Ignorance of the law excuses no one. Every business has to be aware of and abide by regulations that concern their operations. It’s not only large corporations who should be aware of certain legal liabilities and issues.
Ventures exploring innovation may touch on legal gray areas and even small businesses still have to deal with routine compliance. Having legal input is necessary to mitigate exposure and risks down the line.
Unfortunately, legal expertise is often seen as a luxury especially by startups and small enterprises. Legal services aren’t exactly cheap. However, forgoing legal consultations can be quite the risky especially for businesses operating in highly litigious societies.
Any hint of bad service can be seen as an opportunity for a lawsuit. Suits, no matter how frivolous, can be unnecessary burdens for growing operations.
Technology is starting to offer solutions to this concern. Blockchain, the technology that powers cryptocurrencies like bitcoin, provides secure and immutable record keeping.
This capability makes it promising for legal applications. New blockchain platforms are now also capable of enabling smart contracts – software that could record the terms of agreements on the blockchain and even automate their fulfillment as conditions are met.
As such, smart contracts appear poised to take over certain legal functions. But will they be enough to replace lawyers?
Smart contracts made easy
Many ventures are already embracing blockchain. Secure and immutable records are crucial in most business functions so applications of blockchain are now explored in a variety of industries.
Even large enterprises and traditional financial institutions have embarked on their respective blockchain projects. Gartner projects that blockchain and smart contracts will be in use by more than 25 percent of organizations worldwide by 2025.
The emergence of blockchain platforms such as Ethereum allows for wider access to smart contracts development. Developers can even use these platforms to create their own smart contracts and cryptocurrencies.
However, as software, smart contracts have to be developed and tested properly. This requires technical expertise to accomplish. Due to the current demand, hiring blockchain developers can command be quite expensive and such costs could very well offset the supposed advantage of using smart contracts over traditional legal services.
Fortunately, new blockchain ventures seek to remedy this. For instance, Jincor solves the technical complexity of smart contract and cryptocurrency development by “attempting to provide digital jurisdiction for B2B interactions”.
Jincor’s platform allows organizations to implement these functionalities through user-friendly and affordable means. The platform is also set to further extend the platform’s capabilities to enable companies to facilitation of contracts on the blockchain environment.
This would also allow for users to settle disputes through decentralized arbitration.
“Each company created in Jincor ecosystem has its own digital profile, which can be verified by its business partners (like banks, brokers, legal service providers etc.), listing of participants and one or few cryptocurrency accounts so that they can instantly perform regular financial operations automatically.
In the long-term, Jincor is meant to become a unique environment for implementation and development of various blockchain enterprise applications,” wrote Vladislav Kirichenko, the CEO and co-founder of Jincor.
Smart contract advantages
The ability to implement smart contract that could readily benefit organizations. For small to medium enterprises (SMEs), contracts are essential in defining the scope of transactions such as deliverables and costs.
Having these details in writing offer businesses protection in case disputes arise from transactions. Smart contracts leverage blockchain’s transparent and immutable records making them potentially more secure than traditional legal documentation.
Because of this, smart contracts could even allow for large transactions to be conducted purely online. For example, real estate transactions have mainly been face-to-face and offline.
They also require several intermediaries such as brokers, lawyers, and banks to facilitate each step of the process.However, since smart contracts could already keep track of the terms of an agreement and automate enforcement, third party involvement may not be necessary anymore.
Blockchain and smart contracts can be a difference maker to organizations. Accenture estimates that investment banks could save $12 billion a year on infrastructure costs by using blockchain and smart contracts.
Not only do smart contracts have the potential to offset intermediary costs, but automation could also improve overall business efficiency leading to better experiences for customers.
Admissibility and enforceability
Perhaps the greatest hurdle for blockchain and smart contracts is regulation. As an emerging technology, blockchain has yet to enjoy widespread legality. General admissibility and enforceability of smart contracts is still a work in progress.
Despite this being the case, smart contracts as technology can readily be used to automate transactions. Businesses could already benefit from the reduced friction in the fulfillment phase of agreements.
Various territories are warming up to blockchain as a technology. Japan has declared bitcoin a legal payment method. Sweden is also testing blockchain for its land registry. In the US, Arizona passed a law recognizing smart contracts and blockchain signatures.
Vermont and New Hampshire are also working on similar legislation.
Platforms like Jincor also help organizations to immediately be able to use smart contracts despite the slower adaptation of regulations. Jincor verifies the identity of individuals and companies that use the platform to ensure that transactions occur between legal entities.
Jincor also lends its own legal expertise to users concerning the use of the service. This way, companies could have confidence in delegating their legal requirements to the platform.
Disrupting legal services
Smart contracts offer much potential as legal and business tools. The ability to transparently note the terms of an agreement and automate fulfillment could significantly streamline business processes.
More importantly, the technology can effectively take over the roles of various intermediaries in transactions leading to faster and cheaper fulfillment.
The technology surely has much potential taking over legal activities such as documentation and contract enforcement. Current and future developments in the technology also promise easier adoption and implementation for businesses.
The participation of blockchain startups and services will also help push mainstream use of smart contracts and allow more organizations especially SMEs to readily enjoy the benefits of the technology.