Even though the concepts of Bitcoin and Blockchain have made headlines for a while now, you may not yet fully understand what they are or why it seems like everyone is talking about them. Rest assured, you’re not alone. These are emerging technologies, and how they’re being used – and why – isn’t necessarily common knowledge.
Even so, there’s a reason why you’re hearing so much about them: they’re increasingly being used in the business world, both to make purchases and as building blocks for new technologies. If you’re curious about their application to the practice of law, but aren’t exactly sure how they might be used, then you’ve come to the right place!
This very topic was covered by two experts in February at the ABA Techshow in Chicago. During this presentation – “Bitcoin and Blockchain for Lawyers” – Lisa Bragança and Antigone Peyton offered lots of great advice to get you up to speed on Bitcoin and Blockchain and why they matter to lawyers.
Below you’ll find the visual notes from that session along with 3 things you need to know:
What are Bitcoin and Blockchain?
As the presenters explained, Bitcoin is a type of cryptocurrency. It is a digital asset in the form of a token and can be traded as a form of currency for goods or services, provided the person or company you’re paying accepts Bitcoin as a form of payment.
To use Bitcoin, you’ll have to sign up for a Bitcoin Wallet app online or download a Bitcoin Wallet app to your smartphone (iOS or Android). Your Wallet acts as a virtual bank account of sorts that allows you to send or receive bitcoins. You can buy bitcoins using your traditional bank account through a Bitcoin Exchange. Then you can spend bitcoins by locating businesses that accept it using a directory like this one.
Next, there’s Blockchain. The presenters explained that Blockchain provides a chronological record of Bitcoin transactions, with each individual block being similar to a bank statement. The difference is that unlike a bank statement, there is no identification of the owner other than a long string of numbers. The transaction can be viewed without entering a key, but in order to access the wallet and the Bitcoin, you’ll need access to the private key.
Why do lawyers need to understand Bitcoin and Blockchain?
According to the presenters, one important reason lawyers need to understand these concepts is because Bitcoin and Blockchain are being used to conduct business. Because Bitcoin is being accepted as payment for services, lawyers should ensure that they fully understand Bitcoin and Blockchain so that they can make an educated decision as to whether to accept Bitcoin as payment for legal services.
Depending on your areas of practice, Bitcoin and Blockchain will also potentially impact your clients and their businesses, which is one more reason why many lawyers will need to learn more about these technologies. Another reason is that cutting edge software tools are now emerging that rely on Bitcoin and Blockchain and have applications to the legal industry. For example, as the presenters explained, smart contracts – self-executing digital contracts that use Blockchain to verify the different stages of the contract as each condition is met – will undoubtedly impact the practice of law.
Can lawyers accept Bitcoin as payment?
As is the case whenever lawyers use a new technology, it’s important to ensure that you’re doing so in a way that comports with your ethical obligations. Using Bitcoin and Blockchain are no exception.
Fortunately, one ethics committee has already addressed the issue of whether lawyers can accept Bitcoin as payment. In Nebraska Ethics Advisory Opinion for Lawyers No. 17-03, the ethics committee concluded that attorneys “may receive and accept digital currencies such as bitcoin as payment for legal services.”
Based on the conclusions reached in that opinion, the presenters recommended that lawyers treat Bitcoin payments for legal services as if they were foreign currency, and immediately convert the Bitcoin payment into U.S. currency upon receipt. This is because Bitcoin isn’t particularly stable and its value can change quite a bit from day to day. So by converting it into U.S. currency upon receipt, you’ll ensure that you fully mitigate the risk of volatility and possible unconscionable overpayment for legal services.
So if you’ve been wondering what all the fuss is about, now you know. Now that you’re up to date on the ins and out of Bitcoin and Blockchain, will you be accepting it as payment in your law firm?