Opportunities in the Blockchain Industry for Lawyers
Unless you've been time travelling in the stone age era, there's a very high probability that you've heard of the buzzword BITCOIN. While we're not here to discuss bitcoin, it is worth mentioning, considering many erroneously assume it is synonymous with blockchain. Unfortunately, the heavily negative reputation of bitcoin due to its coupling with scams and ponzi schemes has forced many to treat blockchain as leprous.
Blockchain, the underlying technology behind bitcoin has been enjoying a place of prominence among other hype words like AI, IoT, robotics and of course Elon Musk's colonization of Mars. Enthusiasts of the invention tell anyone who cares to listen, that blockchain can be used for anything and everything. How true is that? Undeniably, the potentials of the technology are massive, eliminating middlemen being the most cited. After all, the question blockchain sought to answer is summed up in one word: Trust.
If this is your first time of hearing the word “blockchain’’ or you've heard so much and yet understood next to nothing, fret not. The first part of the article will take you from clueless to informed. By my last sentence, you would know what blockchain is, how it works and what it can be used for. And also, (in the second part) the prospects it holds for lawyers and law firms.
Part A: Blockchain: Clueless to Informed
I. What is Blockchain?
In simple terms, blockchain is a digital record, or a digital database which is replicated on several computers. Data, information and transactions are permanently recorded on the blockchain. It is distributed because the nodes (computers) that make up the blockchain network are scattered around the world. It is decentralized because it is not controlled by any single entity, rather decisions are reached via a consensus algorithm. It is immutable because once new data is entered, it cannot be changed, deleted or altered. There are mutable blockchains, but that's not within the scope of this article. Some will also say it is unhackable, while that is true, the fact still remains that hacking the blockchain will be an expensive and time consuming task.
II. How Blockchain Works
As we saw earlier, blockchain is a digital ledger
housing data, information or transactions. Before new information is added to the blockchain, the different computers (nodes) running the blockchain software, have to first verify that the information given is correct. Once verified, the new information is added to a block. More data, more blocks, together forming a block-chain.
The process of verification (or reaching a consensus) involves nodes racing Â to solve a difficult computational maths problem. Whoever gets the correct answer first, wins the block reward. This type of consensus algorithm is called Proof of Work (PoW), common with most public blockchains like the Bitcoin blockchain. There are other consensus algorithms, such as Proof of Stake (PoS), Delegated Proof of Stake (DPoS), and so on.
III. What it can be used for
Bitcoin and other cryptocurrencies happens to be the most popular use case of blockchain. Well, it was the very first use case. Of recent, there has been a surge in projects that centre around use cases in non-financial sectors, from shipping and logistics, to farming. We'll start with cryptocurrency, and then move on to other financial and non-financial use cases.
Before that, please note that since blockchain is basically a glorified database, use cases can be clustered into three broad areas. First is where there is a need for an immutable record, example entry and exit on a country's borders or financial transactions. Second is where there is a need for digitization of physical assets, example representing a car or land digitally with a unique string of alphanumeric characters. Third is where there is a need for digitization of processes, example the process from name reservation until collection of incorporation certificate.
Cryptocurrency: Of course, you've probably heard of, or even invested in bitcoin. Although a controversial invention, there's no doubt that it is inevitable and is here to stay.
Why do I think so? Read on.
What we're yet to know is whether governments will be issuing their own virtual currencies or the “free’’ virtual currencies will be left to function.
For context, and to answer the question of why I think bitcoin (cryptos or virtual money) was inevitable, let's have a brief history of money in a few sentences.
Long, long ago, humans traded via trade-by-barter, which simply means Alice has what Bob needs and Bob has what Alice needs. Exchanging the items results in a transaction. After a while, the problem of availability and desirability, led to usage of things like cowries, special stones, animal skins and other valuables, as money. Next was metal coins which preceded today's paper money. Of course, digital transformation meant we would go from the animal skins of the stone age to the virtual money of the digital age.
One of the problems with virtual money was double spending. You could have a $100 balance and still be able to send the virtual $100 to Alice and Bob and everyone you know, and yet... still have the virtual $100. That latest cat video you downloaded can be sent to 1 million people online, but you will still have the video.
To solve this, a middleman was required to keep records of everyone's transactions. When Bob sends Alice $100, two things happen: the middleman reduces Bob’s balance by $100 and increases Alice’s balance by $100. The middlemen (e.g. banks and governments), always had full control over these records, making them vulnerable to threats or insider manipulation. Enters blockchain, a digital record duplicated everywhere, effectively doing away with the need for a middleman.
