Comstock's magazine 0419 - April 2019 - Page 45

Imagine a real estate sale without agents, a sale of stock without brokers, or a peer-to-peer loan without a company website to transact on. puter programs that execute transactions. A smart contract on a public blockchain lets a seller interact directly with a buyer with no in- termediary: A buyer pays money, the payment is recorded on a blockchain, and the smart con- tract conveys the good or service to the buyer. To envision a smart contract, enthusiasts often encourage thinking of it like a vending ma- chine — an automatic way for buyers and sell- ers to interact directly. The idea? Automate the intermediaries into oblivion, or at least restrict their role. In the 2016 book “Blockchain Revolution,” which some consider the bible of the blockchain world, the authors assert that in our finan- cial system, intermediaries “make the system work, but also slow it down, add cost, and gen- erate outsized benefits for themselves.” Block- chain will move them out of the way because of its advantages in cost and speed. If the proponents are right, blockchain rep- resents the next phase in the internet’s evolu- tion. One prediction about its coming impact is eye-popping: A forecast in July 2018 by IT mar- ket intelligence firm International Data Cor- poration estimated that worldwide spending on blockchain technology will grow from $1.5 billion to $11.7 billion by 2022. California’s leaders decided last year that they can’t ignore that possible impact: A ma- jor factor driving where blockchain compa- nies headquarter is well-defined regulations, say the technology’s advocates. So two relat- ed bills became law in 2018. AB 2658 defines blockchain and establishes a working group to research its potential uses, risks and benefits. SB 838 gets more specific, allowing California corporations to issue and transfer corporate share certificates via a blockchain instead of the more time-consuming and less secure tra- ditional method of issuing actual share certif- icates. California was one of 18 states to pass blockchain legislation last year, and the num- ber of states enacting blockchain-related laws April 2019 | 45