Bitcoin, Blockchain, and Smart Contracts – Part 1

Photo of a Bitcoin Cash wallet on a mobile phone and a copy of Mastering Bitcoin written by Andreas AntonopoulosOver the past year and a half Bitcoin and other cryptocurrencies have been taken a place under the mainstream spotlight, meaning the public at large has witnessed the speculative behavior in the cryptocurrency market. In December 2017 the price of one Bitcoin surpassed $20,000, only to encounter a bear market where the market price today is around $6,500. This volatility is not new to Bitcoin. For example, on December 4, 2013, Bitcoin was $1,175 and shortly after, on February 10, 2014, the price hit a low $100.  I point out price volatility to show that the cryptocurrency market is a unique speculative market. With that being said, let’s put money to the side and focus on the technology on which the Bitcoin network runs – blockchain technology. As we will see, using blockchain to create and maintain a currency is only the beginning.

At its essence blockchain technology is linked data between computers. It is defined as a digital, decentralized, append-only, distributed ledger that allows unrelated individuals to transact with each other without the need for a third-party or controlling authority. Because no third-party transaction confirmation is needed, the network becomes trustless. I want to make a note on the ‘append-only’ characteristic because it is crucial to the high security value blockchain provides. Append only means that data can only be added to the blockchain, it cannot be removed. Blocks that are already on the chain cannot be altered in any way. You can only make a change by noting it on a future block that is not on the chain yet, and every participant of the blockchain can see this change. At very technical levels advanced cryptography is what allows blockchain to exist, but diving into a discussion of these technicalities requires a scientific discussion, which, while interesting, would not serve a legal purpose. However, something of high-relevance to the legal community is a discussion of smart contracts. Working closely with coders and blockchain experts, attorneys can draft smart contracts that provide a more efficient, secure, and cost-effective way of facilitating transactions between individuals.

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Will a Wisconsin Benefit Corporation Benefit Your Start-Up?

Certified B Corp LogoThis semester in Professor Lisa Mazzie’s Advanced Legal Writing: Writing for Law Practice seminar, students are required to write one blog post on a law- or law school-related topic of their choice. Writing blog posts as a lawyer is a great way to practice writing skills, and to do so in a way that allows the writer a little more freedom to showcase his or her own voice, and—eventually for these students—a great way to maintain visibility as a legal professional. Here is one of those blog posts, this one written by 3L Nikki Paterson.

As a student associate in Marquette’s Law and Entrepreneurship Clinic, I see many start-up companies struggle with entity selection. It can be a difficult decision because founders have to consider liability, management structure, employee compensation, formation formalities, future investments, and tax implications, among other things.

As of February 26, 2018, the decision-making process got even harder. That is when 2017 Wisconsin Act 77 took effect, which recognized a new type of entity: benefit corporations. Far from being a trailblazer, Wisconsin was the 34th state to adopt such legislation.

So what is a benefit corporation? A benefit corporation is a type of corporation that places social and environmental values on equal footing with profits; in other words, a corporation with a “triple bottom line.” Chapter 204 of the Wisconsin Statutes specifies the process and requirements of incorporating a benefit corporation.

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Foxconn Deal Tips the Scales of Justice

Photo of the front of the building that houses the U.S. Supreme Court, with an inscription above th doorway that reads "equal justice under the law."

The following opinion piece appears in the Milwaukee Journal Sentinel

 

Our system of justice rests upon two pillars: equal treatment and independent judgment.  Every person who appears before our state courts expects to be treated equally to every other litigant.  In addition, every party to a lawsuit expects to have his case heard by a judge who is free to exercise their own independent judgment.  Recently, the state legislature in Madison and Governor Walker approved legislation – a $3 billion package luring Foxconn Technology Group to build a flat-screen TV factory in Racine County — that seriously undermines these two fundamental principles.

The principle of equal treatment commands that the same rules should apply to all parties appearing before the court.  No one should receive special status.  It is true that the two sides in a case might not be evenly matched, and that one might have more financial resources or a more skilled legal team.  But, even then, both parties in the case should be subject to the same set of laws and procedures, and have the same opportunity to argue that the law supports their claim.

The Foxconn legislation creates special treatment for Foxconn whenever that corporation is sued in Wisconsin courts.  The law forces the Wisconsin Supreme Court to directly take appeals involving “Electronics and Information Technology Manufacturing Zones” (EITM) from the circuit courts. By law there is only one such zone, and that zone is home to Foxconn. Typically, the high court would hear appeals at their discretion, and then only after the case was heard by an intermediate court.  The reason for placing cases involving Foxconn on a “fast-track” to the Wisconsin Supreme Court should be obvious.  That Court currently boasts a majority of Justices who were elected with the financial support of Wisconsin’s largest trade and manufacturing lobbyists.  The drafters of the legislation expect these Justices to be sympathetic to the concerns of manufacturers like Foxconn.

We expect our state court judges to be free to exercise their independent judgment when deciding the merits of a case.  It is the trial judge that hears the facts and the evidence, and who determines the appropriate remedy should the plaintiff prevail.  It is not the state legislature’s job to decide which party in a case should win, or what remedy should be imposed in an individual case.

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