56 LEXPERT MAGAZINE
|
SEPTEMBER 2016
IN-HOUSE ADVISOR
Bitcoin's potential for disintermediating
incumbents in financial services
is well-known
— but the underlying
technology, blockchain, could also cut
out the middle man in legal services
BY JULIUS MELNITZER ILLUSTRATION BY CHRIS MADDEN
The Blockchain
BYPASS
THE MOST IMPORTANT thing in-house counsel need to know about fin-
tech — the emerging industry that's using soware to provide financial services
— is that the blockchain technology that represents its future focuses on elimi-
nating the middle man. And that goes beyond the banks, credit card companies
and clearing houses. Needless to say, lawyers are middle men too.
If there's any doubt that lawyers are in blockchain's sights, consider this re-
sponse from Vitalik Buterin, who co-founded Switzerland-based Ethereum
Foundation, a leader in cryptocurrency and blockchain technology, when asked
who might suffer from the phenomenon: "I suspect and hope the casualties will
be lawyers earning half a million dollars a year more than anyone else," he said.
While the legal risks have yet to be addressed by regulators, the blockchain rev-
olution is gaining significant traction: former US Treasury Secretary Larry Sum-
mers has publicly stated that blockchain is "overwhelmingly likely" to change
the financial industry. In fact the technology, which drives Bitcoin cryptocur-
rency, has already made its mark. "e distributed digital ledger that underlies
blockchain technology has certainly been disruptive to the traditional banking
structure because it enables transactions that are instantaneous, frictionless and
secure," says Peter Read, President of Peoples Card Services, Canada's largest is-
suer of prepaid payment cards.
Proponents of blockchain, meanwhile, say it will make business more efficient
by eliminating the traditional stopping points between buyers and sellers, includ-
ing this era's corporate behemoths. Aer all, consider what disruptive forces like
