Ledger Domain: How and Why Marketers Can Improve Their Implementations of the Blockchain

Looking At Milky Way, Image by Wall Boat

Is there any product, service or technology out there today that’s just a click away from offering people the virtual equivalent of a cure for the common cold that costs less than a dollar and tastes better than chocolate? No, of course not. But as new innovations inevitably rise and fall along the waves of the tech hype cycle, the true potential of The Next Big Tech Thing often takes years to become fully realized and optimized for a deep and wide variety of markets.

One of today’s leading candidates competing for this top-level billing is the blockchain.¹ It is enjoying massive media buzz, investment and experimentation in configuring it for a diversity of applications including, among many others, food supply chains, financial services and artists rights. This technology is providing new means to accomplish business tasks more securely and reliably, thus increasing operational efficiencies.

Yet whether the blockchain can and will fully and effectively scale in all circumstances still remains to be seen by many sectors of the business world. An inherently key question at the very heart of the blockchain’s growth and acceptance is whether marketers and advertisers can leverage many of its technological virtues and, if so, how they can best accomplish this?

Taking a deeply insightful and informative look at of the latest developments concerning this is a highly informative recent article entitled How Blockchain Can Help Marketers Build Better Relationships with Their Customers, by Campbell R. Harvey, Christine Moorman and Marc Toledo, posted on the Harvard Business Review website on October 1, 2018. I highly recommend a click-through and full read if you have an opportunity.

I will summarize and annotate this, reference in some related Subway Fold posts, and then pose some of my own ad-free questions.

The Benefits of Diminishing Transaction Costs

Economic Gardening, Image by Missy Schmidt

According to a February 2018 CMO Survey, just 8% of its participants rated the usage of the blockchain in their marketing operations as being “moderately or very important”. This technology is still “not well understood” among marketers and perceived as being over-hyped. This has resulted in a “wait and see” attitude about it. Nonetheless, there are compelling reasons to understand the blockchain and build specific marketing applications for it that will be more likely to benefit early adopters and innovators.

The blockchain’s virtues of “transparency, immutability and security” make it very suitable for a wide range of transactional and managerial functions. Likewise, it lowers the costs involved in executing all of these activities and, even more importantly, the need to rely so heavily on the web’s giant advertising intermediaries (primarily Google and Facebook), may be reduced. As well, the means now exist using this technology to permit consumers to better “own and control” their personal data.²

Currently, electronic transactions using credit and debit cards involve significant costs to online and real-world vendors. These associated costs are passed along to consumers. Sellers often set minimum purchase thresholds to maintain their profitability.

However, the transactional costs of using the blockchain are approaching zero. For example, MasterCard and Visa have implemented blockchain-based alternative systems enabling customers to “send money in any local currency”, without using a credit card. This again removes any embedded intermediaries and “connects directly to the banks” involved. Consequently, cross-border fees can be dispensed.

There are other advantages emerging for marketers and advertisers involving exchanges of real monetary value with consumers. Rather than these professionals all relying on third-parties such as Facebook for acquiring troves of customer data, they could instead use a system of micropayments³ to directly reward consumers for their personal data. For instance, under this alternative model, a supermarket chain could provide shoppers with a mobile app that pays them to install it, tracks their location, and use it for special deals on merchandise at personalized prices4.

Similarly, marketers could employ the use of smart contracts that vitiate the “need for validation, review, or authentication by intermediaries”. These can be engaged when participants subscribe to an email newsletter or customer rewards program. (More on this below.) The micropayments here are dispensed to consumers whenever they respond to a vendor’s emails or advertisements.

Like Flamingo Synapses, Image by Donal Mountain

Alleviating Google’s and Facebook’s Dominance in Online Advertising

This direct-reward-to-consumers architecture could similarly be deployed for the engagement of website ads. Presently, most users are put off by the current system of intrusive pop-ups and other forms of unavoidable online advertising. A growing Web-wide push back to this has been the use of ad-blocking browser add-ons.5

New alternatives based upon the blockchain can “recapture” some this lost ad revenue by directly compensating online consumers “for their attention”6. This could potentially diminish Google’s and Facebook’s lock on the majority of online ad and data revenues.7 Blockchain options will also enable individuals to “control their own online profiles and social graphs”.8

Taken together, these possibilities might permit companies to:

  • interact directly with their consumers
  • bypass patronizing the social media and search giants, and
  • avoid relentless email solicitations and “follow-me ads”

Furthermore, meaningful cost savings can be directly passed along to consumers by virtue of this voluntarily consumed advertising via these types of blockchain-supported conduits.

Image from Pixabay.com

Shutting Down Online Frauds and Spam

By 2016, $7.6 billion was appropriated by “fraudulent or deceptive activity” and is expected to increase soon to nearly $11 billion. Nonetheless, marketing teams who deploy the blockchain to “track their ads” can:

  • maintain control over their online activities
  • be more confident that expenditures are going to “ROI-generating activities”, and
  • measure the effects of their efforts on a per-user and per-mail scale

Thus, to the benefit of marketers and vendors and to the detriment of bad actors online are the following technological advantages:

Verification: The blockchain can be used to provide verification of “the origin and methodology of marketers”. It can likewise reduce or eliminate large-scale phishing spam through the use of micropayments to the recipients of marketing emails. This will enable “companies to identify consumers” who are genuinely interested in their offerings. Micropayments could then be dispensed in exchange for access to various forms of onscreen content.

Security: Such implementations could also potentially defeat malicious hacks using denial of service attacks (DoS) and could make social media sites more resistant to automated bot accounts. The former are attempts to overwhelm web servers with a flood of traffic and latter are widely used for massive distributions of deceptive information, as well as to illegally appropriate “online advertising from big brands”.

