Blockchain is a new and confusing technology. This means the direct application of blockchain to your business may be a bit vague. The actual use of blockchain varies from intellectual property, file storage, smart contracts and supply chain management. Ultimately using blockchain to secure your business in matters of contracts, data and finance is an investment in the future.

What is Blockchain

Blockchain has frequently become synonymous with cryptocurrency. In reality, cryptocurrency uses blockchain technology but is not itself blockchain. The idea behind blockchain is traceable data. Blockchain works through a decentralised system. This means there is no regulator or intermediary. Instead, the system is the global network of computers. Another way to think of blockchain is a record of data. When a new record is created a block is formed along with a timestamp and transaction information. The final pivotal feature is transparency as users can’t delete the blocks. This creates a transparent view of all previous records. This creates a platform for using blockchain to secure your business in areas of financial transactions and more.

Smart Contract

A smart contract is a legal document that works through blockchain technology. To use the technology there usually is a set of conditionals in the contract. A conditional is just if x happens then I will do Y. For example, if the store opens in the morning I will purchase a product. As a business, you can have smart contracts between suppliers and consumers. Businesses are using smart contracts overseas for flight insurance, sharing products, loans and buying property. Likewise, the contract allows for transparency and dates for when each action took place. The issue is the legality and enforceability of smart contracts in the current legal landscape.

Julia has a smart contract with X enterprise. The contract is to purchase 2 apples once they 3 days old. The business can then convert the sentence into code.

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Supply Chain Management

Just like the smart contract, blockchain can trace the movement of a product. The very nature of the system is a ledger of records. Your business could then access this ledger to see where your supplier bought the product from before they gave it to you. In other words, each transaction is logged and can’t be deleted. This means your business would be able to guarantee certain claims made about products. It could relate to working conditions, sustainability or environmental claims.

File Storage

The backbone of blockchain is data. This means another function of this technology is using blockchain to secure your business data. The data is stored in no central place but globally distributed across the network of computers. If you had files on google drive they exist on the ‘cloud’ but that cloud is still supported by Google’s servers. It operates on the same principle as an email address. You can log into your email account on any account and see all your emails instantly. This is because the business stores the data on the ‘cloud’. In contrast, the data for blockchain is shared in the global network. To use blockchain storage you would need to encrypt the document as a data file so that only you can access it. There are already companies like STORJ which use blockchain to encrypt and store your data. This is the broader topic of cyrptography.

Risk of blockchain

As with any technology, there are always backdoors and ways to exploit it. In the case of blockchain, there are different ways people could hack it. You should also be aware that blockchain is a technology and there are various companies which use that technology. This means there could be different security measures in place.

However, the real risk is users. If you leave your computer unattended or use similar passwords you may find that your data is left at risk. If you are unsure of what the risks or benefits for using blockchain to secure your business then you can check with an IT lawyer.

Still Unsure? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.

Justin Pasqualino

Justin is a legal intern at LawPath as part of the content team. He is currently studying a Bachelor of Laws and a Bachelor of Economics at UTS.