Blockchain impact on the legal industry is sure to be long-lived
While Bitcoin may disappear in a few years (doubtful, but possible) its underlining technology is by far the most important development going forward. Furthermore, I have little doubt that blockchain technology will revolutionize the legal industry in the coming years and that it will be a significant disrupter to the legal profession and the overall market on many fronts.
What is blockchain?
Blockchain is a public ledger. It can be applied to almost anything that you would normally save to a database or spreadsheet. Take Bitcoin, for example. The blockchain shows the exchange of all the money that has ever changed hands in Bitcoin transactions. It does not list who owns the coins per se, just that they exist or that they changed hands. It is controlled by no single person, but by all parties connected to the exchange.
This public, but encrypted “spreadsheet in the sky” is, in theory, more secure and open than our current system of money exchange. The network maintains a collective history of all of the transactions that have ever occurred on the network.
You can view all of the Bitcoins changing hands every moment of the day at Blockchain.info. And as you see the transactions scroll up, you soon identify several important legal implications.
For one, none of this money has been passed through a bank or other financial institution, nor has it been screened by any government agency. That is, if you have a major transaction of $10,000 or more coming or going from the US — one that is normally required to be reported — it is not being reported via Bitcoin today. As you might surmise, many positives with this technology exist, but significant challenges, mostly concerning government regulators and current US laws, are also present.
While Bitcoin created the first blockchain, many other such chains have been created since. (For example, there are other cryptocurrencies that use the technology.) However, where this becomes most interesting is how related businesses could use a ledger-based blockchain platform.
Fundamentally, blockchain is a program from which to build a system of accounting or process. One network called Ethereum, which has been described as a “decentralized virtual machine that can execute peer-to-peer contracts” is leading the charge with smart contracts and the law.
So how will blockchain revolutionize the legal industry?
Creation of legal contracts
The blockchain could alter the landscape of contract attorneys. Part of what makes the blockchain so special is that not only does it keep records which are immutable, it also creates a process around that.
For example, I could create a contract which stipulates that when my patent was approved by the Patent and Trademark Office (PTO), my four partners would receive a 10 percent share in my company. How would that work? The contract on the blockchain would check to see if the patent was approved, then trigger a process releasing the shares to the partners.
All of this would be automated and fall outside of human legal action. Indeed, you could go one step further and tie in a payment system so that when that patent was granted, bonus funds could be dispersed automatically into the accounts of said partners.
Intellectual property rights management
If blockchain is ripe for anything, it is IP. This technology creates a publicly accessible, indisputable ledger of each filing which could be held not solely by jurisdiction but on a global scale benefiting everyone.
This information would offer clean and clear rights of use for all parties. You could even submit your trademark through the system. Leveraging an algorithm identifying any likeness to the trademark, the system could then grant or dismiss it. All of which would become part of the public ledger for anyone to review.
Land registry and deed management
Some Latin American countries are beginning to use blockchain as a means to keep track of who owns which land deeds.
Wealth is created through ownership, and one of the most challenging aspects of developing countries is determining who owns a piece of land. Disputes often occur because of corrupt governments or individuals taking advantage of the under-educated.
Having a public blockchain ledger would allow for everyone to be aware of who owns which parcel of land; and it would make the exchange of those plots much easier and more equitable.
If a family were to buy a plot of land that could be registered on the legal blockchain, it would be much more verifiable than even perhaps government records. All parties would be able to authenticate this as compared to one entity (the government) holding onto all the records. This process would even create a better base for the government to fairly tax individuals and businesses.
Establishing public records
In some African countries they are looking at using blockchain technology to keep census information. Voter records could also be added to this process as a means to have a central repository of eligible citizens. In this area, which is currently under development, blockchain seems primed for tremendous growth.
Estate planning and personal finance
The banking industry also is jumping into this arena. The theory is that our stock exchanges will become blockchain-enabled. The idea is simply that every stock bought or sold would be on the ledger. You could trace back your own ownership of that equity and even tie that to your estate planning documents.
Extrapolating this out, those documents also could be housed on a blockchain with respective triggers for when you eventually die. Ultimately that information is then released to your beneficiaries based on that event (Date of Death) recording by the Social Security Administration (SSA).
Behind-the-scenes or tangible technology?
Personally, I have little doubt that blockchain technology will revolutionize the legal industry in the coming years. The question is if it will be more like HTML (a behind-the-scenes technology) or if it will be a more obvious, almost tangible technology that we will all reference by name.
I believe this technology will be a significant disrupter to the legal profession and the overall market on many fronts. The biggest industries — government, banking, legal, healthcare and others will either use it or be significantly impacted by it.
View this story as it originally appeared on the Legal Executive Institute blog.
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