Authenticity: A user’s bonafides is one of the main cornerstones of the blockchain. Turning this into a service, Keybase.io is a company currently working on reducing social media fraud. Their blockchain-enabled app permits individual users to prove they are the “rightful owners” of various social media account. This makes marketing easier to monitor and advertising expenses more supportable.

“Origami Fish – Made by June”, image by Penny

Increasing Revenues from Media Viewership

Original and editorial web content built upon blockchain technology can potentially permit media companies to increase their “quality control and copyright protection”.9 For example, Kodak has developed a new product called KODAKOne, an image rights and distribution platform. It uses the blockchain to record the ownership rights to individual images. Photographers will be awarded greater control over their work than they currently have with how their pictures distribution online. In the future, photographers will automatically be sent payments whenever their content is used. This could probably also be used for video content creators whose work has gone viral.

A company called Coupit also uses blockchain tech to enable marketers to join loyalty and affiliate programs whereby consumers can opt-in and “trade rewards with each other”. As a result, marketers can increase their “visibility and transparency” in order to distinguish inactive from loyal consumers. They can next sharpen their marketing strategies to distribute “targeted offers” to each of these categories.

In those cases where marketers employ a data aggregator or analytics processor, using micropayments will permit companies to circumvent ad-blocking apps10. For consumers, this gives then more fine-point control over their personal data and privacy, and rewards them for their willingness to view advertising that they have chosen.

Taking an alternative approach to content monetization is a new web browser called Brave. In addition to providing many built-in privacy and security features, it contains a blockchain-based feature called Basic Attention Tokens (BATs). These enable “publishers to monetize value added services” whereby users can dispense these tokens to sites they choose for content they select.

“The Crystal Ball”, Image by Gyorgy Soponyai

Companies and Consumers are Both Beneficiaries

Along with the progression of the blockchain’s reach and capabilities, business “intermediaries will need to adapt” accordingly. As discussed above, consumers will be exercising increased control and discretion over how they decide to engage with advertisers and Web threats such as spam and phishing will become self-limiting as their current tactics will be economically undermined.

Balancing this power and attention shift, companies might be able to exert greater control over the “quality of inbound traffic” to their marketing programs and achieve greater understanding of their customers’ needs and motivations.  When pursuing such “high value customers”, these economic incentives will perhaps result in a correspondingly increase in value.

Given all of these advantages that marketers and advertisers have to gain from further embracing blockchain technology, “finding ways to design and implement” them should be a joint effort among corporate decision-makers not just in marketing but also from the strategy, finance and technology departments. Moreover, innovative applications of the blockchain may ultimately be more beneficially in connecting marketers and advertisers with their intended audiences in ways that may have not been otherwise previously possible.

My Questions

  • Given that Google and Facebook currently have an overwhelming lock on online advertising’s multi-$billion revenue streams, will they meet any potential challenges to this with their own blockchain-founded variants? If so, how might they be different in their approach to benefit both advertisers and consumers? At the very least, do they even perceive this as a legitimate threat to their business models?
  • In addition to rewarding consumers with micropayments for ad clicks and content views, what, if anything, could companies do to correspondingly build incentives into their pricing structures for consumers’ purchasers? How should pricing be affected for repeat or bulk purchases by consumers? What if consumers make referrals of additional interested consumers to these blockchain-based vendors?
  • Would using mixed media such as augmented reality and virtual reality lend themselves to blockchain-based marketing implementations to further attract new potential consumers? That is, in return for micropayments disbursed to capture users’ attention, might enhanced advertising or content consumption experiences benefit both advertisers and consumers who would both end up feeling as though they are receiving added value for their participation?
  • What new entrepreneurial opportunities for goods, services and technologies might arise from these new and extensible blockchain-based marketing capabilities?

 


1.  Some examples of earlier implementations of blockchain technology were covered in these Subway Fold posts.

2.  X-ref to the concluding paragraph of the June 7, 2018 Subway Fold post entitled Single File, Everyone: The Advent of the Universal Digital Profile, concerning another innovative effort to return full control of personal data to consumers called the Hub of All Things. Two other similar startups that have emerged during the past few weeks are Inrupt and Helm. This is starting to become a very interesting and innovative space. Furthermore, there was a fascinating and far-ranging article in The New York Times on October 19, 2018, entitled How the Blockchain Could Break Big Tech’s Hold on A.I., by Nathaniel Popper, exploring the possibility of using the blockchain as a means for individuals to control and distribute some of their personal information to be used in AI databases.

3.  Virtual reality pioneer, Microsoft scientist and author Jaron Lanier presented a persuasive case for this, among many other thought-provoking insights about the digital world, in his book entitled Who Owns the Future? (Simon & Schuster, 2013). Highly recommended reading if you have an opportunity.

4Amazon constantly and widely varies it prices based on all of the personal and market data they have accumulated as reported in an article posted on BusinessInsider.com on August 10, 2018, entitled Amazon Changes Prices on Its Products About Every 10 minutes — Here’s How and Why They Do It, by Neel Mehta, Parth Detroja, and Aditya Agashe.

5.  For example, AdBlock and Ghostery, among others, are browser add-ons that can effectively remove nearly all online ads. These apps are continually updated by their developers.

6.  Columbia University Law School professor and New York Times contributing opinion writer Tim Wu wrote a highly engaging book on the past, present and future of how advertising and mass media compete for our attention entitled The Attention Merchants The Attention Merchants: The Epic Scramble to Get Inside Our Heads, (Alfred A. Knopf, 2016). It is very worthwhile reading for its originality and insights.

7.  See the July 25, 2018 Subway Fold post entitled Book Review of “Frenemies: The Epic Disruption of the Ad Business (and Everything Else)” for more detailed coverage on the current state of the online advertising market.

