You might wonder why a blog focused on law office technology would be writing about blockchain. Read on here to discover why we think it is important to understand this new blockchain technology,and be poised to work with it as new uses emerge.
Before discussing what blockchain actually is, however, we need to clarify some terms. Most people associate blockchain with cryptocurrency. Blockchain is not a cryptocurrency in itself, however, but a technology that provides the backbone for various cryptocurrency exchanges, such as Bitcoin (probably the most popular cryptocurrency). But Blockchain technology is so much more than simply Bitcoin.
Let’s look at what a cryptocurrency is. Cryptocurrency is an encrypted, digital currency used to track individual units of currency, verify the transfer of funds, and operate outside of a central bank. There are many cryptocurrencies in use around the world today. The terms cryptocurrency and Bitcoin are often, incorrectly, used interchangeably. Bitcoin is merely one of the “exchanges” on which cryptocurrencies are tracked. Think of it like the New York Stock Exchange vs the NASDAQ. There are many crypto-coin alternatives beyond the popular Bitcoin, such as Litecoin, and Zcash.
People unfamiliar with the blockchain distinction are alarmed about the many illegal opportunities cryptocurrencies afford, such as illicit trade, tax evasion, and fraud. The perception is that crypto-currencies are highly suspicious, making them undesirable for most people. Remember, however, the technology behind cryptocurrency has many uses. Not all of them are nefarious.
Now that we know that blockchain and Bitcoin, or other cryptocurrencies, are not synonymous, we can look past the negative connotations of the concept and focus on the concept itself. A “block” is the name given to the digital ledger that tracks cryptocurrency transactions chronologically and publicly. Every time the related currency (or anything of value, for that matter) changes hands, it is recorded in the digital ledger. This ledger holds a complete history of all transactions made with that cryptocurrency, forming what is a “chain” of information. The term “blockchain” has been created to describe this online tracking technology.
So why are we writing abut this? Blockchain technology will facilitate important changes in the legal industry. Blockchain technology can be applied to any need for a trustworthy record, of any type. Imagine it as a digital ledger for legal documents and files. The technology can create a publicly accessible ledger of patent filings, copyrights, and trademarks. The ledger can record and track who viewed those items on a world-wide basis. Property deeds can be kept on a public ledger, eliminating disputes over true ownership even if records are lost due to natural disasters or regime changes. Bitland, for example, has had over 500 deeds recorded in Ghana since January 2016. The technology can be applied to anything of value that requires careful tracking. It can maintain a “chain of custody” over a rare Rolex, a Picasso painting, or a car registration. This is a real thing. Watch for its use to be more widely accepted in the coming months and years.