February 26, 2019
Self-Enforcing Contracts and Accounting on BSV – Visions for Bitcoin from Dr Craig S Wright
A solution that takes the method of the Ricardian contract and makes it viable in commercial and regulatory terms.
In a previous post, we looked at how nChain’s patent innovations and Bitcoin (BSV) can leverage payments and bookkeeping for your business in a safe, reliable, and cost-efficient manner.
Expanding on the same idea, we allow businesses to build on such EDI services to enable automated or self-enforcing auditing and payments of financial shares—where, for example, government can collect taxes in a transparent, accurate, and efficient manner and where businesses can streamline proceedings and more effectively ensure full legal compliance.
The solution, revealed by nChain’s Chief Scientist in his Medium post of Bitcoin (SV) use cases entitled “Forex accounting in script,” takes the method of the Ricardian contract, and makes it viable in commercial and regulatory terms.
Several patent innovations by nChain allow for different scenarios and use cases; if we look at one such innovation, the patent for Registry and Automated Management Method for Blockchain-Enforced Smart Contracts, we can identify several benefits in a range of different use cases.
Efficiency and convenience at a fully compliant level. The concept of electronically enforceable contracts as offered by previous proposals in the form of smart contracts has so far suffered from either:
- a lack of feasibility and thereby comparative economic advantage; or
- not being able to meet the same level of requirements as would otherwise be the case when using paper and ink.
The solution offered by nChain bridges the gap between legally compliant paper-and-ink contracts and electronic ones—to the point where it is more beneficial to solely establish and maintain contracts on the blockchain—by offering several advantages:
- Ease of compliance: The requirements under law can be kept in check more easily—offering economic advantages to both businesses and institutions; the secure, reliable, and efficient nature of BSV transactions ensure the fast and reliable exchange of goods in commerce and trade. And with nChain IP, the exchange can trigger the automatic payment allocation for taxation—in the currency required by law. It can even mean the inclusion of an electronic, fully compliant bill in the same transaction, leaving an immutable record for both the execution and transparent compliance of, say, paying consumption taxes such as VAT or GST.
- The rights to privacy are strengthened in the process by using nChain’s Deterministic Key Generation for reliably signing legally binding contracts, whereby identities are linked and authenticated without exposing a business to unauthorised access. The result is a fully compliant contract that can be enforced in the acquisition and maintenance of deeds and land titles, for example—at a fraction of the cost and hassle of paper signatures.
- The services are integrable with current standards and practices, including different languages and facilities such as XBRL, XML, JSON, etc.; in other words, the open nature of our solution allows financial innovation to take place. For example, project charts can be computed and displayed using the existing smart-contract capability of Bitcoin (BSV). Entire business reports can be reliably filed, allowing for customisation in time and the currency of one’s choice. Conditions of a contract can be personalised and trigger the allocation of rights and assets to the respective parties. In our example, we account for the public registry of an asset, the creation and registry of an asset with hidden ownership, a lease contract, a rolling contract, and contract conditionality.
The convenient, regulatory-friendly, and secure solution goes hand in hand with building a key part of nChain’s Metanet project, where device and web information can be organised and commercialised on the Bitcoin SV blockchain; an integrated BSV wallet allows for direct and efficient monetisation, seamlessly protecting and streamlining your business’ financial operations (also see previous posts for more information here).
Gain more insights into building the service for automated contracts and accounting on BSV and make it your business by reading Craig Wright’s entry here.
Or get in touch with nChain Professional Services here.