8.  See again the June 7, 2018 Subway Fold post entitled Single File, Everyone: The Advent of the Universal Digital Profile for some of the emerging innovative alternatives in this space.

9.  See also these Subway Fold posts in the category of Intellectual Property.

10.  See the August 13, 2015 Subway Fold post entitled New Report Finds Ad Blockers are Quickly Spreading and Costing $Billions in Lost Revenue.

Single File, Everyone: The Advent of the Universal Digital Profile

Ducks at Parramatta, Image by Stilherrian

Throughout grades 1 through 6 at Public School 79 in Queens, New York, the teachers had one universal command they relied upon to try to quickly gather and organize the students in each class during various activities. They would announce “Single file, everyone”, and expect us all to form a straight line with one student after the other all pointed in the same direction. They would usually deploy this to move us in an orderly fashion to and from the lunchroom, schoolyard, gym and auditorium. Not that this always worked as several requests were usually required to get us all to quiet down and line up.

Just as it was used back then as a means to bring order to a room full of energetic grade-schoolers,  those three magic words can now be re-contextualized and re-purposed for today’s digital everything world when applied to a new means of bringing more control and safety to our personal data. This emerging mechanism is called the universal digital profile (UDP). It involves the creation of a dedicated file to compile and port an individual user’s personal data, content and usage preferences from one online service to another.

This is being done in an effort to provide enhanced protection to consumers and their digital data at a critical time when there have been so many online security breaches of major systems that were supposedly safe. More importantly, these devastating hacks during the past several years have resulted in the massive betrayals of users’ trust that need to be restored.

Clearly and concisely setting the stage for the development of UDPs was an informative article on TechCrunch.com entitled The Birth of the Universal Digital Profile, by Rand Hindi, posted on May 22, 2018. I suggest reading it in its entirety. I will summarize and annotate it, and then pose some of my own questions about these, well, pro-files.

Image from Pixabay

The Need Arises

It is axiomatic today that there is more concern over online privacy among Europeans than other populations elsewhere. This is due, in part, to the frequency and depth of the above mentioned deliberate data thefts. These incidents and other policy considerations led to the May 25, 2018 enactment and implementation of the General Data Protection Regulation (GDPR) across the EU.

The US is presently catching up in its own citizens’ levels of rising privacy concerns following the recent Facebook and Cambridge Analytica scandal.¹

Among its many requirements, the GDPR ensures that all individuals have the right to personal data portability, whereby the users of any online services can request from these sites that their personal data can be “transferred to another provider, without hindrance”. This must be done in a file format the receiving provider requires. For example, if a user is changing from one social network to another, all of his or her personal data is to be transferred to the new social network in a workable file format.

The exact definition of “personal profile” is still open to question. The net effect of this provision is that one’s “online identity will soon be transferable” to numerous other providers. As such transfer requests increase, corporate owners of such providers will likely “want to minimize” their means of compliance. The establishment of standardized data formats and application programming interfaces (APIs) enabling this process would be a means to accomplish this.²

Aurora Borealis, Image by Beverly

A Potential Solution

It will soon become evident to consumers that their digital profiles can become durable, reusable and, hence, universal for other online destinations. They will view their digital profiles “as a shared resource” for similar situations. For instance, if a user has uploaded his or her profile to a site for verification, in turn, he or she should be able to re-use such a “verified profile elsewhere”.³  

This would be similar to the Facebook Connect’s functionality but with one key distinction: Facebook would retain no discretion at all over where the digital profile goes and who can access it following its transfer. That control would remain entirely with the profile’s owner.

As the UDP enters the “mainstream” usage, it may well give rise to “an entire new digital economy”. This might include new services such as “personal data clouds to personal identity aggregators or data monetization platforms”. In effect, increased interoperability between and among sites and services for UDPs might enable these potential business opportunities to take root and then scale up.

Digital profiles, especially now for Europeans, is one of the critical “impacts of the GDPR” on their online lives and freedom. Perhaps its objectives will spread to other nations.

My Questions

  • Can the UDP’s usage be expanded elsewhere without the need for enacting GDPR-like regulation? That is, for economic, public relations and technological reasons, might online services support UDPs on their own initiatives rather than waiting for more governments to impose such requirements?
  • What additional data points and functional capabilities would enhance the usefulness, propagation and extensibility of UDPs?
  • What other business and entrepreneurial opportunities might emerge from the potential web-wide spread of a GDPR and/or UDP-based model?
  • Are there any other Public School 79 graduates out there reading this?

On a very cold night in New York on December 20, 2017, I had an opportunity to attend a fascinating presentation  by Dr. Irene Ng before the Data Scientists group from Meetup.com about an inventive alternative for dispensing one’s personal digital data called the Hub of All Things (HAT). [Clickable also @hubofallthings.] In its simplest terms, this involves the provision of a form of virtual container (the “HAT” situated on a “micro-server”), storing an individual’s personal data. This system enables the user to have much more control over whom, and to what degree, they choose to allow access to their data by any online services, vendors or sites. For the details on the origin, approach and technology of the HAT, I highly recommend a click-through to a very enlightening new article on Medium.com entitled What is the HAT?, by Jonathan Holtby, posted yesterday on June 6, 2018.


1.  This week’s news bring yet another potential scandal for Facebook following reports that they shared extensive amounts of personal user data with mobile device vendors, including Huawei, a Chinese company that has been reported to have ties with China’s government and military. Here is some of the lead coverage so far from this week’s editions of The News York Times:

2.  See also these five Subway Fold posts involving the use of APIs in other systems.

3.  See Blockchain To The Rescue Creating A ‘New Future’ For Digital Identities, by Roger Aitlen, posted on Forbes.com on January 7, 2018, for a report on some of the concepts of, and participants in, this type of technology.

