Link Search Menu Expand Document
  1. VI. WHY THE “INTERNET OF VALUE” NEEDS LEGAL PRACTITIONERS

“2020 will be the year of regulatory clarification and broader enterprise adoption. . . . [P]ractitioners will need to continuously monitor this fast-moving aspect of the blockchain space” — Accounting Today189

While the innovations discussed in this paper—altcoins, privacy coins, stablecoins, crypto-tokens, exchanges, platforms and smart contracts, ICOs, STOs, and IEOs—cover some of the


  1. Sean Stein Smith et al., 5 Blockchain Trends to Watch in 2020, ACCOUNTING TODAY, [https://perma.cc/WE8D-MXYJ] (last visited Feb. 26, 2020).

major technical and financial innovations since Bitcoin, the coverage is not exhaustive. There are projects addressing interoperability to allow digital assets to be processed across blockchains;190 quantum-proofing cryptography to prevent future quantum computers from guessing private keys;191 new consensus algorithms besides those discussed above (proof-of-work; delegated proof-of-stake, and practical byzantine fault tolerance);192 and scalability projects to increase transactions per second.193 As of January 2020, over 4,900 cryptocurrencies exist, with a combined market capitalization of $180 billion.194 Thousands of enterprise applications have been built and tested, with hundreds now moving into production.195 No doubt, blockchain technologies are enabling an “Internet of Value.” However, legal practitioners are needed to help influence sound regulations and policies that protect the environment, investors, and consumers while still fostering innovation.

For the United States, the stakes cannot be higher. Other countries—particularly China—are ahead of the United States in


190. Stephen O’Neal, Blockchain Interpolarity, Explained, COINTELEGRAPH (Sept. 5, 2019), [https://perma.cc/ZD7A-GYM5].

191. Ambika Choudury, Quantum-Proof Cryptography & Its Role in Security, ANALYTICS INDIA MAGAZINE, [https://perma.cc/8452-YMLZ] (last visited Feb. 26, 2020).

192. Proof-of-Stake (PoS) is a consensus protocol created by Sunny King and Scott Nadal in a 2012 white paper. See SUNNY KING & SCOTT NADAL, PPCOIN: PEER-TO-PEER CRYPTO-CURRENCY WITH PROOF-OF-STAKE (2012), [https://perma.cc/CS66-MN7C]. Instead of “mining” for coins, the protocol selects a member to “forge” new currency as a reward for validating the transactions and creating the next block. Id. Essentially, the selected member node is awarded a transaction fee. Id. It is called a “Proof-of-Stake” because the members with the highest “stake” (i.e., those who have the largest account balances and hold the coins the longest periods of time) are giving priority in the selection algorithm. Id. Proof-of-Stake uses much less energy than Proof-of-Work and settles transactions faster than Proof-of-Work. Id. However, critics claim it is less secure than Proof-of-Work because people with small stakes have little to lose by voting for multiple blockchain histories, which leads to consensus never resolving. Id. Other consensus protocols include Proof-of-Authority (PoA), Proof-of-Capacity (PoC), and Proof-ofElapse-Time (PoET). See Different Blockchain Consensus Mechanisms, HACKERNOON (Nov. 10, 2018), [https://perma.cc/GS54-4YUT].

193. Connor Blenkinsop, Scalability on Blockchain: Is There a Solution?, COINTELEGRAPH (Sept. 27, 2019), [https://perma.cc/FA2N-DT7Y].

194. Horus Hughes,* 4 Things You Must Know Before Trading Bitcoin and Cryptocurrency,* COINTELEGRAPH (Dec. 16, 2019), [https://perma.cc/S4XQ-YRPT]; Aaron Hankin, Crypto Market Value Surges $30 Billion in 36 Hours; Bitcoin Cash Doubles in Value, MARKETWATCH (Apr. 3, 2019), [https://perma.cc/5Q52-38T7].

195. *Guide to the Rise of Cryptocurrency, Digital Currency and Bitcoin, *NE. UNIV. D’AMORE-MCKIM SCH. OF BUS., [https://perma.cc/P3PE-RSRJ] (last visited Feb. 26, 2020).


developing sovereign cryptocurrencies and obtaining blockchainrelated patents. China, for example, will likely launch a digital currency to commercial banks and payment networks like WeChat Pay and Alibaba’s Alipay in early 2020.196 Our research at the Blockchain Center of Excellence at the University of Arkansas found that China is ahead of the United States on granting blockchain related patents.197 China’s patent office, the National Intellectual Property Administration (CNIPA), has awarded 2,218 blockchain patents compared to 227 by the U.S. Patent and Trademark Office (USPTO).198 Legal practitioners need us to help narrow the gap. We hope the papers in this special issue of the Arkansas Law Review will inspire legal practitioners to better understand and influence public policy.


196. Yen Nee Lee, China Could Launch Its Own Digital Currency in the Next 2-3 Months, Predicts Investor, CNBC (Nov. 11, 2019), [https://perma.cc/7NPM-NGVF].

197. Mary Lacity et al., US and China Battle for Blockchain Dominance, COINTELEGRAPH (Nov. 29, 2019), [https://perma.cc/8W7K-GMQJ].

198. Id.



Table of Contents