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Influencers and thought leaders in the legal technology space Legal Tech's Predictions for Emerging Technology in 2025 predict blockchain will affect smart contracts and contract lifecycle management in the corporate law department. This prediction brings exciting opportunities for general counsel and legal operations professionals who manage department efficiencies, productivity and performance. First, we need to explore more about this nascent technology in the crypto landscape so each of us can confidently address and understand how it can improve workflow automation.
What follows is a compilation of resources from the legal technology and consulting sectors that clarify, “What is Blockchain?” and how blockchain relates to smart contracts in the contract lifecycle. In this “What is Blockchain” guide, you’ll see a list of reputable sources with an anecdote and link to the educational reference material. Regarding the smart contract connection to blockchain, thought leaders suggest that humans may likely be removed from the contract lifecycle management equation as blockchain technology enhances contract automation, data security, auditing, and the reduction in errors and redundancies.
McKinsey & Company published “What Is Blockchain” in June 2024 and provided an intricate review of blockchain in simple terms everyone can understand. It describes blockchain this way, “Put simply, blockchain is a technology that enables the secure sharing of information. Data, obviously, is stored in a database. Transactions are recorded in an account book called a ledger. A blockchain is a type of distributed database or ledger, which means the power to update a blockchain is distributed between the nodes, or participants, of a public or private computer network.” This lengthy article discusses how blockchain works, its benefits, what it can be used for, its relationship with cryptocurrencies, and the challenges afoot.
IBM provides various explanations across several industries about blockchain and its work in the food sector, among others. In simple terms and with basic short videos, the company explains the technology well with use cases, benefits, a 101 explanation, FAQ, and more.
Amazon Web Services, AWS, published a web page describing blockchain technology as it relates to various industries, how it works, its benefits, a description of what happens, and a reference to smart contracts. AWS describes smart contracts like this, extracted from its website:“Companies use smart contracts to self-manage business contracts without the need for an assisting third party. They are programs stored on the blockchain system that run automatically when predetermined conditions are met. They run if-then checks so that transactions can be completed confidently. For example, a logistics company can have a smart contract that automatically makes payment once goods have arrived at the port.” AWS takes it further with a video on how blockchain-as-a-service can be implemented in organizations featuring AWS technology.
Coinbase states it is “powering the crypto economy and building the open financial system.” Because cryptocurrencies work on blockchain technology, Coinbase is highly familiar with blockchain’s influence on financial markets. In its post about what is blockchain, the company writes simple and easily understandable explanations about blockchain, Bitcoin and Ethereum. This article provides solid insights for those interested in learning more about blockchain in the financial world and cryptocurrency. Other details are included that provide an interesting perspective.
On the PWC website, you’ll find diagrams that show blockchain from the inside with insights into how it works and its applications. Many of the articles provided are from 2023, but some topics could be interesting, including a Strategist’s Guide to Blockchain (published in 2016). The use case examples provided in the 2016 article include voting, airlines and finance. In the previously mentioned examples, similar use cases are presented for blockchain technology.
Imagine the ability to seal a deal without a third party to negotiate and execute the contract lifecycle. This is the future of blockchain technology: smart contracts.
Brittanica provides a step-by-step on how to implement a smart contract on blockchain? This easy-to-understand article provides the how-to and shares more about the risks, use cases, security, and the bottom line. Based on the nature of this source, a digital encyclopedia, this piece is clear, concise and a good start point to learn more about blockchain technology and smart contracts.
This article, most of all, showcases the intrinsic value and error-prone environment that smart contracts in the blockchain provide. Case in point, directly from the World Economic Forum web article, “One of the biggest challenges with smart contracts is that the rules aren’t always clear. It’s like playing a board game where the rules differ from one place to another; what’s acceptable in one country might be illegal in another. This can create confusion about how secure these contracts are and what happens if things go wrong.
Let’s say a smart contract is supposed to pay you when you deliver a project, but the payment never arrives due to a flaw in the program. Who do you call? Usually, you might take legal action, but with smart contracts, it’s not always clear how you can enforce your rights. The laws that apply to traditional contracts don’t always match up with how smart contracts work.
Another takeaway from the World Economic Forum about smart contracts is steps to regulate the environment. Here is another segment extracted from the World Economic Forum article:
“The Infrastructure Investment and Jobs Act passed in the US in 2021 shook the foundations of many blockchain projects. This legal shake-up illustrated how swiftly changing regulations could destabilize the smart contract landscape, forcing projects to adapt or perish.”
As with any emerging technology, early adopters pinpoint trouble spots, enjoy some of the largest returns on investment, and may be subject to the negative influences of cyber hackers. Regardless, as the ebb and flow of evolution emerges and evolves, the legal operations department will bear the fruit of the benefits of blockchain technology and smart contracts; it just may take a while. In the meantime, contact us to see enterprise contract lifecycle management.