The smallest state has the biggest blockchain ambitions

Crypto should be exciting, right? Hacking, fraud, overnight billionaires, international refugees.

Secure. But, far from the high drama of crypto-finance, governments around the world have been quietly putting blockchains to a more, well, boring use: record keeping.

While these experiments lack the drama of crypto-finance, they convert on a promise of blockchain technology: that it creates a permanent and transparent distributed record of activity. And they raise the possibility that blockchains could soon be coming, not just to your wallet, but to most other aspects of your life that the government takes an interest in, like birth, death, marriage, and your very identity.

Already, New York City, Chicago’s Cook County and South Burlington, Vermont, have all explored or deployed programs to put property records on blockchains. California moves to set car title records on chain. And if you can’t quite remember if you really got hitched in Reno last weekend, Washoe County, Nevada, will verify your marriage certificate online using a blockchain.

Much of the experimentation is overseas: National governments in Honduras, Ghana and Georgia have pursued blockchain-based systems for property registration, in addition to local projects in places like El Salvador.

However, the biggest plans to put the government on the chain in the United States may be the ones taking shape in the smallest state.

Rhode Island’s Department of Commerce is currently looking for vendors to help it integrate records from agencies across state governments into a single blockchain-based system. The hope is that it will make it drastically easier to register a business – a task that currently requires dealing with many different agencies running their own siled systems.

Unlike its more exotic crypto-finance cousins, this blockchain system was designed to be “boring and not risky,” says Commerce Secretary Elizabeth Tanner, who tells DFD that opening a restaurant in Rhode Island currently requires access to 11 state websites.

Tanner determined that the use of a distributed blockchain database was the best way to create a single system of records used by multiple agencies.

To keep things as boring as humanly possible, she enlisted both Rhode Island’s Department of Motor Vehicles and the state’s chartered accountants for a proof-of-concept pilot program that ended in June.

The accountants were able to obtain a digital ID card from the DMV, then use that digital credential to prove their identity to the Department of Business Regulation, which in turn issued them a digital copy of their CPA license.

One problem with blockchains is that they are designed to be accessed by multiple parties – sometimes millions, in the case of public chains – which means they are not a good place to store sensitive information in unencrypted form.

In Rhode Island’s model, most of the information is stored privately by the government and in users’ digital wallet apps, while the shared blockchain stores public keys — published by the issuing agency — that can be used to verify the authenticity of a user’s digital credentials.

Tanner said she became interested in blockchain about five years ago, when she served as director of the Department of Business Regulation. After dealing with the hassle of opening businesses as an attorney in private practice, she wanted to create a more user-friendly experience for entrepreneurs in the Ocean State.

Tanner said she quickly discovered that the systems used by other US states were just as clumsy as Rhode Island’s. She looked further afield and fell in love with the high-tech approach of the tiny Baltic nation of Estonia, which only started putting government records on a blockchain in 2012.

Tanner credited then-Gov. Gina Raimondo, now the US Secretary of Commerce, gave the green light to the project early on.

Of course, there is a reputational issue. Government record-keeping requires public trust, and the collapse of crypto-financial markets has created a serious political liability for projects like Tanner’s by destroying the underlying technology in the public imagination.

“It’s becoming a big problem for me,” Tanner said. “I rarely use the word blockchain anymore.” Tanner said she is especially careful to describe the project to lawmakers, who oversee the project’s funding.

During our conversation, Tanner dropped the less polarizing term “DLT,” short for “digital ledger technology.” This broader concept refers to a set of distributed record-keeping methods that include blockchains as well as other techniques—including some used by central banks’ digital currency experiments—that do not require sequential blocks of data.

The project puts Rhode Island in league with a constellation of other technophile governments. Tanner said she is following initiatives as far away as Dubai, Singapore and Lichtenstein. In October, she traveled to Estonia to learn more about systems there, and she’s staying in touch with the governments of Aruba, Ontario and British Columbia about their own blockchain trials.

For now, the state is fielding an avalanche of questions from potential service providers trying to wrap their heads around the project: Tanner said she hopes to find a provider by early May. Meanwhile, any crypto firm in need of emergency audits knows where to find a group of accountants who have used a blockchain.

Digital artist Mason Rothschild – creator of the “MetaBirkin” NFT bag — yesterday appeared the loser in a trademark lawsuit initiated by the luxury fashion brand Hermès – the real makers of Birkin bags. The matter was followed closely a litmus test on an issue very important to the metaverse as it evolves: how protections under existing US intellectual property, trademark and copyright laws will extend into the virtual world.

Brand owners can breathe a sigh of relief for now: A Manhattan jury ruled that Rothschild’s “MetaBirkins” infringed on Hermès’ trademark rights and ordered him to pay the company $133,000 in damages for trademark infringement, dilution and “cybersquatting.” (Rothschild has indicated he will appeal.)

The ruling shows that “you can extend physical IP protection” that applies to physical goods “to the same kinds of objects, albeit pixelated, in the virtual world,” said Preetha Chakrabart, a IP lawyer at the corporate firm of Crowell & Moring.

Still, updating IP protection to keep pace with technology remains an active task, Chakrabarti said, pointing to the United States Copyright and the United States Patent and Trademark Offices. joint study on NFT tokens as such an effort at the federal level.

And questions about metaverse trading are not completely settled yet. There is a pending Supreme Court case between the Andy Warhol Foundation for the Visual Arts and the American photographer Lynn Goldsmith that will determine what qualifies as “transformative fair use” under US copyright law. That matter handles about Andy Warhol’s silkscreen reproductions of the musician Prince, which were based on a photograph taken by Goldsmith, infringed Goldsmith’s copyright claim to the original image. The transferable concept here is that if Warhol’s work counts as transformative fair use, so can some NFTs.

Indeed, Rothschild’s legal team had, tried to draw a comparison between MetaBirkins and Andy Warhol’s universally recognizable The “Business Art” projectalthough Hermès pushed back and District Court Judge Rakoff eventually sentenced against allows the testimony of a Warhol biographer who could make that analogy. —Mohar Chatterjee

Russian disinformation is not gone. It’s just moving. With the Kremlin largely stripped of the megaphones that are Twitter, YouTube and Facebook — which have become more awake to Russian propaganda — Telegram has become the new information battleground for the Kremlin, researcher Nika Aleksejeva told Politico’s Mark Scott in today’s Digital Bridge newsletter.

Just last week, threat intelligence firm Logically published a report on two new influence operations “aimed at spreading pro-Russian sentiment,” led by Kremlin-linked propagandists Luc Michel and Ramzu Yunus. Both influencer operations have a strong presence on Telegram, according to the report.

Between EU sanctions against Russian state media, attempts by tech companies to crack down on misinformation on their platforms and ordinary Ukrainians posting real-time footage of the war, the Kremlin’s military aggression has not won hearts. But by moving to Telegram, the Kremlin can target “specific pro-Russian online voices versus previous efforts to bombard anyone who would listen to Russian disinformation,” Scott wrote. — Mohar Chatterjee