Distributed Ledger: A Lawyer’s-eye View

One of the biggest challenges for lawyers in the blockchain space is getting our minds around how the technology works without getting lost in a sea of jargon. Fortunately, the common law itself provides a useful analogy for how distributed ledger/blockchain systems work. Distributed ledger houses information in a network of nodes.  Each node has a copy of the current iteration of the ledger, and there’s a consensus among the nodes as to the “true”  contents of the ledger.  These nodes verify, code and package information into blocks. In the common  law, these nodes look like courthouses, verifying, bundling and submitting transactions/cases to the blockchain.


In a common law analogy, a blockchain looks like this:



Court reporter series work like a blockchain.  We package, verify and bundle cases into a book, for example, 17 F3d.  The contents of 17 F.3d are never going to change. The effect of the cases in 17 F.3d may change by the addition of subsequent volumes to the chain, but the disputes and decisions in 17F.3d are recorded for the permanent record, accessible to all across the web of legal information.





Like the blockchain, a common law system’s security lies in its decentralization. The common law is formed by the transactions/cases, not centralized legislation. If one courthouse burns, the common law survives unchanged. A good visual image comes from the 1999 movie Fight Club.  In the end, the fight club masterminds blow up most of Wall Street in an attempt to destroy establishment financial systems by eliminating credit records.

This cannot happen in a distributed ledger system, and this is why, despite the science-fiction vibe of bitcoin and blockchain technology, distributed ledger is the future for the kind of secure recordkeeping the legal system and its clients require.