Can blockchain technology send notaries on vacation… For good?
When trust in men is replaced by trust in math
Do you remember the days of the Internet without the browser? I remember when I used the Internet for the first time and while I already had a browser (Netscape 1.0 — yes, @pmarca is one of my modern heroes), a lot of information could be retrieved only through Gopher, chats happened only on IRC, modern web forums didn’t exist and I could only access fascinating, persistent discussions on Usenet newsgroups.
A particularly sadistic way of adding confusion to computer use was the X400 suite of ‘Data Communication Networks for Message Handling Systems’ (MHS) also known as email. Instead of having an email address like email@example.com, X400 had a group of values that had to be given for each text message sent. For example, C (Country name), ADMD (Administration Management Domain), PRMD (Private Management Domain), O (Organization name), OU (Organizational Unit Names), G (Given name), I (Initials), S (Surname) so an email address looked like this “G=Robin;S=Batman;O=Comic;P=Marvel;A=Compub;C=USA”. It made users weep.
My parents thought I was mainly using my computer for tricking my teachers by cutting-and-pasting into my school work stuff I found on that thing called the Internet. The truth is that (almost) no one could foresee what was coming next and just a few understood that a huge change was taking place — transforming forever the way we live.
Now, imagine launching a service in the mid nineties aiming to disrupt, let’s say, the taxi business, with almost no browser adoption, very few Internet users and no cell phones. Most people would have said that you were completely mad. True, the speed in adoption of radical technology is today faster than it was in the nineties. The Internet user base is expanding exponentially, access to the network is almost universal and mostly at high speeds, and cell phones are found everywhere. Most important, there’s been a deep cultural change: everyone is now used to discovering and adopting at the speed of light innovations that keep coming out at an astounding pace. We can confidently say that we are very much less conservative today than we were a few decades ago, and that we are now more eager to adopt a constant stream of novelties.
Today we are launching Stampery.co to send notaries on vacation forever. We have nothing against notaries as Über has nothing against conventional taxi drivers or Airbnb against hotels. It’s just that sometimes technology gives a response to real human needs in a way that is radically different to how it has been done for decades, or in our case centuries.
Notaries, simplifying, are any authority with a given power to guarantee and certify, documents, creations, transactions, contracts or identities and sometimes they are needed to store the certified information, or to allow only relevant information to be stored in other official databases.
Their service is centralized and therefore creates oligopoly and by definition scarcity. The cost of certifying though is high and inefficient.
Just in the USA there are 4.8m of notaries. They oversee commercial transactions and maintain registers of property. In civil-law countries, as per most of continental Europe, valuable assets (real estate, companies, shares, etc.) cannot change hands without a notary’s approval. They have the monopoly on the ability to make official and public a private agreement between companies or individuals.
This is a lucrative business: In 2010 the average self-employed French notary earned 190,812€ ($212,488). In Italy, in 2013, the figure was 210,400€ ($234,301). And still, while their theoretical set of duties is vast, in practice one of their main duties is to certify documents, an apparently easy task that extracts a vast amount of money from those using notaries’ services, while consuming a lot of their time too. In a world of fast-moving digital data it seems wasteful and dated to have to physically meet someone to certify a piece of information.
The same happens to author’s rights and intellectual property, even if there are great differences between common and civil laws. An author’s moral rights are often mixed with the author’s economic rights, or copyright and monopolists organizations claim exclusive right to grant, manage and collect the economic values linked to creations of the mind.
An individual right is again centralized, always causing inefficiency and bureaucracy not compatible with the digital age.
The high cost of certifying creation has led to a lack of its use. Most of the creations of mind and transactions of any kind between humans can’t be certified in an efficient way mainly due to its cost and bureaucratic procedures.
Generating “prior art” for intellectual creations or evidence for human (also not human, just machine to machine) transactions in the digital age is almost impossible in a centralized system based on trust.
In case of controversy, evidence has to be demonstrated. Certified evidences have already generated high cost. Uncertified require digital evidence, often digital forensics come in, making the cost of proving even more inefficient.
Centralization seems to go against the interest of the people, but has been, until recently a necessary way to guarantee trust for certifying existence, integrity and ownership of any set of data and the relative storage of its proof.
Now, after centuries, things have changed thanks to technology.
Invented in 2009, the bitcoin blockchain will change it forever.