TechDay New York 2018: 500 Local Startups’ Displays, Demos and Delights for the Crowd

All photos on this page by Alan Rothman.

Sometimes in traditional advertising for creative works like movies, TV shows, books and plays, the quoted reviews and taglines include the exclamation “This one’s got it all!” Yet this is only rarely, if ever, true.

Well, wait a minute. Let’s check that.

Last Thursday, May 10th, I had the great pleasure of attending TechDay New York 2018, held at Pier 94, on the West Side of midtown Manhattan. This is a monumental annual exhibition of 500 startups located throughout NYC almost did have it all. In addition to all of these new companies, there were separate areas set up for brief products and services demos and talks by industry experts. Even the TV show Shark Tank was on site there.

First and foremost, massive amounts of thanks to everyone at Techday for putting on such a terrifically enjoyable, informative and memorable event. Their efforts clearly showed that they worked long and hard to get everything about it right.

On to the show …

One of New York City’s greatest economic and cultural strengths has always been its incredible global diversity of it population. So, too, is that dynamic comparably evident in the breadth of it startup ecosystem. From one end of Pier 94 to the other, there was artificial intelligence this, blockchain that, and data analytics everything infused everywhere.

Just a sampling of who and what were on display, among many others, were startups in legal services, architecture, editorial software, video search, incubators and accelerators, social media support services, event planning platforms, programmer aptitude testing, intellectual property protection, pharmacy order and delivery services, office design consultants, branding and digital experience designers, augmented and virtual reality hardware and software, venture capitalist, crowdfunding services, multi-platform public relations strategists, fashion designers, food services (some displaying much chocolate!), consumer data tracking analyst, competitive intelligence trackers and analysts, restaurant reservations, media consultants, phone apps, online security planning and systems, fully integrated electronic health records and billing systems, and dedicated tech recruiters as well as exhibitors themselves looking for new talent. Whew!

Notwithstanding the vastness of the exhibition space, hundreds of startups and thousands of attendees, the organization and presentations of the startups’ display areas was well planned and easy to navigate. The startups were grouped in helpful sectors for social media, e-commerce, fintech and others into more general categories.

The three among the twelve TechDay Talks I attended were quite compelling and evinced great enthusiasm by both the speakers and their audiences. These included:

Above all other considerations, I found every entrepreneur I stopped and spoke with, asking them to tell me about their company, to be highly enthusiastic, engaging and sincere. They were knowledgeable about their markets and competitors, sounded willing to adapt to changing market conditions and, most importantly, convinced that they would become successful. At no point did any of them move on to their next visitors until they sensed that I understood what they were saying and encouraging me to follow their progress online. They were not so much giving visitors hard sales pitches, but rather, much more of the who, what, where, how and when of their businesses. My gratitude to all of them for their patience with me and many of the other attendees I saw them talking to with the same level of professionalism.

Below are some of the photos I took while I was there. I was trying to capture some sense of infectious energy and engagement being generated across entire day’s events.

My very best wishes to all 500 startups to succeed and prosper.

 


 *   For some very worthwhile deep and wide analysis of the effects of AI upon current and future employment, I highly recommend the recently published book entitled Human + Machine: Reimagining Work in the Age of AI, by Paul Daugherty (Harvard Business Review Press, 2018).


 

 

 

 

 

Pushing the Envelopes: New US Postal Service Report Assesses Possible Blockchain Applications

"Vibrant US Air Mail Stamp", Image by Nicolas Raymond

“Vibrant US Air Mail Stamp”, Image by Nicolas Raymond

Way before the advent of email, when people exclusively wrote letters on paper and mailed them to each other (yes, this really did happen once upon a time), there was a long-running scam known as the “chain letter“. Recipients who received such a letter were asked, often through manipulative language, to copy it and send it on to as many other people as possible. In effect, these were structured as fraudulent pyramid schemes that ultimately would collapse in on themselves.

Sometimes chain letters involved illegal financial dealings and other hoaxes, also producing unwanted emotional effects on who mistakenly fell for them. Variations of the chain letter still survive today online and operate using email, texting and social media.

However, an emerging new form of virtual chain, in conjunction with the mail service, might soon appear – – namely using the blockchain – – within the U.S. Postal Service (USPS). However, this combination could potentially produce four very positive improvements in services. These exciting prospects were the subject of a most interesting new post on Quartz.com on May 24, 2016 entitled Even the US Postal Service Wants to Start Using Blockchain Tech, by Ian Kar. I recommend reading this article in its entirety. I will summarize and annotate it, and pose some questions of my own (but without any additional postage due).

While blockchain technology has been getting a great deal of press coverage recently involving innovative new development initiatives in, among other fields, finance, law, government and the arts, this story illustrates how it also might affect something as routine and mundane as mail service with possibly dramatic results. Such changes could produce significant economic and logistical advances that would affect just about anyone who checks their real world mailbox every day.

(These six Subway Fold posts cover just a small sampling of blochchain projects.)

Better Letters

Image from Pixabay

Image from Pixabay

Traditionally, the USPS has never really distinguished itself as a leader in innovation. Rather, it has a long reputation for its inefficient operations. This could possibly be significantly changed by this series of a series of blockchain proposals. Because this technology is decentralized, widely accessible, and secured by encryption, it is highly resistant to tampering.

On May 23, 2016, the USPS Office of the Inspector General and a consulting firm called Swiss Economics, published a new report entitled Blockchain Technology: Possibilities for the U.S. Postal Service. It analyzed the following four possible future implementations:

1.  Financial Services:  US post offices currently offers a limited number of financial services such as international money transfers. The IOG report speculated that the USPS “could benefit from developing its own bitcoin-like digital currency”.  Perhaps it could be called “Postcoin”. This would permit the expansion into other financial services such as a “global payment service” for people without traditional bank accounts.

