Will Blockchain Revolutionize Finance, Legal Industries Just Like Internet Changed Media?
Most banks are working on the development of blockchain-inspired technologies or private blockchain networks. Will it pay off?
Most of the world’s largest banks and financial institutions have already allocated billions of dollars to the development of Blockchain technology. The question remains, will Blockchain technology revolutionize the finance and legal industries in the same way the Internet changed the media industry, once and for all?
Blockchain in finance
The applicability of Blockchain technology in the finance industry is completely different to that of the legal industry. Corporations or service providers within the finance industry are required to deal with millions of data sets on a daily basis, stemming from various operations including lending, settlement of transactions, cross-bank operations, etc.
"In order to utilize Blockchain technology efficiently in the realm of finance, a flexibility and functionality-focused Blockchain is necessary."
There exist some immutable and public Blockchain platforms such as Ethereum which are designed to operate as a decentralized development framework for applications. In Ethereum, transactions or settlement of smart contracts has a fixed fee called gas. For banks, a Blockchain like Ethereum would better meet their demands.
However, decentralized Blockchain networks like Ethereum can’t be integrated into existing infrastructures of banks for two reasons: regulatory conflict and incompatibility. The finance industry is a highly regulated market. Banks and financial service providers are strictly overseen by financial regulators and according to various policies including regulations on money transmitters, banks are not allowed to have systems in place that they have no control over.
Instead, most banks are working on the development of either Blockchain-inspired technologies or private Blockchain networks developed on top of Blockchain frameworks such as Hyperledger.
As mentioned above, private Blockchains aren’t immutable and decentralized in nature. Therefore, infrastructure providers like IBM can’t guarantee full immutability. To prevent external attacks and breaches, IBM integrated a technology called Safeguard, which autonomously shuts down the entire Blockchain platform if it senses an external attack.
Blockchain in the legal industry
The utilization of Blockchain in the legal industry is particularly different from that of the finance industry. For law firms, immutability is a necessity. Every party involved including the court, attorneys and defendants need a platform which secures information in real-time, in an immutable, unalterable and transparent ledger.
For years, developers and executives in the legal industry have discussed the possibility of utilizing the Bitcoin Blockchain to secure sensitive data.
In fact, one agency of the Brazilian government is actually using the Bitcoin Blockchain to secure land records in a transparent ledger.
Such utilization of the Bitcoin Blockchain enables the real estate realtor, government officials, property owners and buyers to track the ownership of properties in real-time and access the history of ownership in an immutable ledger.
With the help of Ubitquity, a US-based Blockchain startup, one of the land records bureaus of Brazil ran a successful test of its Bitcoin Blockchain-based system which updates the ownership of properties onto the ledger of Bitcoin in real-time.
“We are incredibly excited to announce our partnership with the land records bureau, a Cartório de Registro de Imóveis [Real Estate Registry Office] in Brazil. This partnership will help to demonstrate to government municipalities the power and benefits of using blockchain-powered recordkeeping,” said Ubitquity Founder & President Nathan Wosnack.
Bitcoin Blockchain-based record keeping is becoming a real trend amongst government agencies and authorities globally. If law firms can demonstrate the potential of the Bitcoin Blockchain within the legal industry, there is a high probability that Blockchain will revolutionize the legal industry similar to how the Internet transformed the media industry.