All transactions, whether the transfer of funds, the sale of real and personal property, or otherwise, rely on trust and verification. And transactions traditionally require a bank, an escrow agent, or other trusted third party to ensure that trust and verification. But what if a technology system could replace the third-party’s role so that any two people could contract directly with one another? Blockchains (also called distributed ledger systems) may soon offer validation in a number of areas where lawyers practice, including financial transactions, proof and chain of title, and authentication of many types. Understanding the technology, or at least its potential, is important for those attorneys who take part in the process of authentication and verification.

1. Yes, It’s About Process:
Blockchains and How
Lawyers Might Use Them

2. Why Do We Care, If the
Robots Are Taking Over?

4. Hang This in Your Office

6. Algorithm= "a set of rules that precisely
defines a sequence of operations”
In other words ……

7. Overview
• Historical Trust Process
• Changes in Tools and Platforms Provide
New Options
• Blockchains and the Problems They Purport
to Solve
• Potential Blockchain Applications
• Implementation Challenges

8. Trust, Authentication and
Transactions
• Notaries, Escrow Agents, Banks, Registers
of Deeds
• What is the One Exception?

9. The Byzantine General’s Problem

10. Trusted Person in the Middle
• Centralized Ledgers
• Bank Account Information
• Registers of Deeds (Chains of Title)
• And Good Reasons for This System

11. How’d It Work Before the
Internet?

12. What Hath the Internet Wrought?
• Networks
• Nodes
• Distributed Computing Power
• Bandwidth (Also Computing Power)
• Storage
• “I can get what you’ve got more quickly.”

13. After the Internet

14. New Ways To Manage Contracts
• “Wet” signatures
• Electronic Signatures (Esign and SCUETA)
• Digital Signatures

15. Encryption- Single-key
(Symmetric)
• (Password for a word-processing document
or an ATM PIN)
• Risks of trust, limited anonymity, secure
pathways

16. Encryption- Public Key
(Asymmetric)
• Works using public and private keys, which
solves the authentication and confidentiality
problems.
• But how do you keep the private keys
secret?

17. So What’s Still Broken?

18. The Double-Spend Problem
• Don’t Have it Often With Currency
• But Bits are Easy to Replicate

19. Friction in Various Systems
• Payment systems
• Property Information
• Supply Chains and Value Networks

20. Enter Bitcoin
• Distributed (Shared) ledger- all users hold an
identical copy of every transaction
• The “Coin” is just a collection of digital signatures
• The BitCoin blockchain notarizes (authenticates)
each transaction with a timestamp and creates a
log for everyone to see.
• Each block is hardened (made immutable) via
proof of work, and linked (chained) to other
blocks by a hash pointer.
• Interesting Game Theory

21. Distributed Ledger Technology
• “I know that what you see is what I see”
• “Global Notary”
• “[Blockchain] is to Bitcoin, what the
internet is to email. A big electronic system,
on top of which you can build applications.
Currency is just one.” - Sally Davies, FT
Technology Reporter

22. Definition: Focus on
“Distributed”
• Peer-to-peer distributed ledger of timestamped
transactions. –Coincenter. “Blockchain 101,” https://coincenter.org/learn
• “The general idea of creating an immutable, chronological
ledger of transactions protected against revision by
encryption and consensus algorithms.” Cook County, Illinois
Recorder of Deeds, Blockchain Pilot Program,
www.cookrecorder.com/blockchain
• And When Considering Peer-to-Peer, Think Wi-Fi

23. More
• “It offers a way for people who do not know or trust each
other to create a record of who owns what that will compel
the assent of everyone concerned. It is a way of making
and preserving truths.” - “The Great Chain of Being Sure About
Things,” The Economist, October 31, 2015,
https://www.economist.com/news/briefing/21677228-technology-behind-
bitcoin-lets-people-who-do-not-know-or-trust-each-other-build-dependable
• “A blockchain is a data structure that makes it possible to
create a digital ledger of data and share it among a network
of independent parties.” Tiana Lawrence, Blockchain for Dummies,
Chapter One, “Introducing Blockchain,”
https://www.amazon.com/gp/search?index=books&linkCode=qs&keywords=9
781119365617

24. Parts of a Blockchain
• Transactions
• Blocks (batches of transactions hashed into a
Merkle tree)
• A hash is an algorithm that maps data to a bit
string (in a one-way fashion).
• Timestamps of each transaction (also hashed)
• Each block contains a hash of the previous block
• Use the Train Tracks and Car

25. Consensus Algorithms

26. Potential General Applications
• Digital Assets are Agnostic- All Just Bits
that Can Be Turned into Digital Tokens
with digital signatures.
• Transactions (of any asset)
• Authentication (A Truth Machine)- just
embed information in the ledger
• Smart Contracts- include more code and
self-execution.

