Legislators and business leaders in Northeast Ohio are transforming blockchain from a dizzying conversation topic to a tool that has the potential to dramatically change how we store information and record transactions. Recent legislation and investment efforts are creating a landscape in which we can research and develop blockchain technology, which could alter how we conduct business across a wide variety of industries.
What is Blockchain?
Blockchain is a software program used to record information about business transactions and track assets. It was developed as a secure and reliable system for conducting financial transactions, best known for supporting cryptocurrencies such as Bitcoin. The unique and powerful features of blockchain have advocates touting broad applications across many industries.
Blockchain gets its name from the way it stores transaction data. Data is stored in a series of “blocks” that are interconnected so that each new block is securely linked to the immediately preceding block. Each block in the chain is replicated across a peer to peer network of computers. The constantly growing and decentralized nature of blockchain results in records that cannot be hacked. The power of blockchain lies in its reliability which reduces transaction risks and the costs of mitigating those risks. Blockchain has enormous potential for a wide variety of uses, such as real estate transactions, supply-chain management, medical records storage, and even voting processes.
Ohio’s Blockchain Legislation
Last week, Ohio legislators passed S.B. 220 to amend parts of existing Ohio law to expressly recognize contracts secured through blockchain technology. The concept was previously introduced by State Senator Matt Dolan in a standalone bill earlier this year. The bill was backed by Bernie Moreno, luxury car dealer and influential civic leader, who has been a vocal advocate for making Northeast Ohio a leader in researching and developing blockchain technology.
The new language amended the Uniform Electronic Transactions Act, which was enacted in 1999, to ensure that electronic transactions would have the same force and effect as transactions completed on paper. The Act now provides certainty that business transactions utilizing blockchain technology to form contracts will be recognized as legally binding in Ohio.
Arizona, Colorado, Delaware, Illinois, and Tennessee have passed similar legislation already and California, Florida, and New York are in the process of considering similar recognition of blockchain-based transactions.