How Lawyers Benefit from Blockchain
By now, you’ve probably heard of blockchain, the technology behind Bitcoin’s cryptocurrency. Several aspects of blockchain technology can help lawyers create a more efficient US legal system.
A blockchain is a distributed ledger that stores past transactions and data such as identity, ownership, and payment details.
- It is transparent and immutable. All parties to a transaction can access all the information on a blockchain, and no one can alter it without everyone knowing.
- It is self-governing. No central authority controls how decentralized blockchains operate.
- As specified conditions are met, embedded code (i.e., smart contracts) on blockchains automatically self-execute the agreed-upon terms.
These aspects can revolutionize access to justice in the US.
Decentralized blockchains eliminate the need to send out intricate details and wait for banks, brokerages, exchanges, and other agencies to verify information and process transactions.
- Eliminating these intermediaries also eliminates their hefty fees, which often price people out of traditional finance and investment models.
- Automation reduces lawyers’ direct involvement and oversight, as there’s no need to sign off on agreed-upon transactions.
- A blockchain saves the cost and hassle of storing and updating multiple copies of agreements and transactions across offices.
As a result, lawyers can help develop a legal system that offers:
Greater access to financial services. Financial services on public blockchains fall under what’s known as “decentralized finance (DeFi)”.
A March 2022 GOA report to congress states, “Some aspects of DeFi may be more inclusive than traditional financial products … because it is decentralized rather than relying on intermediaries to make transactions, reducing one potential barrier to entry. Further, DeFi may offer greater access to financial services for the 1.7 billion adults, globally, who do not have access to a bank account.”
This would include the approximately 63 million Americans with no bank account or who rely on alternatives such as money orders, check cashing services, or payday loans.
Digital IDs. A blockchain can store digital IDs that individuals own and control. This can aid vulnerable community members who face issues with birth, citizenship, marriage, school and death records, credit ratings, benefit applications and payments, and more.
Enhanced transparency and speed. Using blockchain to store and execute employment contracts can protect often-victimized populations. Recording trust agreements, property deeds, and wills would reduce and speed up property disputes and bankruptcy, divorce, and inheritance proceedings.
More affordable legal services. In automating significant parts of legal and financial services, lawyers can serve more clients more efficiently. The potential impact is enormous.
Blockchain is often lauded for what it can do in virtual realms. But let’s also celebrate its real-world capacity to help lawyers create an equitable and just legal system for all!