Merriam-Webster.com lists two definitions for the word legerdemain,:”1. Sleight of hand. 2. A display of skill or adroitness”.
If a newly passed bill and a currently pending amendment to it in the state of Vermont’s legislature produce their intended results and, taking the second of the above definitions into consideration, I think that such a combination might give rise to a, well, [bit]coining of a new homophone: ledgerdomain. That is, a conflation of:
- the blockchain technology upon which the online ledger for Bitcoin and a growing array of other systems is built, and
- the concept of the domain name, a critical Internet protocol.
The details of this very interesting story involving this unique meeting of the virtual and legislative worlds were reported in an article posted on cointelegraph.com on August 5, 2015 entitled Vermont Considering Blockchain Tech for State Records, Smart Contracts by Brian Cohen. I highly recommend clicking-through and reading it in its entirety. I will summarize just those parts of the article about the blockchain legislation and smart contracts, provide some annotations, and then add some of my own questions to the ledger.
Vermont’s Blockchain Legislation
This new legislation is intended to move the state towards using blockchain technology for “records, smart contracts and other applications”. One of the key distinctions here is that Vermont is not in any manner approving or adopting Bitcoin, but rather, the state is diversifying and adapting the underlying blockchain technology that supports it. Just recently, we examined a comparable effort in the music industry in the August 21, 2015 Subway Fold post entitled Two Startups’ Note-Worthy Efforts to Adapt Blockchain Technology for the Music Industry. (Please see also the May 8, 2015 SF post entitled Book Review of “The Age of Cryptocurrency”.)
In June 2015, a bill entitled No. 51. An Act relating to promoting economic development was signed into law by Vermont’s Governor, Peter Shumlin. On Page 7 is “Sec. A.3 Study and Report: Blockchain Technology”, requiring a report to be completed by January 16, 2016 on the “potential opportunities and risks” of using blockchain technology “for electronic facts and records”.
An as yet to be signed amendment to this legislation by Vermont General Assembly Senator Becca Balint is a “roadmap if there are favorable findings” in this report. In April 2015, the amendment mentioned above appearing on Pages 2 and 3 of the PDF file for Sec. 47. 9 V.S.A. Chapter 2: Electronic Verification Of Facts And Records: § 11. Blockchain Enabling was introduced. The relevant text of §11(a) appears as:
“Blockchain technology shall be a recognized practice for the verification of a fact or record, and those facts or records established through a valid blockchain technology process shall have a presumption of validity for matters to be determined subject to, or in accordance with, the laws of the State of Vermont.“
Because of some recent negative publicity about a number of cases of alleged illegality involving Bitcoin, the virtual currency is never mention in any of the official text. Instead, the focus of the bill and the amendment are squarely upon exploring the potential of the blockchain. It is the promising technological capabilities of the online ledger system that have drawn this serious attention from Vermont’s legislators.
Smart Contracts Resources
Oliver R. Goodenough, the Director of the Center for Legal Innovation at the Vermont School of Law, drafted the amendment. In his previous state legislative testimony along with his supporting memorandum on April 1, 2015 by Professor Goodenough, among other topics, he addressed the need for recognition of smart contracts. He mentioned the advances being made on these systems that “permit the statement of contractual obligations in software” covered in his own academic writing and the work of the software companies Ethereum (another link here covers this startup on Wikipedia), and Exari. He further recommended making “Vermont a leader in the field”.
Among the citations to the professor’s memo is one from an Office of Financial Research of the U.S. Department of Treasury Working Paper entitled Contract as Automaton: The Computational Representation of Financial Agreements. (This was dated March 26, 2015, just four days prior to his legislative testimony.) In turn, this paper contains a link to a one-hour YouTube video entitled Ethereum Contracts as Legal Contracts. This is an in-depth presentation by patent attorney Tom Johnson where he discusses the legality of smart contracts and documents using Ethereum. (I believe this video is quite informative and enlightening for anyone who is interested in the legal aspects and implications of Bitcoin and blockchain technology.)
My own questions are as follows:
- How can the operations and possible benefits of adopting blockchain technology be effectively introduced to other states’ legislators and their constituents?
- Should the US federal government and federal agencies initiate such studies for their operations?
- Should local, state and federal judicial systems also undertake pilot studies to weigh the risks and rewards of introducing the blockchain applications?
- What, if any, potential benefits would the large numbers of commercial contractors who deal with government agencies derive from applications of the blockchain?
- Where should potential entrepreneurs now be looking in this early market to provide guidance and services for the possible evaluation, planning, installation, implementation, rollout, maintenance and upgrades of blockchain-based government IT systems?
For another comprehensive and timely article on the early stage blockchain work now being done in the private sector within the financial industry, I highly recommend clicking-through and reading an article from the August 28, 2015 edition of The New York Times entitled Bitcoin Technology Piques Interest on Wall St., by Nathaniel Popper. It also references and links to the cointelegraph.com report discussed above and well as the August 5, 2015 billboard.com article which was the basis for the August 21, 2015 Subway Fold post linked to in the fourth paragraph above concerning the music industry.
Editor’s Note – reprinted with the permission of the author – first published on his blog – The Subway Fold.