Blockchain and legaltech have been on a collision-course for years..
This is bringing together two segments of society that weren’t all that well-acquainted in the past. Having trouble with some of the terms? Here’s a quick overview of some commonly used words from both the legal and blockchain space. Happy reading!
The potential applications of blockchain technology to legal services are numerous. Below are some of the most common ones.
Let’s start with the basics:
A glossary of Legaltech cannot start without mentioning:
- Smart Contract: a program that automatically executes a contract when triggered by a specified events. This is like a digital vending machine — if the pre-determined condition (in this case, a coin is put into the machine) is met, the vending machine releases control of an asset (in this case, a can of Pepsi). Smart contracts can be executed on a blockchain platform, like VeChain.
- Smart Legal Contracts: Self-executing agreements with terms and conditions traceable on an immutable blockchain. Smart legal contract platforms (eg. Jur, Openlaw, Clause) take more traditional legal contracts and automate them using code.
- Decentralized: Lacking any centralized server or agency, significantly reducing the risk of breaches caused by bad actors, hacks or natural disasters.
- Blockchain: A decentralized, immutable ledger is used to record data or transactions across many computers, making data written to the chain transparent and permanent.
- dApps: A decentralized application, usually using a blockchain as part of their core product.
- Consensus: The agreement of all participants of the network on the validity of something. This is an important part of blockchains, as the method of consensus affects how secure, efficient, costly, and decentralized a platform is.
Now that we have that under control, let’s move on to some more advanced terminology:
- ADR (and ODR): Alternate Dispute Resolution platforms (and Online Dispute Resolution) replace the role of courts in mediation processes. They can act as a third-party to make a decision on a dispute and distribute contested funds via smart contracts (eg. Jur, Kleros).
- Litigation funding (or legal financing): In the current legal system, people hoping to fund high-profile lawsuits can receive funding from firms or groups of people hoping to earn interest on any damages received from a successful ruling. Tokenisation (making a product, asset, security, or liability into a token on the blockchain)enables plaintiffs to crowdsource litigation funding and automate the repayment of financing (eg. Jur).
- Trust accounting: A smart escrow ‘locks up’ digital assets so no party can access it until it released by a defined trigger event. The “power of attorney” can now become digital and transparent. This is how the Jur Beta Platform works.
- Evidence: Users can trace digital documents or media for evidence of contract versioning or proof of prior ownership (eg. Blocknotary).
- Certification: Institutions can issue certificates for bar qualifications and university degrees which can be verified by anyone. (eg. Blockcert).
- Paper documents: Important documents like property deeds can be stored on the blockchain, preventing loss or destruction (eg. Lantmateriet).
- Pro bono: Tokenised reward systems incentivize pro bono (free) legal work for low income or disadvantaged clients (eg. Legaler Aid).
- Fractional asset ownership: Token ownership makes it possible to “crowdsource” ownership of real-world assets like real estate or fine art (eg. Blocksquare).
- Predictive justice: Applications that use big data and AI to compare a
current scenario to a database of previous court decisions and output a chance of success.
- Computational Law: The capability of computers to automate some aspects of the law, particularly judicial decision making.
- Document analysis: A data collection technique that evaluates documents, grouping together keywords and important pieces of information.
- Digital Signature: a mathematical or cryptographic method of presenting the authenticity of digital assets.
- Digital identity: online identity adopted by either a person or an electronic device.
- Application Programming Interface (API): A gateway to a program, protocol, or operating system. This makes it easy for other applications or users to “use” or integrate the application (e.g. logging into a third-party website using Facebook or Google account details). Jur’s API will allow other platforms to integrate parts of our decentralized legal ecosystem for easier adoption.
That’s all for now!
Use the knowledge just learned to get a better understanding of the nascent legaltech industry and help us building the legal decentralized ecosystem.
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