A talk I gave, as part of a roundtable on CivicTech, on blockchain and smart contracts. Legal considerations are discussed as well as the technology considerations.

1. Blockchain and Smart Contracts: Not Smart, Not
Contracts
Blockchain and Civic Tech Roundtable: Smart
Contracts 2.0
Presented by
Nelson M. Rosario
June 27, 2017

2. Agenda
1. Blockchain
2. Smart Contracts
3. Legal Considerations
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3. Blockchains
Or distributed ledgers if you prefer

4. 1. Blockchain
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Generally, what are blockchains?
• A technology that guarantees trust and consensus on a distributed and
decentralized network
• More particularly, a blockchain is typically a tamper-evident append only
ledger of transactions consisting of cryptographically linked blocks of
transactions
• Differences exist depending on particular characteristics of the blockchain
– Participation (e.g. Permissionless v. permissioned)
– Consensus (e.g. Proof of Work v. proof of stake)
– Incentives (e.g. Tokenized v. tokenless)

5. 1. Blockchain
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Use cases for blockchain technology abound:
• Potentially any situation that can benefit from cryptographically linked time-
stamped data that needs to be tamper-evident
• Multiple private consortiums, and governmental initiatives have been
created: e.g. Illinois Blockchain Initiative, Enterprise Ethereum Alliance
Governmental Private
Voter registration Peer-to-peer transactions
Business licensing Supply chain management
Digital identity Internet of Things

6. Smart Contracts
Really more like smart agreements, but I digress

7. 2. Smart Contracts
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First, what is a contract?
• “A contract is a promise or a set of promises for the breach of which the law
gives a remedy, or the performance of which the law in some way recognizes
as a duty.” – Restatement (Second) of Contracts § 1
• Agreement between two consenting parties that will be recognized as legally
binding
• Legal enforcement of promises
• Assuming two parties capable of consenting to legal and reasonable terms
– Typical formulation: Offer + Acceptance + Consideration = Contract

8. 2. Smart Contracts
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Generally, what are smart contracts?
• The end of lawyers
– Probably not
• Scripts that execute automatically
• Distributed and decentralized public agreements
• They have some important properties
– Transparent to participants in the network
– No middlemen
– Executed by the network
– They can hold balances of tokens

9. Legal Considerations
Lawyers, like life, find a way

10. 3. Legal Considerations
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General legal concerns:
• Liability is unclear
– When a smart contract breaks, who is liable? The drafter? The network?
• No smart contracts have been litigated, yet
• Enforcement is unclear
– If the contract does not perform as anticipated how can the contract be enforced?
• Jurisdictional recognition is unclear
– The smart contract is decentralized, people and companies are not decentralized
• How is data input into the blockchain validated?

11. 3. Legal Considerations
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Concerns for Civic Tech:
• Who controls/administers a Civic Tech blockchain? A Civic Tech smart
contract?
• How can you ensure equitable access for all citizens to any Civic Tech
blockchain?

12. Thank you
© 2017 Marshall, Gerstein & Borun LLP. All rights reserved.
This presentation is intended to be informative and should not be construed as legal advice for any specific fact situation.
Readers/viewers should not act upon the information presented without consulting professional legal counsel.