Smart Contracts & Blockchain Technology - The New Reality

More and more, the legal tech scene is riddled with terms such as smart contacts and blockchain. But what do these terms entail and how do their technologies impact the legal arena?

Looking at blockchain first, it is a database that is specifically protected against subsequent changes to its content. Falsifications or manipulations of data are thus virtually impossible to accomplish. On a technical level, this is made possible by storing a hash value of a previous data set in the new data set when the data is changed. Applying blockchain technology is particularly relevant when used as a distributed database (peer-to-peer). This eliminates the need for a central server system of a third party that needs to be trusted (such as money transfers to the server of a bank).

This kind of application is generally known as Bitcoin, which was established in 2009, making it the oldest blockchain application in a peer-to-peer network. Smart contracts are independently monitored in real time and automatically enforced according to previously defined terms between contract partners.

Smart contracts can independently monitor contracts in real time and automatically enforce previously defined rights of contract partners. When combined with blockchain technology, they can ensure that all transactions are legal and self-monitoring. This is particularly important when the contract parties are not familiar with each other and therefore have a trust issue.

There are currently very few legal applications for smart contracts for blockchain technology. However, this will change over time, since “smart” is gaining ground (just consider smart homes and the Internet of Things). The advantages of the combination of smart contract and blockchain technology is obvious: it can not be manipulable, and it is autonomous, decentralized and anonymous. The legal language in the future will become more and more a programming language - Code is Law.

Why Kanye Hates Coinye Currency and Promply Killed It

As you might now, the virtual currency Bitcoin is becoming more and more popular. Needless to say, its success triggered quite a few copycat cryptocurrencies trying to get a piece of the action. Virtual money talks!

A group of seven coders took a different direction – they decided to have some fun with the new hype. They created a virtual coin with the name “CoinYe West”, which they later shortened to “Coinye”. They even came up with a catchphrase: we ain’t minin’, we pickin’.

The seven coders decided that the maximum number of Coinyes that could ever be mined in the currency would be 66,666,666,666. They also had fun with the design - it featured a cartoon fish wearing West's signature shutter shades.

Kanye West was not amused. The musician is not known for his sense of humor which might explain why his facial expression often resembles that of Grumpy Cat. He promptly instructed his lawyers to take action.

Since the entity of the powers behind Coinye was unknown, West’s legal team decided to also go after 0daycoins.com (a currency exchange) and Amazon.com as the provider of web hosting services to virtual currency exchanges. The legal eagles were hoping to flush out the John Does they wanted to sue.

Kanye’s law office Pryor Cashman LLP sent out a cease and desist letter of January 6, 2014 on behalf of Grumpy Kanye. In it, they state: “Mr. West is an internationally renowned musical artist, songwriter, producer, film director and fashion designer, to name just a few of Mr. West’s endeavors.” 

The Coinye currency would take advantage of/harm his brand. They go on to point out that the logo resembles their client and that the name of the currency was “substantially similar” to Kanye’s name. They demanded that all websites and social media accounts (Facebook and Twitter) associated with Coinyes would be shut down.

The developers quickly moved their website to India and issued the following statement:

“We are just a few guys who are excited about the future of cryptocurrency and would like to see it become a more mainstream phenomenon. We would like to make it clear that we are entirely independent of the Kanye, and there should be no confusion as to the intent or origin of this project. The name "Coinye" is intended solely as parody, not an indication or implication of endorsement or involvement.”

After considering their options, the creators of Coinye decided to back down and pulled the Coinye currency. They posted on their website "Coinye is dead. You win Kanye".

RIP Coinye

(Image courtesy of Coinye)