1. Less Simple = Less Secure

    • The more features and complexity in a distributed application, the more potential vulnerabilities
    • Ask: What is our strategic goal? What functionality is necessary vs. just desirable?
  2. Jurisdiction issues

    • Consider cross-border transactions, different laws and regulatory schemes
    • Ensure clear and comprehensive choice of law, venue and jurisdiction provisions for resolving any disputes
  3. Vendor issues

    • Blockchain vendors will want to disclaim as much risk and liability as possible
    • Consider necessary service levels and performance required for business application in determining when to walk away
  4. Testing / Liability

    • Robust testing environment to validate and debug application before launch
    • Consider risk of improperly settled transactions, network failures, and other risks inherent to business application
    • In customer and vendor agreements, clearly allocate risks and liabilities under all potential dispute and/or failure scenarios
  5. Privacy / Customer Data

    • Understand benefits and need for comprehensive permission-based structure
    • Verify identification of participants and set access levels to ensure compliance with all applicable privacy and security regulations
  6. Intellectual Property

    • Ensure appropriate user permissions and access limitations to prevent harvesting of proprietary business data or trade secret information
    • Vendor and customer agreements should address ownership of existing IP, later-developed IP, and comprehensive restrictions on use / disclosure
  7. Enforceability / Dispute Resolution of Smart Contracts

    • Automated process, but what if something goes wrong?
    • Allocate liability & risks, and outline procedures for enforcement / dispute resolution
    • Have "in case of fire" plan – may need to unwind transactions or manually evaluate and create corrective entries.
    • Consider including real-time monitoring and auditing functionality
  8. Regulatory Compliance

    • Same rules, different game
    • Critical to understand technology, how it works, what processes it is supplanting, and what it is doing to coordinate and update compliance regimes
  9. Transaction Due Diligence

    • Ownership of data / property on Blockchain
    • Critical to understand how Blockchain technology works
    • Traditional approaches to due diligence may need to be altered

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.