The Technology Behind Bitcoin Could Replace Lawyers, Too
May 18, 2015 • Blog Post • By Quartz Creative
IN THIS ARTICLE
- Bitcoin technology will increase the speed and anonymity of transactions across any industry
Smart contracts promise to relieve businesses of the costs and lag-time of corporate legal work. This software-based change could affect services firms everywhere.
Everyone has heard the hype about Bitcoin, but the real promise of the technology behind cryptocurrencies is smart contract that is, legally binding agreements that execute themselves through software.
In Bitcoin, the contract is the transaction itself: one party sending another funds. But in commercial banking or investments, smart contracts could execute unknowably complex contingencies based on the terms of the contract, all in real-time, with total transparency to the agreeing parties.
If that sounds fast, then its warp speed by comparison to theblock chain transactions are recorded in a public ledger holding every transaction with a unique but anonymized key, so if someone modifies one copy of the ledger, everyone else's copy makes the fabrication clear by comparison. human lawyers, accountants, consultants, and bankers, many of whom bill small fortunes by the hour. By comparison, a smart contract is just software—and not even complex software at that. What makes it unbeatable is its imperviousness to fraud:
The question is: if two nerds on the Internet hold a transaction, does anyone care? The Fortune 500 had better. Innovators in the block chain space are experimenting with ways to use the protocol in B2B payments without all the usuallimits on transaction volume. If they succeed, credit card companies, payments processors, and legions of accounting and law firms (and of course, the attendant consultancies) would be devastated.
That'll cost jobs but save billions for companies and individuals alike. But it also will increase the speed (and potentially the anonymity) of transactions at all levels of the economy. With that kind of uptick in volume, the IRS might end up being the most disrupted entity of them all.