Ohio is now at the forefront of the blockchain revolution. On August 3, Governor Kasich signed Sub S.B. 220 into law. The bill specifies that transactions recorded by blockchain technology are permitted under the Uniform Electronic Transactions Act. Ohio is now just one of a handful of states, including Arizona and Tennessee, that have passed blockchain-focused legislation.
Blockchain is commonly defined as a decentralized digital ledger in which transactions are recorded chronologically and publicly. Recently, blockchain technology has been most commonly associated with crypto currencies, such as Bitcoin. However, blockchain technology can facilitate many types of business transactions.
The newly enacted bill makes two simple, but important changes. First, the definition of “Electronic record” now includes “A record or contract that is secured through blockchain technology is considered to be in an electronic form and to be an electronic record.” Second, the definition of “Electronic signature” now includes “A signature that is secured through blockchain technology is considered to be in an electronic form and to be an electronic signature.”
So, while the amendment’s wording seems simple, the impact is significant. It can turn smart contracts into legal contracts in Ohio.
So what is a smart contract? In its most basic form, smart contracts are computer programs that can automatically execute an agreement based on programmed logic. Smart contracts work by following simple “if/when…then…” statements that are written into code on a blockchain. What smart contracts on blockchain can do is streamline a complex transaction that involves several intermediaries because of a lack of trust among participants in the transaction. In short, smart contracts are quicker and more accurate. This, of course, translates into savings of both time and money.
Of course smart contracts won’t be the ultimate fix. A smart contract is simply an “if-then” statement that runs on a blockchain. A real contract can be layered, address multiple contingencies and include a standard of behavior, like “reasonable” or “in good faith,” that can’t be encoded in software.
Despite these limitations, you can now see why so many of Cleveland’s business and civic leaders have started banging the blockchain drum. They see opportunity. They see Blockland.