Notaries: Powerful Potential for Blockchain (Bitcoin)

By Timothy Reiniger

The rise of the digital network-based information economy, machine-mediated digital identities and the internet of things have been accompanied by difficulty in proving ownership and control of electronic records and devices both from origin and over time. Blockchain technology, which enables distributed public ledgers, has emerged as a solution for registering objects such as property records, devices and transferable instruments. Excitement over the potential of blockchain to meet the need for trustworthy electronic records recently has been captured by articles in the Economist, as well as others.

The network-based economy requires trust in the capability to identify and authenticate individuals who seek to obtain access to networks, share information and sign documents.

Identity assurance is the new credit, and digital identity a medium for communicating value (see Mason and Reiniger article published in the ABA Information Law Journal). Therefore, proving the authentication of an act as that of a specific person is a main evidentiary concern.

While blockchain technology provides unique identifiers for records and devices, it is not designed to enable identity assurance. Machine-mediated digital identities pose three ongoing evidentiary challenges that are not solved by blockchain technology:

  1. A digital identity credential can be used to access a system, send an e-mail or sign a document without any action or knowledge of the attributed individual.
  2. There is a lack of direct evidence in proving who actually clicked the button or caused the usage of a particular digital identity credential.
  3. The relying party/recipient cannot determine whether the sending party actually authorized the use of the digital identity.

Therefore, prevailing methods of providing identity assurance are still needed to render blockchain legally reliable – methods that include third party vouchers, such as state commissioned notaries. Unfortunately, some companies using blockchain technology are confusing the public by co-opting the terms “notary” and “notarize” to market their services. Even the Economist article cited above reflects this confusion: “Documents can be notarized by embedding information about them into a public blockchain – and you will no longer need a notary to vouch for them.” To anyone who understands notarial law and practice, this statement makes absolutely no sense.

Fortunately, notaries using e-notarization platforms, such as the SIGNiX eNotaryDoX and online signer authentication services, can help blockchain providers overcome the identity assurance challenge involved in identifying users of the systems.

Notaries present two powerful advantages to the deployment of blockchain technology.

First, digital identities and signatures issued by and used with third party assurance (i.e. digital identity credential providers that comply with the rules and procedures of accredited identity trust frameworks) are a current best practice for retaining both the user experience and subsequent evidentiary proof that links a particular person to a record or device.  The SIGNiX SaaS delivery model for digital signatures and identities, which is based on central management of each consumer’s private keys, meets the minimum criteria for third party issuance, validation and assurance of secure on-demand remote identity verification and authentication. And, in Virginia and Montana, the requirement of “appears in person” or “appears before” is legally met for the context of signing a document through the use of third party assurance by means of an online notarization using live two-way audio/video conferencing.

Second, the notary’s electronic journal of notarial acts performed provides an invaluable state-sanctioned audit trail to prove a signer’s identity and intent as well as a document’s authenticity in the event of subsequent legal dispute. The journal also denotes each usage of the notary’s official electronic seal that is affixed in a manner that renders the electronic document tamper-evident. Deploying blockchain technology in connection with the notary’s seal and trustmarks in general would supplement proof of document integrity by enabling proof of document originality – a powerful and practical method for achieving trustworthy electronic records.

With the SIGNiX SaaS delivery model for identifying signers and establishing an audit trail that connects an individual with a specific digital identity, notaries are well positioned to work with consumers and the business community in leveraging the full potential that blockchain technology has to offer.