2.  Identity:  An individual’s identity could be verified for the USPS using a blockchain. Essentially, they already do this when they deliver your mail to you each day. By using a blockchain for this, the USPS could provide you with assistance to help you manage both your online and offline identities “by storing it on an immutable ledger”.

3.  Logistics Support:  Applying the blochchain to support the Internet of Things (IoT) could enhance the USPS logistics management operations. The IGO report imagine a system where “vehicles and sorting equipment could manage their own tracking, monitoring, and maintenance”. This could include items such as autonomously, efficiently and economically monitoring brake pad performance including:

  • Assessing when one will need to be replaced
  • Determining whether its warranty is still in effect
  • Creating a smart contract with a vendor to replace it
  • Paying for the part and its installation

4.  Mail Tracking:  On a daily basis, the USPS delivers 509 million pieces of mail. As stated in the OIG report, the blockchain can be deployed to uniquely identify each piece of it. This could be done with “a small sensor” on each piece in order to use the blockchain to “manage the chain of custody between different USPS partners, like UPS and Fedex”. As well, the blockchain could be put to the additional uses of:

  • Expediting customs clearance
  • Integrating payments
  • Shipping upon one unified platform

[All of these components form the very convenient anagram FILM, thus making it easier to, well, picture.]

For now, the USPS intends to keep studying blockchain technology. The OIG report states that the agency “could benefit from experimenting” with it on new financial products and then eventually progress on toward “more complex uses”.

"Stamped Mail to be Posted", Image by Steven Depolo

“Stamped Mail to be Posted”, Image by Steven Depolo

My Questions

  • Would these blochchain apps have a negative impact on USPS revenues as this massive government agency has been running at a budget deficit for many years? If so, would this have unintended negative consequences for consumers and/or the USPS?
  • Conversely, can the USPS use blockchain innovations to create new sources of revenue and employment? What new sorts of job descriptions and titles might emerge?
  • Would the blockchain do away with the traditional services of certified, registered, priority and insured mail? If so, what forms of proof of delivery or non-delivery could be provided to consumers?
  • Would any of these proposed new apps possibly create new privacy issues for consumers and policy concerns for the US government?
  • What type of opportunities might arise for entrepreneurs to create new mail apps built on the blockchain?

New Job De-/script/-ions for Attorneys with Coding and Tech Business Skills

"CODE_n SPACES Pattern", Image by CODE_n

“CODE_n SPACES Pattern”, Image by CODE_n

The conventional wisdom among lawyers and legal educators has long been that having a second related degree or skill from another field can be helpful in finding an appropriate career path. That is, a law degree plus, among others, an MBA, engineering or nursing degree can be quite helpful in finding an area of specialization that leverages both fields. There are synergies and advantages to be shared by both the lawyers and their clients in these circumstances.

Recently, this something extra has expanded to include very timely applied tech and tech business skills. Two recently reported developments highlight this important emerging trend. One involves a new generation of attorneys who have a depth of coding skills and the other is an advanced law degree to prepare them for positions in the tech and entrepreneurial marketplaces. Let’s have a look at them individually and then what they might means together for legal professionals in a rapidly changing world. I will summarize and annotate both of them, and compile a few plain text questions of my own.

(These 26 other Subway Fold posts in the category of Law Practice and Legal Education have tracked many related developments.)

Legal Codes and Lawyers Who Code

1.  Associates

The first article features four young lawyers who have found productive ways to apply their coding skills at their law offices. This story appeared in the November 13, 2015 edition of The Recorder (subscription required) entitled Lawyers Who Code Hack New Career Path by Patience Haggin. I highly recommend reading it in its entirely.

During an interview at Apple for a secondment (a form of temporary arrangement where a lawyer from a firm will join the in-house legal department of a client)¹, a first-year lawyer named Canek Acosta was asked where he knew how to use Excel. He “laughed – and got the job” at Apple. In addition to his law degree, he had majored in computer science and math as an undergraduate.

Next, as a law student at Michigan State University College of Law, he participated in the LegalRnD – The Center for Legal Services Innovation, a program that teaches students to identify and solve “legal industry process bottlenecks”.  The Legal RnD website lists and describes all eight courses in their curriculum. It has also sent out teams to legal hackathons. (See the March 24, 2015 Subway Fold post entitled “Hackcess to Justice” Legal Hackathons in 2014 and 2015 for details on these events.)

Using his combination of skills, Acosta wrote scripts that automated certain tasks, including budget spreadsheets, for Apple’s legal department. As a result, some new efficiencies were achieved. Acosta believes that his experience at Apple was helpful in subsequently getting hired at the law firm of O’Melvany & Myers as an associate.

While his experience is currently uncommon, law firms are expected to increasingly recruit law students to become associates who have such contemporary skills in addition to their legal education. Furthermore, some of these students are sidestepping traditional roles in law practice and finding opportunities in law practice management and other non-legal staff roles that require a conflation of “legal analysis and hacking skills”.

Acosta further believes that a “hybrid lawyer-programmer” can locate the issues in law office operational workflows and then resolve them. Now at O’Melvany, in addition to his regular responsibilities as a litigation associate, he is also being asked to use his programming ability to “automate tasks for the firm or a client matter”.

At the San Francisco office of Winston & Strawn, first-year associate Joseph Mornin has also made good use of his programming skills. While attending UC-Berkeley School of Law, he wrote a program to assist legal scholars in generating “permanent links when citing online sources”. He also authored a browser extension called Bestlaw that “adds features to Westlaw“, a major provider of online legal research services.

