Marketing Tech: Why Should Marketers Care About the Blockchain?

Blockchain was invented by a person using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin. The identity of Satoshi Nakamoto is unknown. The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server. Blockchain is a shared distributed ledger technology in which each transaction is digitally signed to ensure its authenticity and integrity.

An easy way to think about blockchain is a public spreadsheet in the cloud that can be programmed to record and track anything of value, as the two authors note.

How Does Blockchain Work?

When a transaction occurs, a record is created and is validated globally by all the computers participating in the network, which are called nodes. The owner of the transaction has the power to move anything of value instantly without the need for an intermediary. Some examples include financial transactions, medical records and land titles.

Since the blockchain is decentralized and not stored in a single location, the records it keeps are truly public and easily verifiable. Because there is no centralized version of this information, it is much less vulnerable to attack. The most common methods of attack include phishing, malware and cryptojacking, which is the unauthorized use of someone else's computer to mine cryptocurrency.

There are four types of blockchains: consortium, public, private and semi-private.

1. Consortium: A blockchain where the consensus process (the mechanism to verify information being added to the ledger is valid) is controlled by a pre-selected set of nodes, for example, a consortium of 15 financial institutions. The blockchain may be public or restricted to the participants. Examples of consortium blockchain include R3 (banks) and EWF (energy).
2. Public: A blockchain that anyone in the world can read, send transactions to and expect to see them included if the transaction is valid. Anyone can participate in the consensus process. Public blockchains are secured by cryptoeconomics — the combination of economic incentives and cryptographic verification using mechanisms such as proof of work (bitcoin) or proof of stake (Ethereum).
3. Private: A blockchain where only one industry can add transactions. The public may be able to view the transactions or it might be restricted to certain participants.
4. Semi-Private: A blockchain that is run by a single company which grants access to any user who qualifies. Typically targeted to business-to-business users and managed similarly to how a company manages private Web applications.

Blockchain and the Legal Industry

Within the last couple of years, the legal industry has taken notice of blockchain technology, particularly Smart Contracts. A Smart Contract is a computer program that directly controls the transfer of digital currencies or assets between parties under certain conditions. These contracts are stored on blockchain technology. Smart Contracts have the potential to increase efficiency in the legal industry as they provide an alternative to traditional legal contracts due to their immutable and autonomous nature.

One example of a smart contract is Crypto-Wills, which are wills that are created and documented on blockchain. Crypto-Wills are far more efficient and quicker than traditional wills. The end-to-end process of the will administration is carried out by code-run software that is distributed and decentralized with no need for an executor.

In May 2017, Frost Brown Todd (FBT), a 500+ attorney law firm based in the U.S., announced the development of a prototype smart contract to be used in software escrow agreements. FBT has also created a Blockchain and Digital Currency practice group that helps clients prepare for the disruption with these technologies in their industry and those on the cutting edge.

The Ethereum Enterprise Alliance Legal Industry Working Group was formed to explore blockchain-based legal technology, develop standards for “smart” legal agreements, support emerging use cases, and tackle important policy issues regarding the technology. At the same time, Bob Craig, the CIO at Baker Hostetler announced the formation of the Global Legal Blockchain Consortium, a group that will work to drive the adoptions and standardization of blockchain in the legal industry.

Blockchain Use Cases

Blockchain is poised to have implications for almost every industry. An October 2017 report from CompTIA, a leading tech association, found that early adopters are using blockchain for digital identity, asset management and tracking, regulatory compliance/auditing, distributed storage, smart contracts and cryptocurrency/payments. Here are a few industry examples:

• Education: The Massachusetts Institute of Technology (MIT) awarded its first digital diplomas to 14 graduates on Oct. 17, 2017. Since then, it has issued paper credentials to more than 207,000 undergraduate and graduate students in much the same way. The app called Blockcerts Wallet enables students to quickly get a verifiable, tamper-proof version of their diploma that they can share with employers, schools, family and friends. Other colleges and universities are using blockchain to store and share student records.
• Financial Services: JP Morgan started a new division called the Quorum division specifically for research and development of blockchain technology. Leveraging blockchain and a smart contract platform that supports speedy transactions and throughput for the finance industry, banks and beyond.
• Healthcare: The Illinois Blockchain Initiative has begun a pilot to integrate the blockchain technology into the birth registration process. Starting a blockchain-based identity management process at birth may have long-term implications on how an individual's health data is stored, shared and protected throughout their lifetime.
• Supply Chain: Blockchain can increase the efficiency and transparency of supply chains having an impact on everything from warehousing to delivery to payment. Walmart uses blockchain to keep track of the pork it sources from China to better regulate food safety. Nestle, Tyson and Dole use blockchain for similar purposes. The World Wildlife Fund (WWF) is also using blockchain to better track seafood.

Other blockchain initiatives include:

• A partnership between IBM Corp, CVS Health Corp's Aetna and a host of other providers including health insurers Anthem Inc, Health Care Service Corp and PNC Bank to develop a blockchain network aimed at cutting costs in the healthcare industry. They will use the technology for processing claims and payments and to maintain directories.
• Accenture is partnering with logistics giant DHL to develop a blockchain-based supply chain prototype to prevent the counterfeiting of drugs. Mediledger is another initiative aiming to enhance pharmaceutical companies' capacity to manage drug supply chains, and track and trace.

Blockchain Resources

If you would like to learn more about blockchain, I recommend the following:

Books

• “Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World” by Don and Alex Tapscott
• “Down the Rabbit Hole: Discover the Power of the Blockchain” by Tim Lea
• “The Book of Satoshi: The Collected Writings of Bitcoin Creator Satoshi Nakamoto”

Podcasts

• Epicenter (epicenter.tv)
• Unchained (unchainedpodcast.com)

Websites

• Blockgeeks (blockgeeks.com)
• Hackernoon (hackernoon.com)

These are just a few of the many resources that are out there to learn more about blockchain. It is truly a revolutionary technology and we will be seeing more of an impact across industries, including the legal industry.

It is not the silver bullet for all challenges an organization or government is experiencing, but there are certainly use cases where the blockchain technology can provide a solution. The more that legal marketers learn about emerging technologies such as blockchain, the better able to help the firm market their expertise and identify business opportunities.

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Deb Dobson is the Marketing Technology Manager at Fisher Phillips. She can be reached at [email protected]. Connect via LinkedIn or follow her at @debdobson.