All new technologies end up in court sooner or later, and cryptocurrencies are no exception. Today, judges around the world are seeing cases involving everything from Bitcoin theft to cryptocurrency contract disputes to who gets the NFTs in a divorce. But as lawyers become more familiar with cryptocurrencies and blockchain, they face a new problem: how to describe them in court filings?
While the challenge of citing blockchain data may seem relevant only to legal nerds, it has real-world implications. Citations-which can point to prior cases, journal articles, or other sources-are the building blocks of legal precedent, and as more NFT disputes land in court, judges and lawyers will need a reliable way to find them.
In the handful of NFT cases that have landed in court, the citations do not point to a blockchain-which would provide a definitive account of transactions involving NFT-but instead refer to a website or simply a written description. This includes a high-profile case this summer in which the Department of Justice charged a senior executive of NFT marketplace OpenSea with insider trading.
Blockchain and NFT-related cases are not the first in which lawyers have struggled with how to cite the new technology. In the 1990s, important sources of information and evidence began to appear on what was called the World Wide Web. In response, popular citation guides like the Bluebook-typically edited by law students-created rules for citing online sources similar to those that have long existed for books, journals, and other parts of the law.
Now, as blockchains and NFTs become more prevalent, the first standard citation for them has arrived thanks to some crypto-curious law students.
Citing token standards and smart contract IDs
Alexandra Champagne is a law student in her final year at McGill University in Montreal. She is also a citation editor for the McGill Law Journal, which publishes the Canadian Guide to Uniform Legal Citations (also known as the McGill Guide), the most widely used legal citation guide in Canada, similar to the Bluebook used in the United States.
In contemplating changes to the next edition of the guide, Champagne realized that the legal world has yet to take into account cryptography, a field she and other members of the magazine have dabbled in personally, including an editor who had purchased NFT. While the Bluebook and other guidelines include rules for citing online sources, simply pointing to a website may be insufficient in the case of NFT.
As Champagne told Fortune, blockchains and smart contracts (which serve to create and transfer NFTs) are new and distinct technology from the web. And because blockchains create a permanent, public, tamper-proof record of the technologies, it made sense to incorporate them into a legal subpoena system. To that end, she and her colleagues developed citation rules that include references to specific elements of the blockchain, such as token standards-Bitcoin or Ethereum, for example-and strings of characters, known as smart contract IDs, that point to the NFT on the blockchain.
the guide offers examples of quotes from famous NFTs, such as the one that artist Beeple sold for $69 million and one from the celebrity-popular Bored Ape set.
The new citation and blocking rules will go into effect when Thomson Reuters publishes the 10th edition of the McGill Guide* next year.
CHECK OUT – SOLANA NFT BEST PROJECTS AND COLLECTIONS
Blockchain and permalinks
Jennifer Allison, a librarian at Harvard Law School, says that in the course of researching NFT citations she discovered a law journal article discussing the topic.
The article included an image of an NFT, describing it as a “tokenized representation of a mural,” but with a citation that simply pointed to an OpenSea website. He says that, for now, lawyers and judges may be content to describe NFTs as they would any other work of art, citing its title and where it was for sale, but over time this is likely to prove inadequate.
“A painting does not have the same fingerprint as an NFT, and McGill’s proposed citation model seems to do a better job of informing the user of exactly what is citing, and how the reader can locate it or get more information about it,” Allison said by email.
Allison also raised the issue of “link rot,” a term that describes the phenomenon of URLs breaking or becoming unusable.
In 2013, link rot became a major issue for the nation’s highest court, prompting the New York Times to publish an article titled “In Supreme Court Opinions, Web Links Lead Nowhere” that revealed that half of the websites cited in the court’s decision no longer worked.
In response:
The Bluebook and other citation guides called for references to Web pages to include so-called permalinks, a duplicate URL maintained by Harvard or other university libraries.
The idea is that even if the original link no longer works, the permalink always will. Today, the system has become the standard in courts and academic publishing houses.
However, in the case of smart contracts and NFTs, it is unclear whether permanent links will be necessary since, by their nature, blockchains stand ready to be permanent and immutable.
Meanwhile, if future citation publishers require a secondary source that locates NFTs, one option may be to incorporate decentralized file storage services such as Arweave or Filecoin, which are linked to various blockchains.
It will likely be years before all of this becomes a reality, but for now, it seems inevitable that blockchains will become a source of authority for the legal system the way the web did two decades ago.
“We don’t know what kind of unique forms of technology will emerge from blockchain that may not even be tangentially tied to a particular URL,” explains McGill’s Champagne.
“Having a way to cite blockchain technology that directly references the smart contract, token ID, etc., will hopefully provide authors with a sustainable approach to communicating the information to their readers.”
The quotation appears with the permission of Thomson Reuters Canada Limited from Canadian Guide to Uniform Legal Citation, 10th Edition/Manuel Canadien de la référence juridique 10E édition; forthcoming 2023.
