Blockchain and smart contracts: A primer for lawyers

Blockchain technology and smart contracts can simplify and optimize law firm activities. A primer for lawyers wishing to explore this emerging space. If you want to start bitcoin trading in only three steps, visit BitQt, you will get the best liquidity, and the platform is immune to volatility risk. Blockchain and smart contracts are two emerging technologies that have attracted the attention of financial markets and finance professionals. The below-mentioned portion will briefly outline some of its advantages, challenges in implementation and suggestions for law firms that wish to get involved in this emerging space. 

Basics of blockchain:

Blockchain technology is a distributed digital ledger that enables the transfer of assets (i.e. cryptocurrencies, data, and other financial instruments) across the globe. With no central authority and banks involved, blockchain offers a consensus-based and transparent mechanism for organizing information in a shared database that anyone on the Internet can access. Because it’s decentralized and offers anonymity to users, blockchain has been hailed as a revolutionary technology and has gained substantial interest from academia and investors.

Applications of blockchain and smart contracts in an attorney:

In the context of Attorneys, blockchain technology can be applied by companies to different areas:

(1)  ICOs

(2)  Smart contract drafting and implementation

(3)  Proof of intellectual property ownership through blockchain technology (i.e. registering a design on the blockchain and notifying other users of it when a new transaction is made with that design)

(4) Document management and legal research services on blockchain to ensure the file’s authenticity, accuracy, time stamps and integrity. Let’s have a look at all these applications in detail. 

Legal Research Service on blockchain:

In the legal field, there is a growing need for transparency and decentralization to ensure higher reliability, credibility and efficiency in documents such as wills, trusts, corporate formation documents and contracts. People can use blockchain technology to register documents on the blockchain by creating digital signatures. Users can also use it to certify ownership using cryptographic keys or digital fingerprints that companies can store on the blockchain. All this enhances the accountability of all parties in signing documents and provides a transparent chain of provenance for records transmitted between parties.

ICOs on blockchain:

The Ethereum network offers 3rd generation intelligent contracts, which are Turing complete. These smart contracts run on a decentralized platform. Intelligent contracts are special computer programs that users can program to self-execute, fulfil the obligations they have been coded to do upon specific conditions being met, or self-destruct upon certain conditions being unmet. They eliminate the reliance on lawyers, auditors or trusted third parties in the process of executing contracts.

Through blockchain technology, it is possible to create a smart contract which will automatically meet any predetermined conditions and trigger the release of tokens upon reaching such conditions. The DAO can be used to raise funds or to crowdsource based on the terms of the smart contract.

(1)  On the back end, blockchain technology keeps track of all the funders’ tokens and verifies that no one is double spending their tokens at any time.

(2)  In traditional fundraising, an escrow agent acts as an intermediary between investors and a company to ensure that investors are protected from fraud and other risks. In contrast, DAO does not require any central authority or third party to govern operations.

Proof of Intellectual Property Ownership:

People can use blockchain technology to register a design on the blockchain and notify other users of it when a new transaction is made with that design. It could eliminate the need for lawyers, trusted third parties or auditors to keep track of who owns the stock.

It is possible to create a smart contract using blockchain technology, verifying ownership of the protected content by other users and ensuring that nobody else has access to it until certain conditions are met (i.e. Dispute resolution). As a result, lawyers can use blockchain and innovative contract technology to streamline document management and improve efficiency in handling legal matters.

Conclusion:

As law firms struggle to cut costs and streamline operations, blockchain and innovative contract technology can help reduce the burden of managing documents. For example, blockchain effectively eliminates the need for creating copies of documents, maintaining backups, organizing information, and tracking whether all participants have received the documents.

A law firm may wish to consider using blockchain applications to manage payments and disbursements to minor parties in a secure manner. Blockchain could also be applied in legal research services, especially regarding crediting authors or attributing ownership of a blog post or piece of content. Companies can also use it to certify ownership using cryptographic keys or digital fingerprints that companies can also store on the blockchain. 

All this enhances the accountability of all parties in signing documents and provides a transparent chain of provenance for records transmitted between parties. However, it is essential to note here that blockchain is still at an early stage of development, which means that there are many legal nuances, regulation issues and technical challenges around applications of this technology in the attorney services space.