The blockchain technology is a decentralized database that stores records -digital accounting- of assets and transactions through a peer-to-peer network . That is, it is a public record in which it is recorded who owns what and who processes what. Transactions are protected through cryptography and, over time, the history or record of these is stored in “data blocks”, which are linked together and replicated in each computer that uses the network, creating an immutable record and unforgettable of all the activities carried out through the network of blockchain.
Blockchain is not an application, nor a company. The simplest way to understand the concept is by comparing it with Wikipedia. In Wikipedia we can see everything. Your information is composed, changed and constantly updated. It is also possible to track changes to information over time. Blockchain technology allows storing the history of creation, custody, modification, ownership, location of assets such as cryptocurrencies, but also other digital assets such as a property title, a certificate of any kind, a contract, personal information, among others. Of course, there are more technical details in regards to the blockchain, but, in essence, it is a public record that stores transactions in a network and is replicated to be very secure and difficult to manipulate.
Application of blockchain technology and its impact on Law
As the role of technology increases within the legal industry, the question of how and in what ways it can best be used in the practice of law is of top concern among law firms, corporate legal departments, and of course, law schools. From predictive analytics to machine learning, the message is clear: technology will underpin innovation in legal services in an increasingly rapid evolution.
Blockchain technology is disruptive and has the ability to alter the way that law is practiced today. I give you some examples of its application and its great impact in the world of Law:
(i) Property rights. Today, to access information on the ownership of a property, it is necessary to go to the respective notary and immerse yourself in piles of books to find the titles on paper. To register any information, it is necessary to go to the handwriting of the interested parties and the information is recorded on paper. Even when the offices make the transition to digital technology, paper continues to prevail. Worse, in many cases information is lost or destroyed.
Blockchain technology , with its inherent security and digital tracking function, is an effective and secure method to store the titles and data necessary to exercise property rights, as well as allowing authorities and individuals to access information from any place of the world, with full certainty that what is recorded is real and that has not been modified, much less lost, conceives the possibility of making required modifications remotely without the need for wasteful and unnecessary procedures. This would allow faster processing of property rights, save physical storage space and, more importantly, prevent the loss of relevant titles.
(ii) Intellectual property rights. The law has had problems when it comes to protecting intellectual property in the digital age, including image, audio and video files, as well as designs and symbols. Artists and musicians try to protect their work, but too often it is used without their permission, and copyright is not paid.
The use of blockchain as a registry of intellectual property rights can help to clarify the authors, owners and users in this matter. By registering their works in a blockchain, the authors would acquire evidence at the national and transnational level of the property, which would be free of manipulation and immutable. This would allow judicial authorities and interested parties to see the complete chain of ownership of a work, including licenses, sub-licenses and other relevant information.
(iii) Notaries. Currently, notaries have the function, among others, to confirm and verify the signatures of legal documents, such as deeds and contracts. Using blockchain technology ,these documents can be digitally preserved as part of a digital ledger, and documents “time stamps ” and “fingerprints” (blocknotary) for multimedia files can be implemented, eliminating the need for the rubber stamp and simplifying the process, to the extent that it can be done online.
The above are few examples of the benefits of the application of blockchain technology to the law. In many countries such as the United States, India, Singapore, this type of tool is being implemented. We hope that the new Government, in its commitment to efficiency and optimization of procedures and processes, considers the application of blockchain technology
Adopting blockchain technology in the legal industry
Blockchain is a replicating, distributed ledger that creates a record of peer-to-peer transactions without the need for a trusted authority. The model is effective because it’s based on a distributed consensus, meaning that all parties agree on the value and transaction consistency. Not surprisingly, the technology found initial acceptance because it allowed a place where funds payments and transfers were immediate and transparent without the need for intermediary financial institutions. Additionally, once the data has been recorded, it cannot be altered without impacting all existing “blocks” of data.
There is a wide range of practice areas where blockchain technology can become a major player, from supporting the changing nature of legal work to enabling new lines of business and differentiating service offerings.
And while many still associate blockchain with its first big application—with cryptocurrencies such as Bitcoin—many other organisations are starting to consider how this technology might also help automate day-to-day operations.
Law firms that are facing challenges, such as diminishing demand from corporate clients and stronger competition from non-traditional players, are considering blockchain for two primary reasons. The first reason is smart contracts, which involve scripted logic relating to simple Ricardian contracts. Essentially, smart contracts are sets of terms and conditions that can be automated, and blockchain appears to be the best way to do that.
“An example of this may be serial renewal of a lease for real estate. “There might be some termination clauses in commercial agreements in which you can automate the execution and invoke. These are repeated functions that don’t need a human to curate and manage”.
The second reason law firms are interested in blockchain technology is its ability to record events for long duration. This might include irrefutable intellectual property claims or even criminal charges relating to a certain case or criminal procedure.
And beyond these few examples, there is a wide range of practice areas where blockchain technology can become a major player, from supporting the changing nature of legal work to enabling new lines of business and differentiating service offerings, Atton says, adding that those players that are embracing new technology are already providing a new way of thinking about legal processes.
“Perhaps one of the most novel ideas of blockchain was brought to me by a law school student. “It was around this idea of fashion law and the ability for blockchain to record copyright of high-value fashion items, such as designer handbags. I had never considered an idea like that before”.