ILTACON 2022: WHAT LEGAL PROFESSIONALS NEED TO KNOW ABOUT BLOCKCHAINS

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.

Lawyers & 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.

Joseph Raczynski of Thomson Reuters

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.

Animated Series: What’s Up with the Metaverse

Originally published on the ABA Center for Innovation, Innovation and You

by Joseph Raczynski with creative by Elise Harmening, Esq.

What’s Up with the Metaverse, was written by Joseph Raczynski of Thomson Reuters, a member of the Governing Council for the Center for Innovation, and created by Elise Harmening, Esq., Project Specialist Manager at the Center for Innovation.

Lawyers and the Metaverse

Interview from Asian Legal Business published April 2022

How did you discover your passion for all things innovation and technology related?

When I was a young boy, I watched a movie that transformed my life then and by happenstance altered my path forward.  War Games, starring Matthew Broderick was about an inquisitive kid who unintentionally almost started World War 3 by hacking into a U.S. Government mainframe computer.  Broderick’s approach to solving problems was mind altering for me at the time.  More than anything that movie taught me the power of creativity in thinking and designing processes to accomplish tasks in a novel way leveraging technology, sometimes with computer code, sometimes by tying disparate technologies together.  Since that day I have been immersed in technology, starting with the beginning of the Internet via BBS (Bulletin Boards), setting up networks, peer-to-peer file sharing, designing websites World Wide Web, testing of mining cryptocurrency, creating my own tokens, white hat hacking, and then tinkering with electronics of all sizes.  Eventually, I added the professional layers from an undergraduate degrees of economics and sociology and a Masters in Business Administration and eCommerce, combined with my own interests in geopolitical trends, finance, and the legal implications of it all.  All of this really excites me to no end!

You’ve written about the Metaverse and the preparedness of lawyers, how widespread do you think use of this will be in the near future, and how can lawyers make sure they are sufficiently prepared? 

If by the near future we are saying 3-5 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 which are enabling the Metaverse; one, blockchain, which is a unique way to store information in a provable, unalterable way.  Secondly, the coming hardware is key.  Likely to hit the mainstream when Apple releases their Virtual Reality or Mixed Reality headset in the coming year or so, this 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.  Extraordinarily bright to a one that I have interacted with, the one limiting factor in this sense, is their dedication to their own craft.  Meaning, most often and understandably, they do not have the time to pick up their heads and see what is coming.  All of these emerging technologies will impact their practice 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, including at Joetechnologist.com but I would include some of the classics with Google alerts, Twitter threads on these topics and magazines like Wired, which should be a staple for everyone.

What kind of opportunities could the Metaverse give lawyers?

Imagine a world, much like what we have now, but only digital.  It is nearly as immersive and interactive, and then extrapolate out 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 legal’s play will be on 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 the lower tier, leaving lawyers to resolve more complex issues.  

We’ve heard that tech adoption rapidly increased during the pandemic — what are some of the significant ways this has changed the way lawyers work, or indeed the legal profession?

The adoption of technology has been fascinating to watch across the legal landscape over the last two years.  My favorite part was how lawyers who were technologically phobic were gently pushed into the space and most thrived.  Bigger picture, the acceptance and now reliance on the Cloud has been massive.  Once upon a time, most law firms would have shuttered at the thought of its use.  Now Cloud has become nearly ubiquitous.  With that adoption has come greater use of workflow tools around document automation processing transactional documents much faster and more reliably for clients.  I have also seen greater openness to this idea of a Legal Platform, meaning an ecosystem like a portal which is first secure, yet open to applications, that can be used in a “containerized” fashion.  What that means are apps that are interoperable and secure, resulting in greater efficiency and productivity.  The last area of growth was around law firms open to APIs, or data feeds which allows them to bring in information, comingle it with their own, create new workflows, and leverage out of the box analytics tools to garner greater insights into both the business and the practice of law.

What can lawyers do to ensure they access all opportunities offered by the variety of tech innovations?

I firmly believe lawyers need to dedicated time, almost every day, be it 30 minutes, to read up on current awareness in technology.  Some days they will find a topic they could spend a week on, but they should try to unpack that in time, to better position themselves for the future of the industry, and more tangibly, in the short term to help their clients.

How does our engagement with digital worlds/environments shape the way we work and the kind of work we carry out?

If we presume we are moving increasingly into a digital world, then every nuance surrounding that space will become increasingly important.  Start with AI.  Algorithms will increasingly be able to make decisions for us.  Yes, this includes much of the lawyerly work out there.  These algos start of simply, but will become far more complex, freeing us from some decisions or work.  Stack on top of that blockchain, which is a trustless (trusted) 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. the house, shoes, art, tickets to a concert, via an NFT (Non-Fungible Token) 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, until AI takes over, kidding, not kidding.