BLOCKCHAIN TECHNOLOGY DISRUPTING THE LEGAL INDUSTRY

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What is Blockchain

Let me take you to the ground floor of the internet, 40 years ago, in 1977.  The internet was just a couple of loosely connected computers, that could barely carry a couple of bits and bytes between them. Today, in the most sacred part of your home, with wireless internet connecting your device to the boundless highways of cyber networks, you are reading this article.

In order for us to go from a couple of dots on a network to where we are now, the world changed a lot. The thing about great inventions and great paradigms like the internet is that many people don’t actually know what is, how it was made and for what purpose it was made. It is only in hindsight do we see its enormous potential and value.

one lives and analyses data within a frame, unaware that the solution is most often just outside of that frame. Never underestimate the depth of your subjectivity. ― Darrell Calkins

If there was a paradigm sitting in front of you now, how would you take advantage of it?

To get ahead, you have to ask the big question. And that is, what is the one thing, or gap that that paradigm fills for everyone?

Hindsight is vision 2020, but foresight is the challenge.

 

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There is another gap that is building in our society and there is an invention that fills that gap! That invention is called blockchain!

Blockchain changes something that is very fundamental and at the core of who we are.  The shift in paradigm will consecrate the relationship between man and machine. Essentially the thing that will change is how we trust. More specifically, how we trust in business.

 Trust is very core to business, trust in business started since the time of the cavemen, it passed on to feudalism, all the way to the mercantile economy, the industrial age and today in the information age. As a species, we have come to the following conclusion.

 I have to trust you, in order to transact with you.

Trust is the fundamental currency of all commerce. Trust is very delicate, it’s poignant, its close to us, easily breakable, yet somehow, we are able to trust each other and transact 100 trillion dollars a year, between the 7 billion of us on this planet. The fact is, we’ve manufactured that trust in order to transact.

Very practical use cases for blockchain.

Imagine that you are about to purchase your dream home and all of the previous transactions regarding that property is stored in a ledger. We have invented this thing called the ledger, an entry of debits and credits, encapsulating the fundamental way we go about storing transactions.

The problem with the ledgers we use is that someone as easily as they can write a ledger entry, they can also delete that record. The information can be tampered with. All ledgers that we use today for transactions, the rights to a piece of art, a patent, someone who owns a piece of intellectual property or a record,  can be compromised.

Any paper record can be tampered with, falsified, added or removed. We are sort of in this state of commerce where we have to trust but verify authenticity.

Today as a civilisation, when commencing transactions, we set out with an almost innate presumption that the counterparty cannot be trusted.  We have remedied this by establishing intermediaries, or entities that are responsible for keeping a centralised copy of the ledgers in all commerce.

These middlemen facilitate the brokering of relationships between those who are looking to be trusted and those who are looking to trust.

Some examples of intermediaries are banks, mortgage title companies, credit reporting agencies. They are intermediaries and the reason why we deal with them is that we simply do not completely trust the ledgers that we currently have.

The intermediaries partially get us to a point where we can manufacture some trust and the rest of it comes from the gut.

The Blockchain Ledger

As you would imagine, blockchain has a ledger as well. However, it is an epic upgrade from the one we now have. Every record written on a blockchain ledger has a unique accompanying key. There is an unhackable key that is in every record on a blockchain ledger. Every record is trusted, stamped and written by the trusted party that wrote that record.

The principal invention is that when the next record is written, everything from the previous record, including the key and the contents of the record is put into that formula and the key for the second record is generated. 

There is a dependency loop, so that when the third record is written, all of the information and contents of the first and second records, go into the formula and out comes the key for the third record.

There is a reliance from one record to another. This is the fundamental difference, especially with technology, making sure that every single record is chained together.

If someone attempts to change a record, the algorithms will immediately show that a record was tampered with.

Blockchains usually exist in what is called communities. For instance participants within a specific industry, would often operate on the same chain. For example, healthcare, financial services, legal, and eventually there will be a chain of chains.

If something unusual happens with a piece of information, a consensus algorithm runs and detects what information is off, and that copy would get replaced with a copy that still has the good and updated information.

New blocks and transactions appear, they get written on top of their collection of ledger repeatedly, and eventually, we get into a situation, of what is called a distributed immutable ledger.

The Inevitable

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We saw the printing press destroy those organisations that were only anointed with knowledge. We saw the combustion engine, obliterate chattel slavery. The internet come in and evaporated brick and mortar marketing companies into oblivion and at a minimum, blockchain will destroy those intermediaries as fundamentally as things changed from the printing press to the combustion engine, to the creation of the internet.

Modern technology allows people to communicate directly, voice and video calls, emails pictures and instant messages travel directly from A to B. Maintaining trust between individuals no matter how far apart they are. When it comes to money, people have to trust a third party to be able to complete a transaction.  Blockchain technology is radically changing the status quo, by using math and cryptography.

Blockchain provides and opens a decentralised database, of any transaction involving value.  Money, goods, property, work or even votes, creating a record whose authenticity can be verified by the entire network. The future global economy will move toward one of distributed property and trust, where anyone with access to the internet can get involved in blockchain based transactions, and third-party trust organiSations will no longer be necessary.

The uses of blockchain technology seem to be endless; some expect that in less than ten years.

  • It will be used to collect taxes.
  • Immigrants will easily send money back to their home countries where access to financial institutions is limited
  • Financial fraud will be significantly reduced, as every transaction will be recorded in a public and distributed ledger.

Think of blockchain as wills and contracts that executive autonomously or dated proof of the existence of ideas, much like a patent.

Blockchain will become a global decentralised source of trust, but not everyone is ready to embrace it. A huge proportion of trust service from banking to notaries will face challenges on price, volume and in some cases, their very survival.

Public authorities will find it increasingly difficult to enforce traditional financial regulations, due to the new possibilities offered by the bitcoin network, to bypass traditional financial intermediaries.

Unimagined new networks will evolve to meet society’s needs more cost-effectively and securely.

Will governments, financial and legal institutions embrace blockchain? What will happen to the ones who don’t?

We are transacting with more things, in more ways than we ever had and we negotiate with machines, devices, in addition to human.

The internet has increased the trust gap. 

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Blockchain changes two other things.  The first one is identity, and the other is all the new devices that are coming online that we also have to trust, not just human beings. By 2020 we will have 50 billion more machines than now that we have to trust.

The other area where the trust gap is expanding is in reputation. The quarter-million rides per day that are happening between Uber and Lyft. The 100 thousand transactions on Etsy, the 150000 rooms rented per night on Airbnb are all reputational opportunities that, in which we continue to manufacture trust with our gut putting ourselves at risk. This is essentially what is meant by the trust gap is expanding.

A possible outcome?

We are on the first floor of a new paradigm shift in humanity called blockchain, the thing that is going to change is trust. Blockchain will create trust companies, which will replace just about every company in the world.  All companies are at risk of having competition from a blockchain version of themselves.