Session led by David A. Fisher
News regarding smart contracts, blockchain, and the rise of cryptocurrencies has been unavoidable in recent years—but many individuals are still in the dark as to how exactly this technology works. How are these technologies interconnected and what does it mean for the future of certain industries?
The most important idea to understand is that blockchain technology provides the structural framework for this entire movement. Cryptocurrencies (like Bitcoin!), smart contracts, and all the applications in between are fueled by this blockchain technology. Put simply, blockchain acts as a decentralized database that all users of the blockchain can see. This database is often referred to as a “distributed ledger” and all computers connected to it participate in approving or rejecting events that occur on the network. An example of this would be the transfer of Bitcoin from the purchaser to vendor, a process that doesn’t rely on any middleman (like a bank) due to the use of blockchain.
This lack of middleman is the revolutionary feature of blockchain technology and what will fuel innovation in the space. Instead of relying on a centrally owned company or financial institution, the blockchain ensures fair and honest verification due to the transparency and authentication process that all computers on the blockchain participate in. Once you see the power of this shared verification process, the variety of applications—like transactional data, funds, records, contracts—becomes even more apparent.
So how would this impact the legal industry? The current discussions surrounding blockchain applications in law include smart contracts, intellectual property rights, notarization, deeds, and many more. While the utility of basing these applications on a decentralized platform would lessen transaction costs and improve transparency, they should not be seen as a threat to the legal profession or industry. Just like many other innovations in this space, blockchain will not eradicate the need for attorneys but instead lead to an augmentation of practice. Smart contracts won’t be able to write themselves, and the automatic triggering of agreements and provisions will still require the oversight of practitioners to ensure legality and compliance.
Although these various use cases sound exciting in their potential to innovate, we are far from a widespread commercial adoption of these applications. The technology is still very much in an infancy stage with lots of tinkering and testing needed in order to see how exactly the blockchain will alter the existing paradigm.
This augmented practice cannot occur unless practitioners are proactive in understanding these technologies. If you’re reading this piece now, you’re already taking the necessary steps of learning more about the power of blockchain and what the future holds. Too few will voluntarily seek out the information and we must take it upon ourselves to be educators and proselytizers.