Why Nigeria lawyers need to know more about Blockchain & Digital Assets Technology.
Recently, I was a panelist at a Lawtech event in Lagos Nigeria; Innovation & Tech Law Summit 2019 convened by Chuma Akana, to be precise. The event themed: Ensuring an Enabling Environment for Digital Innovation, was organized in partnership with the Lagos Chamber of Commerce International Arbitration Centre (LACIAC) by Innovation & Technology Lawyers Network.
Our panel session topic was: Cash and the Digital Age: The Legal Implications of Blockchain, AI and Smart Contracts.
During our interactive discussions, ney question and answer segment, it dawned on me that there is a need for the learned gentlemen and ladies of the bar to “learn more” and know more about the emerging techs of Blockchain and Decentralized Finance. Lawyers need to understand the power of blockchain technology because blockchain technology needs input from lawyers. And once they understand the potential of this technology, they will understand why they need to be more involved in what is going on in the space.
Blockchain technology is one of the most disruptive technologies of our generation as it is in the process of creating new ways to bank, contract, invest, insure, fund ventures, tokenize assets, register IP, register and convey real property, secure identity, manage healthcare, and a whole lot more. It has already thrown out hundreds of new global currencies aligned with no sovereign authority. It has the ability to alter or to eliminate the roles of trusted third-party intermediaries such as banks, corporations, accountants, and lawyers while bypassing the historic processes of governance and of regulation.
Hear this;
“This innovation carries a significant stretching far beyond cryptocurrency. The blockchain lets people who have no particular confidence in each other collaborate without having to go through a neutral central authority. Simply put, it is a machine for creating trust.”
— The Economist, October 31, 2015
Sadly, many of the lawyers I met in that forum are still unable to distinguish between Bitcoin and Blockchain!
Even though Blockchain technology is an integral part of how Bitcoin and other cryptocurrencies operate, it goes far beyond that. The technology is simply esoteric. This makes it very difficult to understand for the layman.
But Lawyers are not “laymen”!
In their most distilled form, blockchains consist of chronological ledgers that record every transaction. In these ledgers, records are stored in the form of cryptographically-verifiable chunks referred to as blocks. These blocks are, thereafter, chained together, with the previously recorded block linked to the proceeding block to form the blockchain.
As of November 30, 2019, there were roughly 260,000,000 search results of the word “blockchain” on google. This could be very confusing to an average reader with zero knowledge of technology, and programming in particular. Though it speaks to hype to some extent, it primarily demonstrates the exponential growth and the importance of blockchain technology.
So, is blockchain an existential threat to the legal profession? Or is it a remarkable opportunity for cooperation and prosperity on a global scale? Lawyers should be contemplating these questions and determining the role of their profession in an economic do-over that is just over the horizon. The knowledge and pragmatism of lawyers are crucial in fashioning a future with this still developing, powerful technology in Nigeria and across Africa.
Here’s the point, trustable networks like Bitcoin or other altcoins are opening new ways to finance and build ned decentralized economies. The state of art of innovation in the Blockchain industry is to rethink from scratch how our society grants values and to rebuild every cross-border interaction to be censorship-resistant without a single point of failure, designing economies that work in anonymity, without any need to trust a single person or an entity, but only math and code.
The Law of code becomes the code of law!
Bitcoin and follow-on cryptocurrencies (altcoins) or tokens are open-source innovations. There is no gatekeeper determining who may and who may not build these networks, and modifying them or building them from scratch requires nothing more than an Internet-connected computer. This permissionless ecosystem for innovation is one of the reasons we should celebrate and support the technology: it helps to break down many of the structural barriers that divide us, whether as producers and consumers, banked and unbanked, or rich and poor.
Trust, transparency, immutability, and security are the core.
The openness of the ecosystem also means that many will misuse the technology for selfish and malicious reasons. These will have legal implications with or without fresh legislation.
Decentralized Cryptocurrencies and tokens, broadly, are truly innovative.
For Bitcoin, it is the original cryptocurrency; the first truly decentralized network for sending and receiving value over the Internet.
That is to say, they present an arrangement of technological components that is so novel and varied as to defy categorization as any traditional asset, commodity, security, or currency.
At root, units of a cryptocurrency are scarce items that can be exchanged and may have market value despite the fact that they have no institutional issuer or legally-promised redemption. In this sense, cryptocurrencies are somewhat like valuable commodities (e.g. gold or platinum). However, unlike gold or platinum, cryptocurrencies are entirely non-tangible. That is to say, that they exist only in the minds or promises of men and women who believe and subscribe to them.
Lawyers need to understand these concepts on a fundamental level and help in drafting needed regulatory documents that will help to foster the emerging ecosystem. They need to understand what IEO, ICO, STO, etc. means and their legal implications in different jurisdictions.
This is huge!
The Promise of Blockchain in Law
The secure, immutable and transparent nature of blockchain will allow attorneys to record and authenticate many types of legal matters. That includes any ledger-based activity: property records, UCC filings, court records, funds transfers, chains of custody, contracts and even legal opinions.
Here’s a shortlist of possible innovative areas that will likely lead the disruption in the legal profession;
Smart Contracts
Corporate Filings
Land Registry and Property Deeds
Intellectual Property Rights
Document Notarization
Public Services Records
Criminal Cases tracking
Dispute Resolution
Industry Organizations Advancing Standards
Why Lawyers Need to know more about Blockchain technology
The legal industry is undergoing profound changes, as the digital revolution takes its course. New technologies and innovative business models challenge the established position legal professionals have retained for centuries as sophisticated, high-earning advisors to every significant business transaction. With the advent of smart contract technology, business transactions of all kinds will experience a significant evolutionary step towards automation.
Law firms that recognize the disruptive potential of blockchain technology early, possess a significant first-mover advantage. In a blockchain-based future, legal firms will be service providers on digital infrastructure. Understanding how law firms will realize their influence on business decisions in such a future is today’s challenge.
How to get started
Lawyers should be in the business of attending blockchain and fourth industrial technology conferences and workshops that expose the basics of blockchain and smart contract technology, especially blockchain!
Why?
Because none on the other techs has the ability or enablement for transfer of value across borders. Value has become fluid. Such fora will deliver hands-on examples/ live coding sessions that will demystify the phenomenon of “blockchain” and introduce simple but effective strategies to make use of smart contracts today. They will learn how to combine both legal and smart agreements in one cohesive process and understand various techniques that allow legal professionals to combine their unique domain knowledge with real-world smart contract agreements, in other to offer their clients the best of both worlds.
Conclusion
While bitcoin and other cryptocurrencies take the headlines, the blockchain technology underlying them has even greater potential for the legal industry. It’s an immature market and a still widely misunderstood technology, but new opportunities, initiatives, and application ideas surface every day. As the growth of blockchain unfolds, law firms and attorneys focused on nearly any practice area will be impacted in some way and would do well to seek opportunities in blockchain.
Drop me an email at chimezie@chuta.me
