Below are my thoughts on just some of directions where legal meets blockchain and where legal firms and DLT (distributed ledger technology) software companies could join the forces to disrupt the world together, leading to more value created andd
Documents, contracts and smart contracts can be signed using an e-signature.
Technology implementation would be similar to DocuSign or SignNow, or integrated with them.
In addition, thanks to DLT it is supported by a unique cryptographic keypair on blockchain each individual or organization will obtain (see Digital Identity).
In addition, optionally all “sign” transactions will be stored on blockchain so that consortium partners and/or 3rd parties can independently verify the document has been signed.
A cryptographic hash of the document will be signed and stored as a blockchain transaction. This does not allow 3rd parties to view the contents of the signed document, but if needed it can be easily proven (through cryptographic comparison) that the cryptographic hash on the blockchain indeed corresponds to specific document, specific organization / individual signing and specific date and time.
Each individual or organization interacting with a blockchain-powered ICT legal platform will automatically have a digital identity created.
It consists of a cryptographic key pair (public key + secret key) compatible with Ethereum blockchain standard and also KYC / profile information.
Every important interaction can be signed with secret key and can be independently verified using the publicly known public key of the organization / individual.
Web portal will be provided allowing entities to edit their profile information and manage digital identities.
Smart contract powered Escrow
This is just one example of what’s possible with blockchain smart contracts.
Blockchain smart contract can be programmed that way that an independent wallet receives payments from parties and automatically releases the payment based on certain conditions met (total funding criteria met, certain time passed, no dispute signals received etc). The logic can be flexible. Advantage is full transparency, decentralization and low cost (when reused). In smart contract powered escrow, no one is holding the funds, the funds are held by an independent smart contract on blockchain, and its logic and transactions are transparent to all interested parties.
Connecting legal prose and smart contracts
There is a demand for connecting “legal prose” i.e. contracts wording with blockchain smart contracts (which essentially are decentralized pieces of computer code). This could potentially be offered as a service where template “real-world” contracts are offered that are backed with template blockchain smart contracts, and two work jointly together.
Additionally, customers will be provided with web interfaces allowing to see transactions, funds held and other parameters and statistics involving their blockchain smart contracts.
Same web interface will be offering to view / download the “legal prose” by way of PDF file or similar.
This will provide the connection and reduce barrier to blockchain technology in the world of contracting, which is currently a problem.
Intellectual Property rights protection powered by blockchain
Another application of blockchain technology is IP protection. As blockchain operates immutable decentralized ledger, it is possible to store a cryptographic hash of any document, piece of art, music etc on blockchain where (1) the original document cannot be retrieved, only hash – meaning only the owner of the document can prove it is their “fingerprint” in case IP dispute arises; (2) date and time are stored accurately without possibility for 3rd parties to tamper with the record. This means once this transaction is created, the document / IP owner will be able to easily prove in future they have been the original author / owner of the document. (Well, technically they can only prove they were the first to publish it on blockchain, but in cases years on there is a dispute on authorship, for example, and the opponent cannot produce any evidence with earlier traces in their favour, this might become very helpful to support a court case).
Assets tokenizations. KYC, AML and Investor frameworks for crypto tokens and asset tokenization
Blockchain and crypto token technology has unlocked a huge opportunity globally allowing any business or individual to raise millions in funding new projects.
The shares in the projects are represented by crypto tokens which are cryptographically secure and can be traded by investors on global exchanges.
This unlocks enormous opportunity and liquidity available to businesses and startups. Technology space, real estate and other sectors have started to unlock this potential.
There are problems and obstacles however that require involvement of regulators and legal firms.
There is a shift globally from unregulated token offerings (ICO) to regulated ones (STO) where tokens are legally accepted securities. Such cases require token issuers to work with legal firms and follow local regulations, collect KYC / AML information, sometimes use existing legal frameworks such as crowdfunding or SPV (special purpose vehicles – i.e. owners of tokens also become shareholders of the company – integrated via automated filing and e-signatures), sometimes requiring financial regulators approval (FCA etc).
There is significant opportunity here for technology platform providers and legal firms to work together to offer turnkey solutions in this space.
Dappros has gained experience in this space working with customers in different jurisdictions, understanding the regulatory landscape in UK, US and EU, and working in partnership with fintech / blockchain teams at prominent legal firms. This is an interesting direction and we are open to further collaboration.