Blockchain Working Group Dives Deep on Report

Among actions at its second meeting, the group discussed its definition of blockchain, and worked on the report on the technology that it will submit to the Legislature by July 1.

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The state Blockchain Working Group is moving toward creation of a report on the electronic ledger technology that it will submit to the state Legislature by July 1, 2020.

Among their actions in a meeting Thursday, members fine-tuned a definition of blockchain, approved a draft table of contents for the report, assigned themselves to write sections of it and created a subcommittee to consider blockchain’s financial implications. The group, created by the California Government Operations Agency, postponed discussion of a decision-making process to its next meeting, likely in late January or early February. But members contacted by Techwire said the five-hour gathering offered significant clarity on how they should proceed and work most effectively with the Legislature. Among the takeaways:

• At the meeting, its second, the group refined a definition of blockchain technology provided by members Brian Behlendorf, executive director of Hyperledger, and David Tennenhouse, chief research officer for VMware, as being used “to build decentralized systems that increase the verifiability of data shared amongst a group of participants, which brings increased trust to the overall system.” The definition, the men added, includes “specialized datastores, sometimes called ‘distributed ledgers,’ that provide a verifiable ordering of transactions on the datastore”; and “’smart contracts,’ which allow participants to automate pre-agreed business processes, which are implemented by the system as a whole through transactions on the datastore.”

The biggest change suggested by members, Behlendorf told Techwire via email, was “to express ‘increased trust and decentralization’ as an objective rather than as a guaranteed result.”

“I've used ‘distributed ledger + smart contract’ as my personal definition for ‘blockchain technology’ for a while now, but it was nice to have David’s rigor in refining it and then ultimately, everyone’s feedback from the public meeting,” Behlendorf said.

The group’s chair is Camille Crittenden, executive director of the Center for Information Technology Research in the Interest of Society (CITRIS) and the Banatao Institute. She pointed out to Techwire that other definitions of blockchain will continue to exist.

“I think we can have a working definition for our working group, and that would be useful for the Legislature to have in mind as they’re thinking about legislation. But I think that defining blockchain is also going to differ based on the audience,” Crittenden said.

• Assembly Majority Leader Ian Calderon, D-Whittier, author of Assembly Bill 2658, which formalized the working group, and state Sen. Bob Hertzberg, D-Van Nuys, a co-author of last year’s California Consumer Privacy Act, are group members. Crittenden and member Michele Neitz, professor of law at Golden Gate University School of Law, said the legislators helped members think about how, despite having a July 1 deadline, their work might still have impact on next year’s legislative session.

“That’s what was so helpful to hear from the legislators about if we could reach consensus on particular urgent issues, we could prioritize those issues in smaller bills instead of sort of an overarching, giant package of legislation that might take much longer to put together and pass,” Neitz, the group’s legal representative, told Techwire.

• Members also discussed so-called “low-hanging fruit” for the public sector, Neitz said — areas where blockchain might be of use and meet minimal resistance from special interest groups. Possibilities included using adding birth, death or marriage records to the blockchain — though Neitz noted that adding even these could be disruptive. Members also mentioned adding property title or title insurance records to the blockchain, which Neitz said would likely be “a much more complicated step.”

• In what Neitz said on Twitter that she believes to be a first for a state, the group considered blockchain’s ethical issues. Blockchain may be a decentralized technology, Neitz told Techwire, but humans nevertheless influence decisions being made “on-chain and off-chain,” and on permission and permission-less blockchains.

“I’m not someone who wants to slow down innovation," she said. "I just think we have to consider these issues at this early stage. And I think that you can consider this without slowing down the innovation.”  

Theo Douglas is Assistant Managing Editor of Techwire.