The blockchain is bitcoin’s (the protocol) foundation, on top of which Bitcoin (the coin) is built. The fact that the coin and the protocol share the same name is somewhat confusing, and usually leads neophytes to think that bitcoin is just a new form of money, or maybe just a new payment instrument.
Nothing could be further from the truth.
The blockchain is much more: it is an unprecedented innovation in computer science that enables a network of distributed nodes to reach consensus without having to resort to any form of central authority.
The key word here is decentralized: as the blockchain is distributed among tens of thousands of computers around the world, the blockchain-based certificates can be checked and verified by anyone in the world, forever, without the need of the intervention of any third party or central authority. There is no longer any need of crosschecking notarized documents, often coming from different jurisdictions and legal systems. Blockchain data is transparent for anyone to access from anywhere at any time.
As Alex and Don Tapscott explained it:
It basically enables a global spreadsheet — an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value and importance to humankind: birth and death certificates, marriage licenses, deeds and titles of ownership, educational degrees, financial accounts, medical procedures, insurance claims, votes, transactions between smart objects, and anything else that can be expressed in code.
This incorruptible digital ledger is secured by the most powerful computer network in the world: each 10 minutes the nodes in the network reach consensus on the current state of the ledger by each proving that they had participated in the network by a system called “proof of work”. A “proof of work” is just solving a very difficult problem, and then proving that it has been solved — this problem is very difficult and solving it takes vast amounts of computer power (which is expensive), and the system rewards those who successfully solved the problem. This basically means that is completely anti-economic to try to cheat the system, while those who play by the rules are generously rewarded.
As Alex and Don Tapscott explained a bit earlier, while Bitcoin (the coin) uses the blockchain to store transactions’ information, you can arbitrarily store any kind of information on it, having the certainty that such information will not be tampered with in the future. In this way it is possible to establish proof of existence, proof of ownership and proof of integrity of any specific set of data: a picture, a video file, a word document, an email, a recorded conversation and so on…
The blockchain can also immediately generate prior art and/or certify the existence, ownership and integrity of any kind of data, in a way that is accurate, reliable, decentralized, cheap, and counterfeit-proof. In Spain, certifying a document costs on average 250€. Thanks to the blockchain, any kind of data can be certified for as low as 0,2€ — that’s a 99,9% cost cut compared to a legacy notary, and that is for a certificate that is as legally binding as the one from a ‘brick-and-mortar’ notary.
Cost efficiency allows finally preventive certification. As of now, many business and personal communications are not securely certified and/or timestamped simply because doing it is too expensive and time-consuming. Blockchain technology allows any form of communication (well: any kind of data) to be immediately certified for just a few cents.
If you are a creative person who shares his ideas with a client, how many times did you fear that your idea could have been stolen by the client and commissioned to a competitor? How many times did that happen? I know the answer by heart: Many times… But now is possible to easily generate a legally binding proof of ownership, and declare so in the document containing the information you want to certify… Protecting your work has never been so immediate, so effective and so cheap.
At Stampery.co, we see blockchain timestamping as a first layer on top of which innumerable services can be built. We are imagining a world in which no intermediary is needed to securely certify that product or property X was bought by Y on day Z. Or that song A was composed by B on day C… And we could keep going on for days enumerating examples.
We are also imagining a world in which identity can be established by digital means on a decentralized network. There are projects like Onename, which we are integrating at Stampery.co, that allow any individual to link their identity to a blockchain entry. That identity token can then be used to sign any document and BOOM: we don’t need anyone to verify the authenticity of a signature, and that enables automatic transactions to happen in a friction-less environment.
Depositions, affidavits or oaths can now be certified at a fraction of a dollar, automatically: the same is true for any form of creative work, such as songs, videos, articles or books. Copyright collective societies were born to collect and distribute the royalties generated by the work of artists. In most of the world they became hungry, slow and ineffective monopolies, which tend to charge a lot of fees to most of their associates, while disproportionately rewarding just a few of them. Thanks to the blockchain and Stampery.co, a decentralized and automatic way of collecting and distributing royalties will be possible.
At Stampery.co we want to enable easy access to blockchain based certification. We will work on many new applications based on this new paradigm of secure and decentralized storage of information, but we know for sure that others will develop most of the innovations with whom we’re ready to cooperate. Our core mission is to enable anyone in the world to certify their important data easily and costlessly, while enabling innovation among developers around the world.
The Stampery.co team
Thanks to: Jonathan Beattie and Carol Giscombe Scott for their help in writing this article.