Blockchain technology can disrupt and radically change the legal and financial fields. This is the prediction of Alec Ross, former innovation adviser to Hillary Clinton when she was U.S. Secretary of State, in his new book "Industries of the Future".
In an interview with Sue Troy published in SearchCIO, Ross said that blockchain technology has the potential to remove "enormous amount of friction" in legal and financial processes, as well as other transactions by removing third-party involvement from legal and financial transactions. Blockchains can potentially eliminate gatekeepers, middlemen and trust from transactions. This will speed up legal and financial transactions and will lower costs of these transactions.
Piper Alderman in Lexology, a blockchain is a public digital ledger that records all transactions for a particular asset. People connected to a network of computers maintain the ledger and anyone can access the ledger. No third-party intermediary is involved. This is the technology underlying Bitcoin transactions. Every Bitcoin transaction is recorded on a "block" through a kind of time stamp. Users employ a specialized software to look for this time stamps, verify their accuracy and add the block to a chain. The chain would contain records of all blocks in chronological order.
Blockchain has the potential to replace the intermediating function of banks in a cheaper and more secure way. It can be used as an alternate way of transferring money or transacting sales. Businesses can use blockchains to keep track of leased assets.
Cathy Reisenwitz in a blog post at Capterra says that blockchain technology will decrease or eliminate the need for lawyers in many transactions. One use of the blockchain technology is for an M of N transaction, an escrow system built into the blockchain protocol that removes most of the need for trust required by traditional escrows. A common method is to give people keys to release funds but not access to funds. To release funds for a transaction, majority or all of the people involved should agree that the requirements for fund release have been met.
"Smart Contracts", protocols with user interfaces to formalize and secure relationships over computer networks, can be executed among parties without need for a lawyer. These agreements will not be enforced by law but by hardware or software that would "fully embed in property the contractual terms which deal with it." People and companies are working on a way to move property ownership records and transfers as well as mortgages, leases, trust funds and others, on to the blockchain.
