According to gartner¹,“blockchain is a type of distributed ledger in which value exchange transactions (in bitcoin or other token) are sequentially grouped into blocks. Each block is chained to previous block and immutably recorded across a peer-to-per network, using cryptographic trust and assurance mechanisms.” Therefore, there is a third-party perpetual retention of salient evidence and validation of transactions showing exact time the transaction took place and the time of each subsequent verification. All of which adds intergrity to the block chain process.
Thus, the nexus which currently exists between blockchain technology and the legal industry lies primarily in the fact that the former is being fashioned to disrupt the activities of the socially trusted intermediaries (lawyers) of which the latter is centrally composed of. Through smart contract, block chain solves the problem of authenticity of contracts using a distributed ledger. Smart contracts are computer programs that are authenticated on a blockchain and that perform operation on that blockchain without human intervention. In the future, it will be coded to instantly transfer title upon transfer of digital-currency to the smart contract- no duplicate contracts, no banks, no escrow agents/lawyers.
Carving a New Dimension in Blockchain Technology for Lawyers
❖ Blockchain are technologies worth exploring by litigation and corporate lawyers because it helps attain authenticity, integrity, completeness and transparency in view of protecting clients’ information and making a case in court for clients. Blockchain can be useful for transactions involving proof and chain of title, ownership of property, or identity of a person. Because the ledger is an ongoing, validated, and secure log of all things that have happened, perhaps going all way back, ownership can be known with exactitude².
❖ Like any technology, blockchain is not without its technical limitation. Recourse would be had to lawyers in situations when a smart contract self-executes in a way that was not the intent of the parties. Again, there has to be an efficient way to create human-readable legal contracts that have a correlation in the machine-readable contracts. Lawyers may act mediators working closely with smart contract drafters.
❖ Again, financial transactions and bankruptcy cases inextricably tie lawyers and law firms to unearthing the intricate of blockchain and cryptocurrencies.
❖ The impact of blockchain would in the future become enormous and lawyers might find that they have client who want to pay in cryptocurrencies, or need advice with transactions/copyright laws in that regards. Also, payment to unlock “ransom” infected computers is usually demanded in the form of bitcoin. A lawyer or law firm then has to learn how to turn cash into cryptocurrency and make payment to regain access to data.
❖ As the regulations guiding blockchains and cryptocurrency are still being developed³, lawyers have to leverage on any available means in uncloaking the masked transactions of blockchain in order to reduce associated legal risks and proffer favourable regulatory advice from their view point.