March 18, 2019
Establishing T&C Agreements on the Blockchain – Visions for Bitcoin from Dr Craig S Wright
A clickwrap smart contract formed on the blockchain allows for the reliable exchange and immutable record of terms and conditions (T&C) in an increasingly connected digital world.
The Hassle of Terms and Conditions
The agreement to terms and conditions of using a product or service is necessary for a fair and regulated use of the good. For ease of compliance and assurance, a clickwrap contract often comes into play.
A clickwrap contract is analogous to a shrink wrap contract used in the sale of physical software and media: when you have bought a DVD and open the cover, it means you have agreed to the terms and conditions. Similarly, in agreeing to the T&C for accessing digital software, we engage in what is called a clickwrap contract.
But in the digital world, the same process can often suffer from an unreliable connection used in communicating the agreement between the client and the seller. And even if the agreement of the T&C does go through in its entirety, what remains is a level of deniability on either side – claiming that the agreed T&C would differ from a record or that the agreement had not taken place before accessing a product or service.
Ensuring Effective and Transparent Agreements
One cornerstone which contributes to an effective agreement is making sure we can hold parties accountable; in other words, we need to have the assurance that no one can deny agreed terms and conditions. Such assurance is referred to as non-repudiation, which we can achieve using Bitcoin (BSV) and nChain intellectual property:
We offer a solution that allows merchants and consumers to engage in trade such that the access to a product or service is necessarily contingent upon the agreement to the terms and conditions—and vice versa.
A custom application, as revealed by nChain’s Chief Scientist in his Medium post of Bitcoin (SV) use cases entitled “Clickwrap smart contracts,” takes advantage of nChain’s patent innovation for Determining a Common Secret for the Secure Exchange of Information and Hierarchical, Deterministic Cryptographic Keys to enable the secure, private, and reliable exchange of contract information granting access to a product or service.
Fulfilling Commercial and Regulatory Needs
The effectiveness of T&C agreements can thereby be substantially improved; the smart-contract capabilities as offered by public blockchains such as Bitcoin SV and through nChain intellectual property leverage the method of the clickwrap contract to ensure terms and conditions are provably agreed upon by both the seller and the client when accessing a product or service.
The solution consists of several key aspects:
- Conditionality: The key aspect of the solution lies in establishing a standard Bitcoin hash puzzle which requires the client to form a solution to the puzzle by agreeing to the T&C—which is then used to grant access to a product or service; the actual T&C are thereby used to form the hash, so that the provision of the hash implies an agreement to the T&C. The unique hash alone provides the necessary condition for a smart contract to give access to the product or service.
The mechanism can be thought of as an encrypted media file or software program, of which the decryption lies in agreeing to the T&C.
- Transparency and immutability: A record with a timestamp of the agreement is stored on the blockchain, allowing for irrefutable proof of the transaction capturing the agreement, while also allowing for traceability of agreed changes.
In cases necessary, a Ricardian smart contract would ensure a digital signature holds up to the requirements for a written contract.
Because the agreement is stored on the blockchain, it is readily available for access by either party at any point in time; while a loss in the connection disrupting the acceptance of the T&C would normally require one party to notify the other party of the failure, the blockchain would present a reliable platform for communicating whether an agreement took place or not.
- Reliability and efficiency: Using nChain’s patent innovations for the Secure Split Keytechnique and Deterministic Key Generation, we can ensure the secure and accurate exchange of information (here the T&C) and reliably authenticate both parties engaging in the exchange in a private manner.
The result is a transaction capturing the agreement of T&C in an indisputable, fast, and transparent way—offering substantial savings in the maintenance and assurance of such agreements.
In combination with nChain’s solutions for fully compliant smart contracts, we can establish the automated trigger for an email notifying the client that the exchange took place—fulfilling the strictest of requirements in web-based transactions.
Clickwrap smart contracts are directly integrable with existing T&C by storing the agreement in the data (OP_Return) field of a Bitcoin (BSV) transaction; we can even allow for the use of tokenised fiat for value of consideration and incorporate the payment transaction within the same exchange, enabling the most friendly and efficient of user experiences.
At the same time, we start picturing some of the key developments which form part of nChain’s Metanet project, where device, software, and existing web information can be organised and commercialised on the Bitcoin SV blockchain. The data of both your clients and your business is thereby seamlessly protected and kept private at all times.
Gain more insights into establishing T&C agreements on the blockchain to help streamline your client operations by reading Craig Wright’s entry here.
Or get directly in touch with nChain Professional Services here.