Re Delaware allows blockchain stock registry

["Dave Farber" <dave () farber net>]

---------- Forwarded message ---------
From: Karl Auerbach <karl () cavebear com>
Date: Mon, Dec 18, 2017 at 5:42 PM
Subject: Re: [IP] Delaware allows blockchain stock registry
To: <dave () farber net>, ip <ip () listbox com>


Bitcoin damaged our perception of blockchain technology.

The really useful aspect of blockchain is a effective only-one-at-a-time
ownership property.

That property allows a blockchain token - for instance a bitcoin - to be
used as a kind of money.

That that property also allows similar block chain tokens to be used as
tokens of ownership (or if one doesn't like the property metaphor,
tokens of control.)

Thus, for instance there are domaincoins that represent control of a
domain name.

There equally could be blockchain based tokens to represent various
rights to real property - deedcoin?  easementcoin?  lifeestatecoin?

We have had a long history with bearer securities - and almost as long a
history of stories of what can happen when they are lost or stolen.

Blockchain technology can help with these issues, but that help doesn't
pop-up automagically and come into play; it needs to be designed into
the particular kind of blockchain token and how it is used, especially,
how transfers are recorded in the chain.

A simple declaration that Delaware will permit securities to be uniquely
represented by a blockchain token is nice, but insufficient.  It is like
saying "I will build a vehicle using wheel technology."

My own guess is that Delaware, following historical patterns, is doing
this to add yet another "privacy" bell and whistle to the package of
enticements the state offers in order to induce corporations to register
in Delaware (and pay Delaware fees and taxes.)

But I hope that Delaware really thinks through issues - especially what
happens when, as John Levine suggests, the means to unlock those
securities-coins is lost.

I can foresee problems.

One obvious problem is, simply, that if a dispute does arise, the
arguments will be mathematical and technical - few judges, and fewer
juries will be able to make sense of the evidence.

There could be questions whether a loss of access to a coin is
self-inflicted, as could happen if a corporate veil were penetrated and
liability is being levied on the shareholders.

I comprehend the attraction of what Delaware want to offer.

But in our modern world, corporate secrecy carries enormous negative
social consequences.  We should not be encouraging greater means for
corporations and their owners to work in something that is even more
opaque than the dark web, rather we should be closing those options and
make greater efforts for visibility into corporate ownership and actions.

        --karl--




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