2.  Consultants and Project Managers

In Chicago, the law firm Seyfarth Shaw has a legal industry consulting subsidiary called SeyfarthLean. One of their associate legal solutions architects is Amani Smathers.  She believes that lawyers will have to be “T-shaped” whereby they will need to combine their “legal expertise” with other skills including “programming, or marketing, or project management“.² Although she is also a graduate of Michigan State University College of Law, instead of practicing law, she is on a team that provides consulting for clients on, among other things, data analytics. She believes that “legal hacking jobs” may provide alternatives to other attorneys not fully interested in more traditional forms of law practices.

Yet another Michigan State law graduate, Patrick Ellis, is working as a legal project manager at the Michigan law firm Honigman Miller Schwartz and Cohn. In this capacity, he uses his background in statistics to “develop estimates and pricing arrangements”. (Mr. Ellis was previously mentioned in a Subway Fold post on March 15, 2015, entitled Does Being on Law Review or Effective Blogging and Networking Provide Law Students with Better Employment Prospects?.)

A New and Unique LLM to be Offered Jointly by Cornell Law School and Cornell Tech

The second article concerned the announcement of a new 1-year, full-time Master of Laws program (which confers an “LLM” degree), to be offered jointly by Cornell Law School and Cornell Tech (a technology-focused graduate and research campus of Cornell in New York City). This LLM is intended to provide practicing attorneys and other graduates with specialized skills needed to support and to lead tech companies. In effect, the program combines elements of law, technology and entrepreneurship. This news was carried in a post on October 29, 2015 on The Cornell Daily Sun entitled Cornell Tech, Law School Launch New Degree Program by Annie Bui.

According to Cornell’s October 27, 2015 press release , students in this new program will be engaged in “developing products and other solutions to challenges posed by companies”. They will encounter real-world circumstances facings businesses and startups in today’s digital marketplace. This will further include studying the accompanying societal and policy implications.

The program is expected to launch in 2016. It will be relocated from a temporary site and then moved to the Cornell Tech campus on Roosevelt Island in NYC in 2017.

My Questions

  • What other types of changes, degrees and initiatives are needed for law schools to better prepare their graduates for practicing in the digital economy? For example, should basic coding principles be introduced in some classes such as first-year contracts to enable students to better handle matters involving Bitcoin and the blockchain when they graduate? (See these four Subway Fold posts on this rapidly expanding technology.)
  • Should Cornell Law School, as well as other law schools interested in instituting similar courses and degrees, consider offering them online? If not for full degree statuses, should these courses alternatively be accredited for Continuing Legal Education requirements?
  • Will or should the Cornell Law/Cornell Tech LLM syllabus offer the types of tech and tech business skills taught by the Michigan State’s LegalRnD program? What do each of these law schools’ programs discussed here possibly have to offer to each other? What unique advantage(s) might an attorney with an LLM also have if he or she can do some coding?
  • Are there any law offices out there that are starting to add an attorney’s tech skills and coding capabilities to their evaluation of potential job candidates? Are legal recruiters adding these criteria to job descriptions for searching they are conducting?
  • Are there law offices out there that are beginning to take an attorney’s tech skills and/or coding contributions into account during annual performance reviews? If not, should they now considering adding them and how should they be evaluated?

May 3, 2017 Update:  For a timely report on the evolution of new careers emerging in law practice for people with legal and technical training and experience, I highly recommend a new article publish in the ABA Journal entitled  Law Architects: New Legal Jobs Make Technology Part of the Career Path, by Jason Tashea, dated, May 1, 2017.


1.  Here is an informative opinion about the ethical issues involved secondment arrangements issued by the Association of the Bar of the City of New York Committee on Professional and Judicial Ethics.

2.  I had an opportunity to hear Ms. Smathers give a very informative presentation about “T-shaped skills” at the Reinvent Law presentation held in New York in February 2014.

Summary of the Bitcoin Seminar Held at Kaye Scholer in New York on October 15, 2015

"Bitcoin", Image by Tiger Pixel

“Bitcoin”, Image by Tiger Pixel

The market quote for Bitcoin on October 15, 2015 at 5:00 pm EST was $255.64 US according to CoinDesk.com on the site’s Price & Data page. At that same moment, I was very fortunate to have been attending a presentation entitled the Bitcoin Seminar that was just starting at the law firm of Kaye Scholer in midtown Manhattan. Coincidentally, the firm’s address is numerically just 5.64, well, whatevers¹ away at 250 West 55th Street.

Many thanks to Kaye Scholer and the members of the expert panel for putting together this outstanding presentation. My appreciation and admiration as well for the informative content and smart formatting in the accompanying booklet they provided to the audience.

Based upon the depth and dimensions of all that was learned from the speakers, everyone attending gained a great deal of knowledge and insight on the Bitcoin phenomenon. The speakers clearly and concisely surveyed its essential technologies, operations, markets, regulations and trends.

This was the first of a two-part program the firm is hosting. The second half, covering the blockchain, is scheduled on Thursday, November 5, 2015.

The panelists included:

The following are my notes from this 90-minute session:

1.  What is a “Virtual Currency” and the Infrastructure Supporting It?

  • Bitcoin is neither legal tender nor tied to a particular nation.
  • Bitcoin is the first means available to move value online without third-party trusted intermediaries.
  • Bitcoin involves a series of decentralized protocols, consisting entirely of software, for the transfer of value between parties.
  • Only 21 million Bitcoins will ever be created but they are highly divisible into much smaller units unit called “satoshis” (named after the mysterious and still anonymous creator of Bitcoin who goes by the pseudonym Satoshi Nakamoto).
  • The network structure for these transfers is peer-to-peer, as well as transparent and secure.
  • Bitcoin is a genuine form of “cryptocurrency”, also termed “digital currency”²
  • The networks use strong encryption to secure the value and information being transferred.
  • The parties engaged in a Bitcoin transaction often intend for their virtual currency to be converted into actual fiat currency.

