No blockchain phenomenon has garnered more attention lately than Initial Coin Offerings (“ICOs”), which have exploded in value and raised more than $1.2 billion thus far this year.
In a typical ICO, a blockchain-based product or service provider offers proprietary digital assets (“tokens”) – rather than traditional forms of debt…
The blockchain or “distributed ledger network” was originally conceived as the peer-to-peer technology platform that allows for the transfer of Bitcoin without the need for a trusted intermediary. However, the blockchain protocol is being implemented across many industries and in many applications beyond digital currencies. Of course, there are questions about the enforceability of blockchain-based transactions and related, self-executing “smart contracts.”
Late last month, Arizona Governor Doug Ducey signed HB 2417 into law. This law clarifies some of the enforceability issues associated with the use of blockchain and smart contracts under Arizona law, in particular with respect to transactions relating to the sale of goods, leases, and documents of title governed respectively under UCC Articles 2, 2A and 7.
The blockchain protocol (a form of a ‘distributed ledger system’) was originally designed as a platform to process Bitcoin transactions. The protocol enables peer-to-peer transactions and eliminates the need for a trusted intermediary to verify and process the transactions.
The blockchain protocol as a platform is actually independent of Bitcoin, and is therefore transferable to other applications. Naturally, because blockchain was conceived of as supporting a specific digital payment system, the initial and most obvious use of the blockchain outside of Bitcoin is “fintech” – technology-based payment and financial transaction systems. The goal of recent experimentation and development in fintech is to reduce inefficiencies in the existing payments, clearance and settlement systems. Conceivably, many of these functions could be conducted through a “smart contract” – a completely automated process, executed via a software application that runs “on chain.” In pursuit of these goals, many in the financial services area have made significant investments in research, development, and pilot programs, in many cases through coalitions or in partnership with large technology companies as well as with blockchain-focused startup companies.
Beyond fintech, however, blockchain offers many other opportunities. The digital values that are tracked and processed through a blockchain implementation can represent any other type of information or assets. This capability has evoked the early development of new applications and technological developments involving many industries beyond financial services.
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