Education: At a Blockchain for Kids class I took sometime in August, while discussing use cases, some of the kids suggested that blockchain could be used to track payment of school fees. Several universities currently use blockchain to record degree certificates which can be tokenized and verified by anyone anywhere. A prominent example is the University of Nicosia, Cyprus which registers student's certificates on the blockchain. There is also Holberton School of Software Engineering in San Francisco. Last example is MIT Lab and Learning Machine who are using blockchain to let people prove their education and employment history digitally.
Government: Whether for things like voting or identity management, blockchain can be used to track and verify votes cast and people's ID. Mobile online voting is increasingly being adopted. The problem we mentioned earlier, blockchain technology can be utilized. Some states in the United States, Thailand and several other countries have either experimented with or are considering using blockchain for online voting.
Smart Contracts: Don't let the name confuse you, they are not smart, and neither are they contracts. They are just codes written by smart people to represent a “contractual” agreement. Once running, there is literally no stopping until the “contract” executes. Thus, there is no way to make adjustments, if terms of the “contract” change before execution date. How dumb is that?
Industrial: Think verification of genuine products, then you have a use case of blockchain in the industrial sector. Granted, this will involve collaboration with IoT, RFIDs tags and other technologies.
Supply Chain: Remember the three blockchain use cases clusters I mentioned earlier? The supply chain industry ticks all those boxes. It's no surprise then that heavy developments in that direction are on going. Most notable being the joint venture between IBM and Maersk. Just last December, I was on a panel in Accra, Ghana discussing blockchain, supply chain, the legal and data protection issues involved.
Part B: What's in it for Lawyers?
I. Will the Law of Code replace the Code of Law? At the center of blockchain technology is the ability for a Decentralized Autonomous Organization (DAO) to govern itself based on code (smart contract) alone. This is where rules of governance embedded in code, determines how the organization is run.
Just think of it as IF-THEN. IF you pay your rent, THEN your house will be unlocked. This is just a simplified analogy, but it is much more complicated.
Now, imagine the DAO on a large scale like a country or a continent. Dubai is aspiring to become the first human government to run fully on code (smart contracts). That brings us back to the question: will the law of code replace the code of law? Beyond all reasonable doubt, that will not be happening any time soon.
Law has always played catch-up to technology's fast-paced development. How else can one explain why we already have facial recognition technology but still vote by thumb printing.
In as much as blockchain, smart contracts and code could help improve efficiency and better track transactions, there are inherent challenges that make it unsuitable as a replacement to law or lawyers.
At the forefront of these challenges is reversibility. Once running, there is no stopping. There is no provision to reverse errors or mistakes. No Undo button. I'm sure, you can begin to imagine the complicated legal implications of that.
The focus shouldn't be on worrying whether the robots or smart contracts will phase out lawyers. Rather, the focus should be on future-proofing one's career.
II. Practice areas to consider
Businesses with a desire to stay ahead are all taking deliberate steps to integrate blockchain or some form of Distributed Ledger Technology into their corporate structure. As we saw in the use cases section of the article, blockchain holds almost unlimited opportunities for today's businesses, from adopting the database for transparent, decentralized records, to utilizing the platform for crowdfunding through an ICO (Initial Coin Offering) or any of the other variants - STO (Security Token Offering), TGE (Token Generation Event), etc. All of these have legal implications that requires the services of a lawyer.
Always likened to the era of the early days of internet, blockchain as a new technology still has a long way to go before it becomes as ubiquitous as the internet. As things get Â refined and mainstream adoption accelerates, its potential would likely exceed expectations.
Uncertainties in the legal framework for blockchain and cryptocurrency, has left more questions than answers, for both lawyers and prospective clients around the world. Are regulators perhaps admitting that “blockchain is too unregulated to be regulated?” Moreover, how does one centralize (regulate) something designed to be decentralized? Hopefully, regulators around the world would take steps that feature a balance between protecting “consumers” and at the same time not stifling innovation.
Just because there are no specific laws regulating blockchain and cryptocurrency does not mean it is a free for all. Several existing laws such as those relating to capital markets, investment, technology, Anti Money Laundering
and data protection apply.
Services a lawyer could render in the space range from general corporate legal services, giving legal opinions on a token's design, structuring a token sale, drafting of specialized documents [like Simple Agreement for Future Tokens (SAFT)], reviewing/auditing smart contracts and legal consulting on compliance.
Blockchain legal consultant/attorney is one of the five most in demand blockchain jobs of the future.
