One of the most important areas in the blockchain space is around testing smart contracts. Since everything is reliant on code, the key is to identify potential holes in contracts, which could lead to massive breaches or losses of money. Immunefi is a place where hackers and companies meet to help find bugs in code and reward the white hat hackers for saving a smart contract from getting exploited. In this discussion, we talk how this works, where it’s going, and even touch on the latest issues around Tornado Cash, regulation, and which parts of the world are leading.
Amazing overview of Circle and USDC, one of the largest stable coins in use today. We discuss regulation, state of crypto, and where things may go.
Amazing conversation with Gwen Regina, Investment Director, BNB Chain, Binance. We dive into Gwen’s perspective on BNB Chain and BNB Chain’s Red Alarm feature, implemented to protect investors from potential rug pulls and scams, flags projects based on two main criteria: if the contract performs differently from what the project owners advertised and if the contract shows risks that might influence users’ funds.
Originally published in the Legal Current
By Carrie Booker
A highlight of Day One of ILTACON included the session Blockchain – Are You Prepared for DeFi, NFTs, and DAOs? with Joe Raczynski, manager, Technical Innovation Services. The session provided a blockchain overview and explored cryptocurrencies, smart contracts, decentralized finance, and non-fungible tokens (NFTs).
Legal Current had the opportunity to talk with Raczynski after his session, and below is a recap of the conversation.
Legal Current: Why is it important for legal professionals to understand how blockchains work?
Raczynski: If you plan to practice as a legal professional beyond the next three plus years, blockchain is critical to understand. Blockchains are a fundamental shift in the way we think about control and proof. They can help people track provenance, view records, and execute contracts. It is a fundamental shift in the way we will transact with code acting as the unbiased middle between two entities. It has the potential to be very powerful. If you are on the transactional side, there is little question in time, you will interact with blockchains for almost any legal document. It will certainly help in the automation components of workflow going forward. As you can imagine, litigation will certainly ensue as questions around the above become central to disputes.
LC: Can you share a short history of blockchain and key ways to participate in it?
Raczynski: Blockchain was initially considered a ridiculous notion – the idea of a digitized ledger beholden to no single owner. However, the evolution of blockchain from joke to genuine is stark. For example, the top 50 banks in the world have unified in the realization this technology could disrupt the financial industry.
For those newer to blockchain technology, here’s a brief history: In its simplest form, the term “blockchain” refers to a peer-to-peer network of computers running a common software protocol that includes a database replicated on each computer connected to the network, where each user interaction (other than a query) is recorded as a new entry. Each computer is called a “node,” while the database is often referred to as a “distributed ledger.” In its most simplistic sense, blockchain is a distributed database based on code.
People will participate with the exchanging of digital tokens, cryptocurrency, NFTs, DAOs, ticketing, identity, and almost anything else that require some verification between two parties.
LC: Explain what decentralized autonomous organizations are and how smart contracts are used to enforce the rules governing them.
Raczynski: A DAO (decentralized autonomous organization) is a revolutionary change in the manner that people and businesses can organize. Leveraging blockchain technology, it is a decentralized model of control and governance. The essence of a DAO is transparency, clarity of rule, and process-driven decisions – primarily utilizing smart contracts on distributed ledgers. Once a DAO has been established, via a blockchain, participants take ownership of its token, which allow them to participate in the system. Token holders can propose changes, and vote on those changes, with the subsequent actions being taken “leaderlessly.” There are no CEOs, CFOs, CTOs, only code and community.
Central to any discussion of blockchain and its legal impact is understanding “smart contracts,” a term that has been around for decades but in this landscape has a specific meaning. A smart contract is a few lines of computer code that creates an “if/then” statement, e.g., “if Amazon® stock is at $2,000 on January 1, 2019, then sell it.” What is special about smart contracts on the blockchain is that once an agreement has been reached by two parties, it is programmed onto the platform and becomes self-executing and immutable – without any human intervention.
LC: What impact are blockchain technologies making on the FinTech and LegalTech spaces?
Raczynski: The next building block for this vision is transforming the financial industry. Decentralized finance (DeFi) is reimagining what the industry could look like without intermediaries. By its nature, blockchain removes third parties because the code and underlying math does the verification. Currently, DeFi has hundreds of billions of dollars locked into various blockchains, using smart contracts and cryptocurrency.
For example, in DeFi, if I wanted to earn 20% interest on my cryptocurrency (my money), I could sign a smart contract within my digital wallet telling the blockchain to hold in custody the money for an agreed period, netting me 20%. Nearly every imaginable financial instrument is being ported over into DeFi.
What is pivotal is that you can establish complex financial ecosystems that run based on rules, thus eliminating the need for traditional third parties, like banks and brokerage houses. These rules can dictate action, lock-in value, automate transactions, and create immense efficiencies in the marketplace at a fraction of the cost of our current systems.
LC: How are NFTs and the metaverse evolving, and how is the regulation landscape keeping up?
Raczynski: The next stage of blockchain, cryptocurrency and DeFi are non-fungible tokens (NFTs). They represent anything physical or digital registered to the blockchain. NFTs give an asset a unique code – or hash or name – that can be checked and is verifiable on that digital ledger. We will use this to prove ownership of assets, such as the deed to your house. Recently, NFTs have taken the art and music world by storm. Billions of dollars of digital art have been purchased in the last year. As we move into the metaverse, an eventual virtual place for business and entertainment, those assets will have even more value in virtual homes or in a digital Times Square. It is surreal to contemplate, but this will happen in the next handful of years, all enabled by blockchain.
