Blockchain is one of the many hyped up buzzwords of our times. Everywehre you go, people interject it into their talk and strategies or features. But what does it actually mean? And more importantly, as lawyers, what is the hype all about and should we be caring?
Dissecting blockchain seems to be the only way to understand it, because as soon as you venture into its constituent parts, intricately connected, there’s far more tech speak than any of us lawyers can pretend to muster. It feels a little like reading Latin in your first year of law or piecing together Roman law with our modern Constitution.
So what is blockchain, if one had to try and explain it in Human? It refers to a series of blocks, with each block presenting an individual transaction operating on an internet connected network, linked together by a series of rules. The rules are preprogramed and serve to govern the transactions that are automatically concluded between two peer groups (contracting parties) on the network when the preprogramed rules are complied with, without the need for a central, “trusted” authority to render them valid.
The predetermined rules, known as consensus rules, manages the transactions and how the parties interact with each other and the transactions on the network by defining, when a transaction would be deemed valid, what the transaction costs would amount to, providing a mechanism by which transactions are validated (similar to a digital signature, password or biometric data) and lastly, the rules on changing the existing consensus rules.
Thus, holistically a blockchain represents a complete ledger of all transactions that have occurred over a series of time, starting with the first transaction known as the Genesis and each transaction concluded thereafter being added to the chain, linking up, as more transactions are undertaken and concluded, to provide for an ever continuing chain between two peers without a central, managing authority.
Blockchain not only offers the ability to store an immense amount of information, which is generally regarded as unmanageable, but also provides for the decentralised, independent verification of information without a central controlling body and for increased certainty as transactions, once they have been concluded are added to the blockchain and cannot be deleted, changed or tampered with unless all parties agree thereto and the consensus rules are amended. (Altman, 2018)
Blockchain holds significant potential in the changing legal landscape, especially in automating routine legal procedures and processes by way of smart contracts, comprised of scripted logic, terms and conditions which allow for automatic execution of basic contracts, such a the renewal of a lease agreement or conclusion of a non-disclosure agreement, which does not require human oversight or negotiations.
With smart contracts, blockchain also creates the potential for the automatic transfer of assets between participants on the peer to peer network where the preprogramed (conveyancing) rules and regulations are complied with, without the need for a controlling, central deed of registries to validate the transfer of ownership, saving time and costs and allowing for easier transfers and better customer relations. Blockchain further offers significant value to the legal field in terms of the immense amount of information it can store, recording pervious legal matters, transactions and events over a long period of time such as irrefutable intellectual property claims or criminal charges and providing legal firms with the opportunity to discover hidden evidence or contradictions that could assist in winning legal argument. (The Legal Executive Institute , 2019) (Altman, 2018)
Now the question is – have you actually ever seen a smart contract? Is this all fiction or is it real?
Join the Futures Law Faculty on 4 July at 5pm at the Inner City Ideas Cartel to delve into this hyped up technology to uncover the truth.
If there’s one expert in South Africa, it’s Tanya Knowles, Faculty Member of Singularity University and Chairperson of the South African Financial Blockchain Consortium (SAFBC) which is comprised of over 50 members including the country’s largest banks, financial institutions, regulators, consulting and legal firms and start-ups. Tanya has been internationally recognised as one of the leading women in blockchain technology. Tanya will be joined by Adv Jackie Nagtegaal, a futurist and legal professional that has conducted research into the application of blockchain and legal practice. She will contextualise Tanya’s finding to the legal fraternity and show examples of application from around the world.