In order for commerce to be effective, parties to a transaction have to trust that their signatures carry legal validity. When transactions increasingly went from paper to electronic form, various laws confirmed the legal validity of electronic records and signatures to promote efficient commerce. However, with blockchain technology, there may be some doubt that signatures on a blockchain would qualify as a valid legal signature.
In Arizona, at least, there is nothing to worry about on that front. A law passed on March 29 makes clear that blockchain-secured signatures and records have the same legal validity as other electronic signatures and records. The bill text is available here. Of note is how Arizona defines “blockchain technology” and “smart contract.” Arizona is among the first of the states to define these terms in a statute, so to sate anyone’s curiosity, we repost the definitions here:
“BLOCKCHAIN TECHNOLOGY” MEANS DISTRIBUTED LEDGER TECHNOLOGY THAT USES A DISTRIBUTED, DECENTRALIZED, SHARED AND REPLICATED LEDGER, WHICH MAY BE PUBLIC OR PRIVATE, PERMISSIONED OR PERMISSIONLESS, OR DRIVEN BY TOKENIZED CRYPTO ECONOMICS OR TOKENLESS. THE DATA ON THE LEDGER IS PROTECTED WITH CRYPTOGRAPHY, IS IMMUTABLE AND AUDITABLE AND PROVIDES AN UNCENSORED TRUTH.
“SMART CONTRACT” MEANS AN EVENT-DRIVEN PROGRAM, WITH STATE, THAT RUNS ON A DISTRIBUTED, DECENTRALIZED, SHARED AND REPLICATED LEDGER AND THAT CAN TAKE CUSTODY OVER AND INSTRUCT TRANSFER OF ASSETS ON THAT LEDGER.