I'm starting to think that blockchain technology doesn't exactly fit into the current legal tech movement. Here's why: (and also, please let me know where you think I go wrong. I'd be very interested!) 1/
Despite the hype, blockchains provide only a few truly novel affordances: digital assets that are rival goods, a tamperproof* chain of data (perhaps only cryptographic hashs of the actual data), and automatically enforced commitments that are native to the internet. 2/
That last part is "smart contracts", as originally defined by Nick Szabo, prior to the existence of blockchain. (Before blockchain tech, a trusted server was needed to run the smart contract, whereas a blockchain uses distributed nodes which are (ideally) disinterested.) 3/
These smart contracts are very different creatures - they aren't like taking traditional legal contracts and making them computable. One major difference: a smart contract is designed to be enforced without a government court's backing. 4/
The reason for this is that, on the Internet, anonymous strangers can interact and create transactions that span borders as if the borders didn't exist. Dragging an anonymous stranger to court for a small transaction isn't going to happen. 5/
So, I think that for many legal tech use cases, especially the case of multinational firms trying to create efficient, computational legal contracts, blockchains are not a good platform at all. 6/
If two parties can find a server that they mutually trust, they can run their contract code there, much more easily and cheapily. If they have a dispute, they can use traditional private arbitration or take it to court, the benefit of a legal contract. 7/
By contrast, where smart contracts shine is where 1) you don't have public identities, 2) you don't have access to court enforcement (a huge # of people, possibly a majority of the world when counting transaction costs), 3) you need censorship resistance. 8/
To close, starting with legal contracts may cause us to overlook the most salient use cases for blockchain smart contracts, because those use cases are exactly where law is lacking, and legal contracts aren't being used! End
