Blockchain is certainly a buzzword at the moment, and with good reason. It is a broad-ranging technology that will find future applications in many different fields. In this article, I want to take a look at how blockchain could impact the legal profession. Also, I will discuss the kinds of changes we can expect from blockchain technology.
What Is Blockchain Technology?
The word blockchain has become synonymous with the world of cryptocurrencies. It is not uncommon for people to think that blockchain and Bitcoin are the same thing. However, this is not the case. Blockchain is the innovation that underpins Bitcoin and other cryptocurrencies.
At its core, blockchain is simply a database that is shared across a large network. This is referred to as the distributed ledger. It means that a record of the database is kept in lots of different places, so it is difficult to tamper with or destroy.
The innovation with blockchain, however, is the way in which information is added to this database. Adding ‘blocks’ to the blockchain requires lots of different computers to check this addition on the network that stores the blockchain. This makes it very difficult to fraudulently alter the data stored on the blockchain. What is powerful here is that there is no need to send additions to one central authority for verification. Instead, any large enough group of machines on the blockchain can verify. This is what allows cryptocurrencies like Bitcoin to allow transactions of value without the need for a centralised bank.
Once something is added to the blockchain, a record of it is kept forever in a secure and tamper-free manner. This makes it an incredibly powerful tool for any kind of record keeping.
Long Term Secure Storage
The fact that blockchain can underpin long term storage of information in a way that is tamper-proof and secure is one way in which it could be used in the legal profession. Some examples that have been suggested are using the blockchain to keep a record of intellectual property rights, or specific legal records like criminal charges. Even bills of sale could be stored in this way.
The power of blockchain here is that its distributed nature means that these records would not be lost even if a specific database or machine fails. Also, the fact that you can add information to the block without needing to go through a single central authority would help avoid bottlenecks, allowing for quicker and more efficient data storage without any loss in security.
Another of the powerful features of blockchain is the public access to block itself. This makes it a very transparent system, something that makes it ideal for many areas of the law where public oversight is important.
Although much of the law should take place in public, often it is difficult to come and cumbersome to use these records. This makes it incredibly difficult for the public to actually engage. Instead, the public could access blockchain records as they would be accessible and searchable by any machine that connected to the network. This would allow for a higher level of engagement by the public in the legal process. It will also offer better oversight and could foster a better sense of inclusion.
Essentially, by making legal processes transparent and visible it helps breed confidence that the legal system is fair and just. Blockchain could certainly help to achieve this.
In 2015, Ethereum was launched. This was a new cryptocurrency and computing platform that was using blockchain technology to facilitate smart contracts. Since Ethereum’s launch, many blockchain companies have launched their own projects using smart contracts, making use of the Ethereum framework.
A smart contract is an agreement between two people that is hardcoded into the blockchain. The central idea is that the contract ‘executes itself’. There is no need to send to a third party for verification.
To many, this signalled the evolution of blockchain, because it took the idea one step further. No longer was the block used to store transactions. Instead, it could be used to store agreements or contracts between two users.
It is clear that this idea could revolutionise the world of commerce, where almost everything can be codified as contracts. By having a system in which contracts can be created and fulfilled on the fly, without the need to have things ratified by a centralised system, could create huge efficiencies in all manner of businesses. And of course, the legal profession is no exception.
For some in the law profession, the idea of a smart contract may actually seem more of a threat than a blessing. After all, in most companies, these are lawyers who have to handle the nitty-gritty of legal contracts. If this process could be automated, then perhaps fewer lawyers would be required.
The world of blockchain is a fast evolving and young technology. This makes predictions about exactly how these technologies will pan out difficult. Hopefully, though this article has gone some way in explaining the basic ways in which we can expect blockchain to disrupt the legal profession.