Currently, the only regulation that exists starts with cryptocurrency and the DeFi space. NFTs are so new, there is very little guidance. As for the metaverse, it is going to be amazing to see how regulators will address it.
Guess what’s coming to ILTACON 2022…
Happy to have played a small role in this report with sections on:
- Defining a Legal Platform
- What is an API in the Legal Industry
- AI – Artificial Intelligence in Legal
- What is the Metaverse and Why it is Important
The Innovation Trends Report will focus on case studies in three areas: Internal ABA Innovations, Advances in Legal Technology, and Regulatory Innovation. It will also feature a case study on Utah’s sandbox, exclusively in the Innovation Trends Report, by sandbox participant, RocketLawyer. This Report is the inaugural edition intended as an annual publication by the Center.
Please see the full report here: Innovation Trends Report
A great discussion about trademark law (IP) in legal surrounding the Metaverse with Tom Polcyn, who leads the IP practice at Thompson Coburn. We unpack the implications of trademarking your company name for the metaverse – a possible future proofing of ownership going forward. Does it make sense… and its resulting implications.
A tour of the Metaverse with the CEO of Mesmerise. An enterprise grade space that allows for large conferences, and more intimate spaces to meet and interact in the Metaverse.
In a new Q&A interview, Thomson Reuters’ technologist and futurist Joseph Raczynski offers his insight about the Metaverse and how it will impact the legal industry
In February this year, ArentFox Schiff announced that it had become the first major US law firm to “join the Metaverse” by acquiring a land site in Decentraland, a fact that underscored how seriously lawyers are taking one of the latest technology trends. Thomson Reuters’ technologist and futurist Joseph Raczynski talks about how the Metaverse will impact the legal space, and what lawyers should do to prepare.
Asian Legal Business: You’ve written previously about the Metaverse and the preparedness of lawyers. How widespread do you think the use of this will be in the near future, and how can lawyers make sure they are sufficiently prepared?
Joseph Raczynski: If by the near future we are saying three to five years, I would say 100% that the Metaverse will be used in various forms by the majority of the population in the industrialized world. It has already started. There are two forces at play that are enabling the Metaverse: One, blockchain, which is a unique way to store information in a provable, unalterable way. Second, the emerging hardware is key. When Apple releases its Virtual Reality (VR) or Mixed Reality (MR) headset in the coming year or so, it will force all of us to head into the Metaverse. Just for perspective, VR is fully immersive, while MR allows you to see the physical world and places digital imagery on top of that.
I have likely spoken to thousands of lawyers over the last several years. They are extraordinarily bright, but with one limiting factor — their dedication to their craft. This means that they do not have the time to lift their heads to see what is coming. All these emerging technologies will impact their practices in some way, as well as the business of law. At a minimum, lawyers need the opportunity to focus on the big four: AI, blockchain, workflow, and the grab bag of general emerging technology. There are a multitude of places to learn about these things, but I would include some of the classics such as Google Alerts, Twitter threads on these topics, and magazines like Wired, which should be a staple for everyone.
Asian Legal Business: What kind of opportunities could the Metaverse bring to lawyers?
Joseph Raczynski: Imagine a world, much like what we have now, but only digital. It is nearly as immersive and interactive. Then, extrapolate all the problems, issues, benefits, and challenges we have currently in real life, and think about where lawyers play a role. It will be similar. In the beginning, much of the involvement of lawyers will be around intellectual property (IP) issues and copyright.
Soon thereafter, insurance and contractual disagreements will ensue, but these contract issues could be interesting because of the nature of the platform a Metaverse will be built upon. Since it should rely on blockchain and smart contracts, these disputes could likely be easier to solve at a lower tier, leaving lawyers to resolve more complex issues.
Asian Legal Business: How does our engagement with digital worlds and environments shape the way we work and the kind of work we carry out?
Joseph Raczynski: If we presume that we are moving increasingly into a digital world, then every nuance surrounding that space will become increasingly important. Start with artificial intelligence (AI). Algorithms will increasingly be able to make decisions for us. Yes, this includes much of the legal work out there. These algos start off simply, but will become far more complex, freeing us from some decisions or work.
Stack on top of that blockchain, which is trustless (as in, you don’t have to trust a third-party) database, meaning both AI and blockchain can work in tandem to begin doing some pretty impressive workflows that are automated. When we move into the Metaverse for both fun and business, everything can be quantified, e.g. a house, shoes, art, tickets to a concert, via a non-fungible token (NFT) which uses a blockchain. Processes will increasingly be leveraging data and AI to make decisions which will rely less on human intervention.
I know this can sound frightening, and it could be — which is why as this progresses, we need the best legal minds to understand the implications, yet keep a progressive mindset to guide the path forward. We do not merely wish to replicate everything we have in the real world, but try to evolve it to the best we humanly can.
This interview was written by Elizabeth Beattie, a Hong Kong-based journalist at Thomson Reuters, and originally published in Thomson Reuters Asian Legal Business.
Mona is one of the leading open Metaverse platforms. Today I sat down with Justin Melillo, CEO of Mona. Their focus is on creativity and design and decentralization. We get a bit technical, but it was fantastic to see the grand vision of this startup. Having witnessed many Metaverses, Mona stands out as one of the more visually stunning.