Blockchain and How It Will Benefit the Legal Industry
Financial and technology industries alike are combining in a grand way, giving rise to the birth of blockchain outside of its normal working conditions. Blockchain is a distributed digital ledger designed to power and back cryptocurrencies—the most popular of which is bitcoin.
Due to the nature of the technology (its reliance on transparency for certain content and ultimate security for other aspects), blockchain is an incredibly lucrative tool in many fields. In healthcare, for example, it can be used to store, share, and protect sensitive patient records and information.
As it stands, blockchain technology is poised to become a critical component of the infrastructure for the Internet of Things (IoT) and modern connected experiences. IBM is currently investing over $200 million into blockchain-powered IoT technologies.
The company also has 1,000 employees dedicated to blockchain-powered IoT projects and that’s just one organization. Right now, 90% of European and North American banks are exploring blockchain as well.
While it does have some implications for privacy and law, blockchain has just as much to offer the legal industry regarding benefits.
How Does Blockchain Work?
In the world of cryptocurrencies, a “block” is the name given to a public transaction. Every time the related currency changes hands, whether through mining or a direct payout, it’s recorded in the ledger and made visible to all.
The ledger has a complete history of any and all transactions made, forming what is a chain of information. Therefore, a blockchain is essentially a huge list of transactions, one after the other.
Here’s where the security comes into play: even though you can open that digital ledger and look at any one of those transactions or blocks, all you can see is the item changing hands and how much it’s worth. With currency, for example, you can see that X amount of bitcoin was transferred from one account to another.
A block or transaction cannot be altered by any parties, including those involved, outside of the initial reporting. It remains transparent, reliable, and accurate for the life of the chain.
Furthermore, the identities of both parties remain anonymous. Even if your closest neighbor earned millions through a recent blockchain transaction, you’d have no idea unless they told you directly.
That anonymity can seem dangerous at times, especially regarding currencies that change hands for many reasons—some unscrupulous. However, it can also protect sources in several fields when the technology is used. Consider a lawyer sharing a sensitive case record on a person with another law official through secure digital means, with no record of who has what.
How Can Blockchain Be Used In the Legal Field?
It’s important to note that while we will posit some ideas for the use of the technology here, it’s not a comprehensive exploration. The technology is new enough that it’s likely that many opportunities and use cases will appear soon that were never discussed before. Keep an open mind when learning about this technology.
1. More Compliant Regulatory Reporting
Legal professionals deal with challenges from regulatory compliance, reporting, management, and even globalization. Couple this with the fact that modern business requires improved speed, efficiency, and service and you have a recipe for disaster—one that could easily be remedied through the adoption of blockchain technology as a digital ledger for related documents and files.
Because it’s practically untouchable—it’s stored in a centralized database and cannot be modified or deleted—blockchain can be used to ensure compliance is achieved, maintained, and, more importantly, unaltered over time. The consistency, reliability, and uniformity of data, particularly for sensitive topics, is important in the legal sector. So really, whether or not blockchain should be considered is a no-brainer.
2. Enhanced Cybersecurity and Protections
Sadly, no industry, business or individual is safe when it comes to their data being available on the public and open internet. Even a local network not connected to the outside world used by large organizations or collaborative teams can be breached. This danger means that security is a remarkably difficult and resource-intensive thing to stay on top of.
Blockchain could change security risks considerably because of how secure the handled data remains. One company, Bitium, already developed an authentication system that relies on blockchain called Blockchain Single Sign-On, or SSO. It’s designed to protect a user’s account and connected apps, all of which are stored in the cloud. It can be used to access documents, files, and sensitive data.
One type of attack blockchain reduces considerably is phishing, which is where attackers create fake yet legitimate-looking portals to trick unsuspecting employees and individuals. As a victim, you visit the fake portal and input your login details or sensitive information only to have the hacker make off with your personal details. They then use collected information to gain access to highly sensitive systems and networks, such as the ones legal professionals use to handle documents and information.
Blockchain Will Grow
From here, the sky’s the limit. Blockchain will continue to grow and disrupt many industries, legal included. We can expect to see just as many organizations and teams adopting the technology as we do methods and strategies for deploying it.
The real question is whether or not an alternative will show up that’s just as viable and efficient. For now, the answer is no.