27. Specific Potential Applications
• Payment and Settlement
• Logistics and Transport
• Real Property and the “Dead Capital”
Problem
• The Cook County Pilot Program
• Legal Decisionmaking

28. Challenges
• Cryptography May Be the Weak Link
• Resources Expended (turning current
into currency)
• Standards
• Achieving Network Effects
• Legal Challenges
• “Code is Law”

29. Conclusion: Be Part of the Process

30. Questions?
Jack Pringle
Adams and Reese LLP
(803) 343-1270
jack.pringle@arlaw.com
@jjpringlesc
http://pringlepracticeblog.blogspot.com
https://www.linkedin.com/in/jack-pringle-5834554/
1501 Main Street, 5th Floor
Columbia, SC 29201
www.adamsandreese.com

31. Resources
Jason Anderman, “Blockchain for Lawyers: Smart Contracts,” The Metropolitan
Corporate Counsel, August 28, 2017,
http://www.metrocorpcounsel.com/articles/34967/blockchain-lawyers-smart-
contracts
James Carlyle, “Distributed Ledgers: From Perception to Truth,” Corda Blog, May
12, 2016, https://www.corda.net/2016/12/distributed-ledgers-perception-truth/
“Bitcoin: the magic of mining,” The Economist, January 14, 2015,
http://www.economist.com/news/business/21638124-minting-digital-currency-
has-become-big-ruthlessly-competitive-business-magic
“The Great Chain of Being Sure About Things,” The Economist, October 31,
2015, https://www.economist.com/news/briefing/21677228-technology-behind-
bitcoin-lets-people-who-do-not-know-or-trust-each-other-build-dependable

32. More Resources
“Blockchain 101” Coincenter, https://coincenter.org/learn
Dennis Kennedy and Gwynne Monahan, “Lawyers Get Ready, There’s a
Blockchain Coming,”ABA Law Practice Today, January 13, 2017,
http://www.lawpracticetoday.org/article/lawyers-blockchain
Tiana Lawrence, Blockchain for Dummies, Chapter One, “Introducing
Blockchain,”
https://www.amazon.com/gp/search?index=books&linkCode=qs&keywords=9781
119365617
“Payment System Improvement – Public Consultation Paper,” The Federal
Reserve Banks, September 10, 2013, https://fedpaymentsimprovement.org/wp-
content/uploads/2013/09/Payment_System_Improvement-
Public_Consultation_Paper.pdf

33. Resources …
Simon Singh, The Code Book: The Science of Secrecy from Ancient Egypt to
Quantum Cryptography, Anchor Books, 1999 https://www.amazon.com/Code-
Book-Science-Secrecy-Cryptography/dp/0385495323
Laura Shin, “The First Government to Secure Land Titles on the Bitcoin
Blockchain Expands Project,” Forbes Magazine, February 7, 2017,
https://www.forbes.com/sites/laurashin/2017/02/07/the-first-government-to-
secure-land-titles-on-the-bitcoin-blockchain-expands-project/#277055cb4dcd
Cook County, Illinois Recorder of Deeds, Blockchain Pilot Program,
www.cookrecorder.com/blockchain
Vinay Gupta, “The Promise of Blockchain is a World Without Middlemen,”
Harvard Business Review, March 6, 2017, https://hbr.org/2017/03/the-promise-of-
blockchain-is-a-world-without-middlemen
Erik Brynjolfsson and Andrew McAfee, The Second Machine Age: Work,
Progress and Prosperity in a Time of Brilliant Technologies, W.W. Norton and
Company, 2014, https://www.amazon.com/Second-Machine-Age-Prosperity-
Technologies/dp/0393350649

34. Still More Resources
Federico Ast and Clement Lesaege, “Kleros, a Protocol for a Decentralized Justice
System: Building a Judicial System for the Internet Age,” September 11, 2017,
https://medium.com/kleros/kleros-a-decentralized-justice-protocol-for-the-
internet-38d596a6300d
Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,”
https://bitcoin.org/bitcoin.pdf
Laura Shin, “UnChained: Big Ideas from the Worlds of Blockchain and
Cryptography,” http://unchained.forbes.libsynpro.com/
Kevin Kelly, “The Inevitable: Understanding the 12 Technological Forces That
Will Shape Our Future,” Penguin, 2016, https://www.amazon.com/Inevitable-
Understanding-Technological-Forces-Future/dp/0525428089
Clive Thompson, Smarter Than You Think: How Technology is Changing Our
Minds for the Better, http://www.amazon.com/Smarter-Than-You-Think-
Technology/dp/1594204454