Blockchain research & industry insights

Take an in-depth look at blockchain technology's latest developments, projects and products.

Leveraging future income with a blockchain

Income share agreements (ISAs) are on the rise for college students seeking tuition assistance. Instead of giving students a loan, universities make a deal with them. They finance the student's tuition in exchange for some percentage of the student’s future earnings for some number of years, say 10% for 5 years (with some cap). By assigning a percentage share of future income, ISAs can function like non-voting shares in a company where the individual student is treated like a company.

These agreements reduce the burden of debt on students and removes the pressure to find just any job in order to satisfy a loan bearing down on them. This financing method also puts more responsibility on the school to help students succeed. The colleges now have “skin in the game”. (Critics, however, argue it’s a small step away from indentured servitude: students indenture themselves to patrons in the investor class.)

Like any debt instrument, the creditor (the school or “investor”) may want to cash-in their share ownership today instead of waiting years to collect payment. Normally the process to transfer ownership would be cumbersome and costly, but with a blockchain it can be done seamlessly.

IncomeShare has created an app to create income share agreements on Ethereum with just a few clicks. Leveraging OpenLaw, a legal agreements platform with associated smart contracts, the worded contract produced is legally binding, and the associated smart contracts give the parties additional functionality on the blockchain. Specifically, the application creates an ERC20 token that represents the shares in the loan recipient. These tokens can now be transferred freely by the school to other parties, effectively selling their stake in the ISA. They can sell small fractions to many different parties. For the student this process is transparent and they don’t have any additional overhead when repaying their obligation. Instead of paying the various holders of the ISA shares, the student simply pays that smart contract that is managing the agreement. The smart contract will divvy up the payment proportionally to the various stakeholders.

This application demonstrates one powerful feature of blockchains and cryptocurrencies: programmable money. The way money flows amongst many parties is programmable and by taking one action—e.g. by making a single payment, a series of actions are automatically set off, paying many parties that are entitled to it.

To learn more about Income Share, see here.

The Agreements Network: Turning Legal Services into Legal Products

Will automated transactions increase efficiency and allow the legal industry to finally keep up with market demand? Can transactional lawyers turn their services into products? The Agreement’s Network has created a marketplace platform that invites lawyers to create and market legal products in an attempt to disrupt the $600 billion transactional law industry.

Is Data on Blockchains GDPR Compliant?

The European Union’s General Data Protection Regulation (GDPR) was implemented on May 25, 2018. The regulation establishes one set of data protection rules for all companies operating in the EU, attempting to give people more control over their personal data.

GDPR was first proposed in 2012 and adopted in April of 2016, occurring at a time when the development of blockchains all over the world was gaining initial traction - creating both potential legal barriers for the implementation of blockchains and opportunities for blockchain projects to help companies navigate through the GDPR regulations.

Improving ADR with Blockchains

Alternative dispute resolution (ADR) proceedings are a popular means of resolving conflicts between parties outside of the traditional justice system. Traditional litigation, which is time-consuming and complex, very often is not a practical solution for disputes. ADR proceedings such as mediation and arbitration, offer less procedural overhead, may provide faster resolution to the dispute, and have a higher degree of confidentiality than litigation. They also allow the parties to choose arbitrators that are specialized and better suited to deal with the issues at hand. Moreover, the decision-making process encourages open participation (under the guidance of the arbitrators) by all the parties to achieve a more equitable result. Thus, both arbitration and mediation are widely employed to resolve disputes and negotiate matters.

Changing the Legal Paradigm: Should Attorneys Learn to Code?

 

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