2.  Benefits of Bitcoin

  • Payments can be sent anywhere including internationally.
  • Transactions are borderless and can operate on a 24/7 basis.
  • Just like email, the network operates all the time.

3.  Bitcoin Mining and Bitcoin Miners

  • This is the process by which, and the people by whom, bitcoins are extracted and placed into circulation online.
  • “Miners” are those who use vast amounts of computing power to solve complex mathematical equations that, once resolved, produce new Bitcoins.
  • The miners’ motivations include:
    • the introduction of new Bitcoins
    • their roles as transaction validators and maintainers of the blockchain
  • All newly mined bitcoins need to be validated.
  • Minors are rewarded for their efforts with the bitcoins they extract and any additional fees that were volunteered along with pending transactions.
  • Miners must obey the network’s protocols during the course of their work.

4.  Security

  • Security is the central concern of all participants in Bitcoin operations.
  • Notwithstanding recent bad publicity concerning incidents and indictments for fraud (such as Mt. Gox), the vast majority of bitcoin transactions do not involve illegal activity.
  • The Bitcoin protocols prevent Bitcoins from being spent twice.
  • Measures are in place to avoid cryptography keys from being stolen or misused.
  • There is a common misconception that Bitcoin activity is anonymous. This is indeed not the case, as all transactions are recorded on the blockchain thus enabling anyone to look up the data.
  • Bitcoin operations and markets are becoming more mature and, in turn, relatively more resistant to potential threats.

5.  Using Bitcoins

  • Bitcoin is secured by individual crypto-keys which are required for “signing” in a transaction or exchange.
  • This system is distributed and individual keys are kept in different locations.
  • Once a transaction is “signed” it then goes online into the blockchain ledger³.
  • The crypto keys are highly secure to avoid tampering or interception by unintended parties.
  • Bitcoin can be structured so that either:
    • multiple keys are required to be turned at the same time on both sides of the transaction, or
    • only a single key is required to execute a transaction.
  • By definition, there are no traditional intermediaries (such as banks).

6.  Asset Custody and Valuation

  • Financial regulators see Bitcoin as being a money transmission.
  • Currently, the law says nothing about multi-keys (above).
  • Work is being done on drafting new model legislation in an attempt to define “custody” of Bitcoin as an asset.
  • Bitcoin services in the future will be programmatic and will not require the trusted third parties. For example, in a real estate transaction, if the parties agree to terms then the keys are signed. If not, an arbitrator can be used to turn the keys for the parties and complete the transaction. Thus, this method can be a means to perform settlements in the real world.
  • Auditing this process involves public keys with custodial ownership. In determining valuation, the question is whether “fair value” has been reached and agreed upon.
  • From an asset allocation perspective, it is instructive to compare Bitcoin to gold insofar as there is no fixed amount of gold in the world, but Bitcoin will always be limited to 21 million Bitcoins (see 1. above).

7.  US Regulatory Environment

  • Because of the Bitcoin market’s rapid growth in the past few years, US federal and state regulators have become interested and involved.
  • Bitcoin itself is not regulated. Rather, the key lies at the “chokepoints” in the system where Bitcoin is turned into fiat currency.
  • US states regulate the money transfer business. Thus, compliance is also regulated by state laws. For example, New York State’s Department of Financial Services issues a license for certain service companies in the Bitcoin market operating within the state called a BitLicense. California is currently considering similar legislation.
  • Federal money laundering laws must always be obeyed in Bitcoin transactions.
  • The panelists agreed that it is important for Bitcoin legislation is to protect innovation in this marketplace.
  • The Internal Revenue Service has determined Bitcoin to be a tangible personal asset. As a result, Bitcoin is an investment subject to capital gains. As well, it will be taxed if used to pay for goods and services

8.  Future Prospects and Predictions

  • Current compelling use cases for Bitcoin include high volume of cross-border transactions and areas of the world without stable governments.
  • Bitcoin’s success is not now a matter of if, but rather, when. It could eventually take the emergence of some form of Bitcoin 2.0 to ultimately succeed.
  • Currency is now online and is leading to innovations such as:
    • Programmable money and other new formats of digital currency.
    • Rights management for music services where royalties are sent directly to the artists. (See Footnote 3 below.)

9.  Ten Key Takeaway Points:

  • Bitcoin is a virtual currency but it is not anonymous.
  • The key legal consideration is that it involves a stateless but trusted exchange of value.
  • Bitcoin “miners” are creating the value and increasing in their computing sophistication to locate and solve equations to extract Bitcoins.
  • Security is the foremost concern of everyone involved with Bitcoin.
  • Because Bitcoin exchanges of value occur and settle quickly and transparently (on the blockchain ledger), there are major implications for online commerce and the securities markets.
  • Government regulators are now significantly involved and there are important distinctions between what the states and federal government can regulate.
  • The IRS has made a determination about the nature of Bitcoin as an asset, and its taxable status in paying for goods and services.
  • The crypto-keys and “multi-signing” process are essential to making Bitcoin work securely, with neither borders nor third-party intermediaries.
  • Real estate transactions seem to be well-suited for the blochchain (for example, recording mortgages).
  • Comparing Bitcoin to gold (as a commodity), can be instructive in understanding the nature of Bitcoin.

 


1.   Is there a conversion formula, equivalency or terminology for the transposition of address numerals into Bitcoin? If one soon emerges, it will add a whole new meaning to the notion of “street value”.

2See also this May 8, 2015 Subway Fold post entitled Book Review of “The Age of Cryptocurrency”.

