April 10, 2020

Smart Contracts and Blockchain Technology Subcommittee

The Smart Contracts and Blockchain Technology Subcommittee held a virtual meeting on March 26, 2020, attended by at least 17 loyal members.  We discussed our projects, one of which is to develop an ABA policy platform discouraging state legislatures from amending UETA to address blockchain technology.  Many states are defining terms in ways that are just plain wrong and don’t make sense, and are passing these laws to make themselves more attractive to technology companies.  However, specific enabling terminology is not required, so we are trying to discourage this.  An example of horrible concepts appearing in state law is a provision that “smart contracts” are automatically valid and admissible into evidence.  What could go wrong?  There are several other organizations developing similar policy positions, so we are going to try to join forces.

We also had interesting discussions of other projects and topics related to blockchain.  One was about a new technology incubator called Hub 88 had a recent tech talk on blockchain in the supply chain and about how smart contracts are becoming useful in the trucking industry.  One organization working on this is the Supply Chain Innovation Center in Bloomingdale, IL.  We talked about the ethics around lawyers being paid in virtual currencies.  It is permissible in the three states (Nebraska, North Carolina and New York) that have an ethics opinion addressing it, but in one state the virtual currency generally has to be converted promptly to fiat currency, and in all three states the lawyers must comply with Ethics Rule 1.8(a) regarding having a business relationship with the client.

Finally, we heard about Dragonchain, a company that does multiple levels of security and authority to manage an Etherium blockchain or any blockchain.  Some applications include a coffee company that uses the system to track, trace, and source beans and roasting procedures down to the level of each back.  You can trace the provenance of the coffee from delivery through processing.  They have an identity product that is in development.  They have a content voting system that is in the works that will allow you to verifiably vote on content.  It is troll-proof.  So you get value here beyond the value of a database by rooting out fakes.  It allows democratization without trolls.  This could be helpful for the UCC committee in terms of providing examples.