It’s not often that state and local governments are at the forefront when it comes to deploying “bleeding edge” technologies, but Delaware is making waves by exploring use of blockchain technologies for business incorporation and its back-office operations, according to The Wall Street Journal.
Gov. Jack Markell unveiled the state’s plan, called the Delaware Blockchain Initiative, at Consensus 2016, a blockchain tech conference held earlier this month in New York City, reports online technology journal Technical.ly Delaware.
Perhaps best known for its role in fueling the Bitcoin cryptocurrency, the blockchain is an open-sourced ledger of all Bitcoin transactions that have happened — and it’s maintained across a network of computers.
While the phrases “Bitcoin” and “open-sourced” are buzzwords that get innovators excited, the use of blockchain technology isn’t without risks, particularly when it comes to security. That’s precisely the reason why the state will initially be limiting its exploration of blockchain to noncritical operations and environments.
“We’ll start with low-risk things and over time move into things that are more complicated,” said Rick Geisenberger, Delaware’s chief deputy secretary of state, in the WSJ article.
While the cool factor certainly carries weight in this initiative, the state of Delaware hopes to reduce costs, increase agility and streamline operations by leveraging blockchain technology, according to the WSJ.
The blockchain system will be faster and cheaper than the existing process, since it automates a number of processes, including share registry, capital-table management and shareholder communications, said Mark Smith, chief executive of Symbiont, the New York startup working with Delaware on its blockchain initiative. It could also improve compliance with various restrictions on share transfers.
Delaware has outlined a plan for how it sees the rollout of blockchain playing out in its state, according to the Delaware Office of the Governor.
- Ensuring that Delaware's regulatory environment is welcoming and enabling by observing the industry as it develops further, rather than immediately enacting laws and regulations regarding licensing of blockchain companies, while working with the industry and consumer groups to determine best practices.
- Creating an appropriate legal infrastructure for distributed ledger shares in cooperation with the Delaware State Bar Association's Corporation Law Council. Distributed ledger shares hold the promise of dramatic increases in efficiency and speed, particularly for multifaceted transactions like incorporation services.
- Naming an Ombudsperson, Andrea Tinianow, the State Director of Corporate and International Development, to welcome companies in the industry to Delaware
- Committing State government to the use of the technology, beginning with the Public Archives project.
So we can expect startups, particularly fintech startups, to leverage blockchain in increasingly more aspects of their business. But they aren’t alone. The financial services industry at large has been warming up to blockchain technology for some time now, as investors and Wall Street sense there’s underlying value in the technology and infrastructure that underpins Bitcoin, reports NASDAQ.
Though there’s much work and testing to be done, we are living in a digital world and Delaware is embracing its transition to becoming a more digital state.
“We're delighted that Delaware has this opportunity to help lead the way in promoting blockchain technology and its growing role in digital commerce,” said Gov. Markell.