Chances are you have may heard about it.
More likely you don’t really know what it truly is?
It is fair also to say that it is still a technology in its infancy.
This is notwithstanding the hype which you may hearing about it when it is spoken about.
Yet some say it is part of a technology revolution that is on par with the rise of the internet in terms of its future potential.
Big call I know.
Blockchain, bitcoin, Ethereum, smart contracts, automated distributed ledgers and cryptocurrencies are new words that are becoming increasingly entrenched in our language.
What ensues with this new technology is a mix of hype, excitement, opportunity, confusion, complexity and uncertainty.
Blockchain lets people and business make and more importantly verify transactions with one another based on mass permission granted from a diffuse computer network almost instantly.
This without using some form of middleman acting as intermediary. A bank being the most relevant example that comes to mind.
Using the banking analogy, it is a way that allows traditional ledger technology and its use of cross checks and time lapse to be taken to the next level via automation and cryptography.
The ledger operates in an automated manner.
The process is open, public, transparent, almost instant and importantly creates an irreversable record ledger – the blockchain.
More About What Is Blockchain?
The blockchain is therefore the automated set of ledgers that exists across a network of computers (called nodes) which store the record of all the past transactions made.
Through this process, the blockchain ends up being the history of transactions which resides on that block of ledgers, thus creating a permanent ongoing record but also the basis for the evolving future blocks.
The issue of course is it is still early days.
Therefore there are challenges ahead especially given it is not a centralised nor regulated technology. There is no one central guardian or custodian of it.
Indeed it is and has been by nature quite fragmented and dynamic in its development.
It has however the ability to profoundly transform how business is transacted. This in a way in which may not have even been properly contemplated fully yet in terms of its impact.
That is why it is so important that businesses and their owners should take some time to learn about it and understand its potential use and application to their area of business.
As commercial lawyers, we can clearly see the benefit of blockchain as a technology that will transform business. It will also change into the future how people transact on a day to day basis.
We see opportunity for our clients, for their business and for us working hand in hand with them.
But we can also see past all the “game changing” and “disruption” hype as well.
Yes the positive benefits include increased productivity, less reliance on middlemen and central authorities as well as lower transaction costs. But they come at a cost. This has to be tempered with the inherent risk in transacting with anonymous parties, cyber security breaches and compliance as well as privacy issues. And most importantly what happens if something goes wrong such as a hack.
How things get dealt with when things don’t go right is an important ongoing issue being discussed by the blockchain community.
The scope for such technology I reiterate can’t be ignored however as demonstrated by the number of patents being applied for relating to computer software indicating the opportunities and potential that lies ahead.
The Future Of Blockchain
Indeed pilots and tests are being conducted in areas as diverse as music royalties, currency exchange to property title registration. They demonstrate there is significant interest in the technology. This is being facilitated at a crowdfunding level up to major banks and government organisations.
Only today the US Caucus set up a committee to review cryptocurrencies as a technology.
Call us on 9528 0235 to talk to us about blockchain and how it relates to your business.
Paul Ippolito is Principal of Ippolito Lawyers. He is an experienced commercial lawyer. Paul also lectures in commercial and corporate law at The College Of Law in NSW. He has previously studied Cryptocurrencies at Princeton University through its Coursera program (apart from the coding part of it). Paul is currently undertaking a Blockchain For Business – An Introduction To Hyperledger Technologies course through Linux FoundationX through the Edx program (again the coding part is doing his head in).