Although it’s unlikely, Bitcoin may well disappear in a couple of years. It’s technology, however, is still one of the most important developments in recent times and it’s very likely that the much lauded Blockchain technology will prove revolutionary within the legal industry in the next few years and will prove to significantly disrupt not only the legal profession but also several aspects of the overall market.
Blockchain explained
Blockchain is effectively a public ledger that can be applied to nearly everything that would normally be saved on a spreadsheet or database. We will use Bitcoin as an example. The Blockchain will show every single exchange of money that has taken place through Bitcoin transactions. It doesn’t actually list who owns those coins, it only lets us know that A) they exist and B) they have changed hands. No single person controls this ledger and it’s accessible and used by every party connected with the exchange.
This public and encrypted ‘virtual spreadsheet’ is, theoretically anyway, both more open and secure than the current systems of monetary exchange. This networks maintains a complete history of every transaction that has ever taken place on the network. Take yourself to Blockchain.info and you can see all the Bitcoins changing hands all day every day. As you watch the transaction scroll, however, you should quickly identify several very important legal implications.
The big one is that none of that money on the screen has passed through a financial institution or a bank or been screened by any government agencies. So let’s say that you have a transaction of $10,000 or more either coming to or going from the US. This is a level that normally would be reported but it isn’t being reported by Bitcoin. Granted, there are many positive aspects of this technology but there are also significant challenges particularly with the current US laws and government regulators.
Whilst Bitcoin created the first ever blockchain, many other chains have been since created. An example of this is the other cryptocurrencies which use this technology. As far as we are concerned, however, is how businesses could incorporate the ledger based platform that is Blockchain.
Essentially, Blockchain is the programme from which you will create a system of either processing or accounting. One of these networks, known as Ethereum, is described as being a virtual decentralised machine capable of executing peer-to-peer contracts and is leading the way as far as smart contracts and the law are concerned.
The major ways in which Blockchain will affect the legal world
Contract creation
Blockchain can change the landscape as far as contract lawyers are concerned. A part of why Blockchain is so special is that it doesn’t only keep immutable records, it creates processes around it.
An example of this is creating a contract stipulating that when the PTO, Patents and Trademark Office, approved the trademark the 4 partners would each receive 10% of the company. The Blockchain contract will check to make sure the patent is approved then automatically trigger the process which releases the shares to the other partners.
All this will be automated and therefore fall outside of the jurisdiction of human legal action. You could even go another step further and incorporate a payment system so that once the patent is granted the bonus funds can be dispersed automatically into the said partners accounts.
Intellectual Properties
Blockchain would seem tailor made for IP. The technology effectively creates a indisputable ledger that is accessible to the public, demonstrates each filing and can be held not by sole jurisdiction but on a worldwide scale thus benefiting everybody.
This information offers clear and clean rights of use for every party and it even allows you to input your trademark into the system. By the leveraging of an algorithm that identifies any likeness/es to the trademark. The system could either allow it or dismiss it. This information could then be seen on the public ledger which anyone can see.
Other areas Blockchain could be used in within the legal industry is land registry and the establishment of records. This technology is set to create rumblings in not only law but also the financial industry. Watch this space for further information as here at Josh and Mak International we pride ourselves on having our finger on the pulse of all the latest technological developments.
