Understanding blockchain for lawyers

Like many lawyers, I was skeptical of the value of bitcoin and other digital currencies. Basing the item's value on people giving it a value seemed risky, fleeting, and trendy. Fast forward around ten years, and I am excited about the future of blockchain.

Understanding blockchain for lawyers
Photo by Pan Yunbo / Unsplash

Why was I interested in blockchain right from the beginning?

I wasn't.

Like many lawyers, I was skeptical of the value of bitcoin and other digital currencies. Basing the item's value on people giving it a value seemed risky, fleeting, and trendy. Fast forward around ten years, and I am excited about the future of blockchain.

So what changed?

First off, I spent copious time around law students, law firms, and the legal industry. Lawyers are risk-averse as a rule, and one might even say they are afraid of technology: I learned why, when, and how I should push past skepticism to truly entertain a thought. Second, I learned about Ethereum.

Ethereum takes the concepts which power Bitcoin and implements them as a mechanism for deploying software. Blockchain is about much more than just virtual currencies.

How do I explain this in a way lawyers will understand... Remember the opening scenes of the Matrix when Neo is looking at the computer monitor, while Trinity is telling him to follow the white rabbit? It was all text, no windows, no graphics, etc. That type of computing is still running underneath all of the technology we use today. Blockchain allows that type of computing to run without relying on a centralized server.

Knock knock Neo | Photo by Markus Spiske / Unsplash

Let's take a quick step back to look at the big picture.

What is the Blockchain?

A blockchain is a self-validating digital ledger of a particular type of transaction. It is constantly growing as "completed" transactions are bundled into newly validated blocks which are then added to the end of the chain. Each block contains a secure validation "receipt" of the previous block, a timestamp, and transaction data. This process creates an immutable record of your digital assets.

For example, the Bitcoin blockchain network uses the self-validating ledger to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere. The blockchain is an immutable, tamper-proof record of all cryptocurrency transactions. Once a transaction is entered into the blockchain, it cannot be altered or removed. This makes the blockchain an ideal platform for secure, transparent transactions. Cryptocurrencies such as Bitcoin are built on the blockchain platform.

No, really — what is "the Blockchain?!"

If you're working in a law firm and reading an article on "Getting Started with Blockchain for Lawyers," I apologize for the maybe-overly-technical description above; but I think it's necessary that you understand why the tech world is excited about blockchain technology.

Let's answer the question by analogy (fond memories of the LSAT anyone?). Think about a shared Google Sheet (or a shared Office 365 Excel file, if that's more your speed). Anyone who is shared on that sheet can add data to it. You can set it up to track changes, and you have some control over who can access the sheet. No big deal, right? Well, the blockchain is kind of like that, with additional functionality.

A blockchain equivalent of the spreadsheet functionality would be able to:

  • anonymize who the participants are;
  • permit or restrict access to the sheet based on secure, automated and manually implemented rules;
  • create multiple, distributed, immutable records of the file by nature of the service;
  • trigger events based on entered data;
  • and much more.

One of the most-lauded benefits of blockchain ledger technology is the decentralized nature of the services. With a Google Sheet, your ability to use your data is dependent on Google continuing to allow your access. Whereas with blockchain ledgers, the utility of the system remains viable so long as anyone continues to use it.

Photo by Solen Feyissa / Unsplash

Now back to why I'm optimistic about blockchain practice for tech and for law firms

Remember, we talked about The Matrix and how modern technology runs on systems that look a lot like that opening scene.

Instead of just a spreadsheet being run on the blockchain, entire systems can run on it. Think of how expensive, difficult, and time-consuming it is to change software at an enterprise level: there are concerns about interoperability, life expectancy, security, etc. Now imagine that the nature of the systems you run on is such that you have nearly unlimited options on how to address new tech needs. Is the software no longer maintained? You can directly take control of the updates for your systems. Is there a new tool you want to run? You can easily plug it into your current tech stack. It's efficient from an implementation and management perspective.

Blockchain solutions for lawyers and law practices

You won't need to up-end your practice to replace everything with blockchain solutions: the technology isn't there yet. Instead, you should start exploring blockchain solutions that make sense to you. If it helps, think of the whole blockchain industry as a large-scale beta test: think proof-of-concept. Some stuff that doesn't work will be improved, some of it overhauled, and some of it abandoned. But there will also be some stuff that stands the test of time. Keep an eye out on what those things might be. Dipping your toe in now will make the transition easier down the road, and it's just a good practice for ethical and business purposes.

Closing thoughts on blockchain and lawyers

You probably don't need to worry about blockchain in your practice yet, but it's wise to start prepping. Start thinking about how you could benefit from blockchain, and start working on ways to implement that. The future will be here soon, and it'll involve blockchain.

Looking for an easy way to get started? You can use my affiliate link to start with Coinbase, you'll get a $10 credit after you spend $100. If you sign up, I also recommend their earning program found here: you earn small payouts for watching instructional videos on various blockchains. Once you are more comfortable with blockchain, I'd recommend playing around with good beginner wallets such as the Coinbase Wallet or MetaMask.

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