Advancing and Implementing Blockchain in the Legal Industry, 1218 COBJ, Vol. 47, No. 11 Pg. 6
| Author | By PIERSON GRIDER |
| Position | Vol. 47, 11 [Page 6] |
TECHNOLOGY IN THE LAW PRACTICE
By PIERSON GRIDER
According to Above the Law, 2017's top legal technology word was "blockchain."1 Over the past year, numerous legal publications have covered blockchain basics, cryptocurrency regulation, and the application of smart contracts, but there hasn't been the same focus on use cases and adoption within the legal industry. This article explores the basics of blockchain technology, identifies legal organizations that are pushing the advancement of blockchain, and discusses how legal organizations are implementing these technologies.
This is important to Colorado. In June of this year, Governor Hickenlooper created a 12-person council of local political and business leaders to develop a legal framework to support blockchain while protecting Colorado consumers.[1]Additionally, in May of this year, the Colorado legislature passed a bill regarding encryption and blockchain to store sensitive information.2
Blockchain Basics
Because blockchain technology has been discussed in several recent Colorado Lawyer articles,3 the following is an extremely simplified explanation.
At its core, a blockchain is a database ("ledger") that records digital transactions. The ledger is duplicated and synchronized across all computers ("nodes") in the network. For a transaction to take place on the ledger, the nodes must come to a consensus and verify the transaction. Because all of these transactions are encrypted, digitally signed, and cannot be altered, the distributed nature of blockchain technology creates intrinsic trust in the network and removes the need for social trust in intermediaries and central authorities.
A good application of this technology is land titles on a blockchain. Currently in the United States, we trust title companies to serve as intermediaries to provide accurate title searches to verify chain of title. This involves time and expense. If chain of title were recorded to the blockchain, there would be an immutable record t rusted by all parties, and tide companies would no longer be necessary.
Smart contracts are another blockchain use within the legal industry. Basically, a smart contract is an agreement between multiple parties where conditions and triggering events are programmed into computer code and stored on the blockchain. When conditions of the agreement are satisfied, triggering events automatically execute. Because the agreement is on a blockchain, there is an immutable record of the agreement. Therefore, the parties of the agreement trust that the triggering events will automatically execute when conditions are satisfied.
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