3.  For two examples of other non-Bitcoin adaptations of blockchain technology (among numerous other currently taking place), see the August 21, 2015 Subway Fold post entitled Two Startups’ Note-Worthy Efforts to Adapt Blockchain Technology for the Music Industry and the September 10, 2015 Subway Fold post entitled Vermont’s Legislature is Considering Support for Blockchain Technology and Smart Contracts.

Vermont’s Legislature is Considering Support for Blockchain Technology and Smart Contracts

"Ledger Detailing External Work Commissioned at Holmes McDougall", Image by Edinburgh City of Print

“Ledger Detailing External Work Commissioned at Holmes McDougall”, Image by Edinburgh City of Print

Merriam-Webster.com lists two definitions for the word legerdemain:”1. Sleight of hand. 2. A display of skill or adroitness”.

If a newly passed bill and a currently pending amendment to it in the state of  Vermont’s legislature produce their intended results and, taking the second of the above definitions into consideration, I think that such a combination might give rise to a, well, [bit]coining of a new homophone: ledgerdomain. That is, a conflation of:

  • the blockchain technology upon which the online ledger for Bitcoin and a growing array of other systems is built, and
  • the concept of the domain name, a critical Internet protocol.

The details of this very interesting story involving this unique meeting of the virtual and legislative worlds were reported in an article posted on cointelegraph.com on August 5, 2015 entitled Vermont Considering Blockchain Tech for State Records, Smart Contracts by Brian Cohen. I highly recommend clicking-through and reading it in its entirety. I will summarize just those parts of the article about the blockchain legislation and smart contracts, provide some annotations, and then add some of my own questions to the ledger.

Vermont’s Blockchain Legislation

This new legislation is intended to move the state towards using blockchain technology for “records, smart contracts and other applications”. One of the key distinctions here is that Vermont is not in any manner approving or adopting Bitcoin, but rather, the state is diversifying and adapting the underlying blockchain technology that supports it. Just recently, we examined a comparable effort in the music industry in the August 21, 2015 Subway Fold post entitled Two Startups’ Note-Worthy Efforts to Adapt Blockchain Technology for the Music Industry. (Please see also the May 8, 2015 SF post entitled Book Review of “The Age of Cryptocurrency”.)

In June 2015, a bill entitled No. 51. An Act relating to promoting economic development was signed into law by Vermont’s Governor, Peter Shumlin. On Page 7 is “Sec. A.3 Study and Report: Blockchain Technology”, requiring a report to be completed by January 16, 2016 on the “potential opportunities and risks” of using blockchain technology “for electronic facts and records”.

An as yet to be signed amendment to this legislation by Vermont General Assembly Senator Becca Balint is a “roadmap if there are favorable findings” in this report.  In April 2015, the amendment mentioned above appearing on Pages 2 and 3 of the PDF file for Sec. 47. 9 V.S.A. Chapter 2: Electronic Verification Of Facts And Records: § 11. Blockchain Enabling was introduced. The relevant text of §11(a) appears as:

Blockchain technology shall be a recognized practice for the verification of a fact or record, and those facts or records established through a valid blockchain technology process shall have a presumption of validity for matters to be determined subject to, or in accordance with, the laws of the State of Vermont

Because of some recent negative publicity about a number of cases of alleged illegality involving Bitcoin, the virtual currency is never mention in any of the official text. Instead, the focus of the bill and the amendment are squarely upon exploring the potential of the blockchain. It is the promising technological capabilities of the online ledger system that have drawn this serious attention from Vermont’s legislators.

Smart Contracts Resources

Oliver R. Goodenough, the Director of the Center for Legal Innovation at the Vermont School of Law, drafted the amendment. In his previous state legislative testimony along with his supporting memorandum on April 1, 2015 by Professor Goodenough, among other topics, he addressed the need for recognition of smart contracts. He mentioned the advances being made on these systems that “permit the statement of contractual obligations in software” covered in his own academic writing and the work of the software companies Ethereum (another link here covers this startup on Wikipedia), and Exari. He further recommended making “Vermont a leader in the field”.

Among the citations to the professor’s memo is one from an Office of Financial Research of the U.S. Department of Treasury Working Paper entitled Contract as Automaton: The Computational Representation of Financial Agreements. (This was dated March 26, 2015, just four days prior to his legislative testimony.) In turn, this paper contains a link to a one-hour YouTube video entitled Ethereum Contracts as Legal Contracts. This is an in-depth presentation by patent attorney Tom Johnson where he discusses the legality of smart contracts and documents using Ethereum. (I believe this video is quite informative and enlightening for anyone who is interested in the legal aspects and implications of Bitcoin and blockchain technology.)

My own questions are as follows:

  • How can the operations and possible benefits of adopting blockchain technology be effectively introduced to other states’ legislators and their constituents?
  • Should the US federal government and federal agencies initiate such studies for their operations?
  • Should local, state and federal judicial systems also undertake pilot studies to weigh the risks and rewards of introducing the blockchain applications?
  • What, if any, potential benefits would the large numbers of commercial contractors who deal with government agencies derive from applications of the blockchain?
  • Where should potential entrepreneurs now be looking in this early market to provide guidance and services for the possible evaluation, planning, installation, implementation, rollout, maintenance and upgrades of blockchain-based government IT systems?

For another comprehensive and timely article on the early stage blockchain work now being done in the private sector within the financial industry, I highly recommend clicking-through and reading an article from the August 28, 2015 edition of The New York Times entitled Bitcoin Technology Piques Interest on Wall St., by Nathaniel Popper. It also references and links to the cointelegraph.com report discussed above and well as the August 5, 2015 billboard.com article which was the basis for the August 21, 2015 Subway Fold post linked to in the fourth paragraph above concerning the music industry.