Blockchain technology has recently received a lot of press, with the Bitcoin hype peaking shortly before the end of last year and slowly coming back down in recent weeks. Blockchain is the technology that enables Bitcoin, as well as all other forms of cryptocurrency (e.g. Ethereum and Dogecoin) to exist.
The technology itself is described as being transparent and incorruptible as it comprises an interconnected network of “nodes” where they are all keepers of the data. This means that, in order to make any changes to the stored data, changes would need to be made to all nodes, and this would take an immense amount of computing power. We can visualise blockchain as a digital ledger, where the information is updated in real-time, and can consist of anything from financial transactions to information relating to ownership of assets.
By utilising blockchain, it is possible to create so-called “smart contracts” which are executed upon the occurrence of a given event. Smart contracts cut out the middleman’s services, provide greater autonomy and efficiency, and can keep the contract public and transparent whilst maintaining the anonymity of the parties. Some have compared this function to a vending machine, whereby a user places money into it (the given event), user then selects the desired product (the code determines from the event what should happen), and then the product arrives (the execution).
So how will this impact the legal industry?
Well, for one, considering every single entry in the blockchain is, in theory, secure and time-stamped, there is a clear trail of ownership of anything which is placed in the blockchain. Consider IP rights, since there is full transparency, there will be little dispute as to who owns what, or who first registered IP rights. Also consider land ownership, where some title deeds go so far back in time that their records are either lost or illegible. With blockchain, loss or illegibility wouldn’t be an issue for the future, as it will be possible to trace the original owner of a piece of land, no matter how obscure it may be.
With the steady rise of blockchain technology, and the imminent dissipation of its applications in the legal industry, now would be the time for lawmakers to increase their knowledge of this innovation so that they can better inform and advise businesses, some of which will, no doubt, push bitcoin to its furthest limits.