Consider these pairings:
Blockchain and Cybersecurity
Blockchain and Data Protection
Blockchain and GDPR
Blockchain and Tax
Blockchain and Capital Markets (securities)
Blockchain and Tokenization (digital assets management)
Blockchain and Smart Contracts (DApps and programming)
Blockchain and IT
Blockchain and Arbitration (ODR)
Blockchain and Real Estate
Blockchain and FinTech
Blockchain and ICO/ITO/TGE/STO
Blockchain and Cryptocurrency
Blockchain and Artificial Intelligence
III. Establishing in the space
While this is stated specifically for the blockchain practice area, it can be adopted for any other practice area.
The bottom line is “Get known, increase your visibility.” Online and Offline. Give Value and be Visible.
Five ways to get known. 1. Endeavour to put out content that is Relevant, Omnipresent and Interesting
Relevant means, if for instance, you have presented yourself to your audience as a real estate lawyer, 90% of content from you should be about real estate. And not, Monday cybersecurity, Tuesday abortion laws, Wednesday election petition and so on. Your audience could get confused and have no idea what you should be known for.
That takes us to Omnipresent . Your content should be everywhere. Best way to achieve that is by being consistent. The most obvious benefit of being relevant and omnipresent is that, you are the first person that comes to mind when people think of referrals in that practice area. I'm painfully aware that being consistent is really tough, but it gets easy when you have a constant flow of content ideas. Here are ways to get a stream of content ideas: 1. Google Alerts; 2. Searching for related hashtags on LinkedIn and Twitter; 3. Email subscriptions. I'm on the list of very good ones. Also, your content do not necessarily need to be in lengthy forms. Short twitter-like content would do, so far it is something that adds value to your audience. But of course, you should also devote time to long-form pieces and publish in reputable journals or publications, online and offline.
It's no secret, today's audience have a very short attention span, to keep them engaged, you have to be interesting. And no, you're not obligated to crack jokes. Passing across your message in simple terms, using everyday,
familiar analogies is sure to be found interesting. Remember, be ROI and you will surely see a ROI.
By the way, your content could be text, image, audio or video. You also do not need your own website before you can start putting out content. You can use LinkedIn Pulse, Medium or Legal Business World.
2. Attend events
Attend events which your prospective clients attend. That's why I go to some blockchain events, for the networking. Be smart though, filter out and attend only quality events. 3. Speak at events They do not have to be events solely devoted to your practice area. For instance, in July 2018, I spoke about cybersecurity at the African Women in Tech conference which held in Nairobi. At the end of the day, there were discussions on cryptography and securing one's private keys. So, you see, we still came around to my practice area.
Here's a tip to getting speaking opportunities. I recently gave a colleague this tip and he has reported success trying it out. Search for events that catch your interest online (Eventbrite, Meetup) and offline. Contact the organizers and ask for the opportunity to speak on related legal aspects. Usually, they don't have such topics on the agenda. And most times, you will get a favourable response. Also, be on the lookout for calls for speakers application.
4. Write a book and Train This is a no brainer. A well written and well researched book instantly affirms one's place as an 'expert' in that field. By the way, that one has to write a thousand pages before it can be called a book, is a myth. Anything of about 20,000 words and above is fine. A side effect of writing a book is that you can train others. I have facilitated online and onsite lectures on blockchain and law for about a thousand lawyers and other professions.
5. Learn to program smart contracts
My fascination with smart contracts was how I got involved with blockchain. This led me down the path of taking a programming course (android and java) and on my way to taking more blockchain-programming-specific courses. A lawyer who can code smart contracts will be indispensable in the nearest future.
As my last words in this article, I would like to address a question many of you might have, most especially young lawyers. When I gave this lecture few months ago, one of the lawyers in attendance came to ask me this question privately. The lawyer said: “how safe is it to have a career in blockchain?”
Here's my answer: Yes, things are uncertain at the moment concerning blockchain and cryptocurrency. However, one thing that is certain is change.
There is no such thing as a safe career for life. It's all about developing marketable skills that give you a competitive edge.
Develop skills that are manifold. Skills that
make you valuable in multiple industries, multiple countries and multiple careers. Moreover, I have listed over ten blockchain pairs. You can never go wrong with any of them.
So, rather than asking “is a blockchain career safe?” You should be asking, “how do I future-proof my career?”
About the Author: Faith Obafemi is a digital lawyer whose practice area revolves around legaltech, cryptocurrency, blockchain and smart contracts. As a Founding Partner at Lex Futurus, an international blockchain law firm, Faith helps her clients illuminate and navigate the crypto dark maze. When she's not decoding the law for her clients, you can find her learning Solidity and HyperLedger Fabric or watching Korean series" LinkedIn Twitter