Building Our Blockchain Future (Part 2) – Future Legal Payments Through Cryptocurrency

By Joseph Raczynski

This is the second post in a three-post series about blockchain, an online public ledgering system, and how it will soon significantly impact many aspects of the legal industry. In the first post, I demonstrated the potential and the pitfalls of Bitcoin and its underlining blockchain technology. The intent of this post is to describe what full global adoption of a cryptocurrency would entail.

Part 2: Future Legal Payments Through Cryptocurrency

First, I have little doubt that in a decade or less we will have a world currency akin to Bitcoin. The implications on both the legal world and government legislation will be significant. Right now there are dozens of cryptocurrencies out there: Dogecoin, Litecoin, Peercoin, and there are many more are on the horizon. Each has unique aspects but all have at their focus: security, ease of electronic money exchange, and the avoidance of a centralized banking system. Certainly the most popular cryptocurrency to date is Bitcoin which started the concept in 2009 after its creation by an anonymous inventor known as Satoshi Nakamoto, a Japanese equivalent to “Jim Smith”.

Bitcoin is incredibly intriguing because it is a natural product of the Internet, a decentralized forum of exchange and connectedness. Currently, for two people to exchange money we typically have to route money through various exchanges which all take fees merely for passing the money along. The success of cryptocurrencies demonstrates that those traditional fees are outdated and excessive for current transactions. While traveling in Thailand recently I took $100 out of an ATM. With the fees — i.e., Thai ATM fee, foreign transaction fee, and a cut of the exchange rate my bank charged — I spent $23 to get that $100. The fee for a similar transaction from dollars to Bitcoin would have been in the neighborhood of 20 cents. The fees of yesterday by the banks made sense decades ago, but now given today’s advanced and speedy technology those extraordinary fees bear little relation to the actual cost of transferring money.

 

Where do I see a cryptocurrency taking off?

  • Micro payments — Premium content on the Web will be changing. If you want to avoid the dominate Internet model of advertising, think about cryptocurrency micropayments. That is, with Bitcoin you can pay people in tiny fractions of a cent. You could then create an account with The New York Times that every time you wished to read a story you would click a link and automatically you would pay ½ a penny. That may not seem like much, but if everyone embraced this model, content providers would actually be paid rather than having to serve you ads to pay for the content. This model is similar to music providers offering unlimited music for a monthly fee, but with that fee broken down into per-play royalties.
  • Developing Countries — Instead of a widely vacillating currency in a country, people could rely on this world currency to be sturdier, because it is not solely dependent on how a single country’s economy is performing, but rather on the stability of the whole world’s economy. Local government action would not be a factor. In addition, money would not have to be printed, but people could exchange money from person-to-person on their phones. This is already being done in African countries as people send money via text messages. Having a cryptocurrency would be much more secure and reliable than the text exchange of money which is currently happening.
  • Small Fees — As I mentioned previously, with a cryptocurrency, Visa, American Express, Master Card, Discover Card and all of the other credit cards could be potentially threatened. In fact, most of their business potentially could go away, especially with those people that use debit cards or pay their bills monthly. Banks could also be threatened. Some ask, why would I house my money in a bank which has a set of rules and a multitude of fees and regulations? In addition, a lack of convenience with banks means walking or driving to receive money. All of that could be avoided with a digital wallet where the individual is the person in complete charge of the money.

The market for growth in this arena will increase substantially in the years ahead. That said, there is little question that several challenges to cryptocurrencies persist. One, a lost electronic wallet is gone forever. If you have not created a backup or saved it digitally in a safe place, you could lose all of your assets. Two, insurance does not exist. Cryptocurrency is not FDIC insured as are bank deposits. Again, it is the responsibility of the individual to own this and make sure they have diversified their assets in safe locations.

In my next post, I will review the countless — and there are legion — legal hurtles ahead. The legal industry will play a significant role in further defining cryptocurrencies and how its underlining technology, the blockchain, will be used.

ILTA’s 2015 Annual Technology Survey Security Highlights

By Joseph Raczynski

Security weighs heavily on this year’s survey

It’s out!  The 2015 International Legal Technology Associations Annual Survey is stocked with insightful legal technology industry knowledge.  This is always an exciting time of the year for me as I get to compare and contrast the stories I heard during the year from law firm visits with ILTA’s survey results.  One dominant theme that prevails throughout the 2015 survey is change and security.  There is little question that many of the “new” ideas or concepts of several years ago have become the status quo and forced firms to adapt.  Sometimes the medium law firm space embraces these new ideas and concepts before Big Law, but more often that is reversed.  So what are some of the interesting trends this year?

top

Atop the trees and looking down, respondents focused on their Top 3 Technology Annoyances.  In order they are Security/Risk Management; Change Management and Expectations; and Change, User Acceptance of Change.  These three issues struck a chord for me.  Many with whom I spoke with throughout the year described these consistently as top pain points for the technology departments at law firms.

Security:

Staying with the security theme, Mobile Device Management (MDM), continues to grow in popularity with nearly 50% of respondents responding that they utilize it.  I assume in the coming years this will continue to rise.  Secure access points where users connect to the Internet are increasingly seen as important by law firms.  To this end, firms are creating policies forbidding users to connect to open WiFi at cafés or airports.  As a result this year Hot Spots or Mi-Fi devices have leapt in adoption with mobile phone hot spots up 20% on the current survey.

Encryption made wide gains across the board.  While there are many facets to encryption, each part of the survey referencing it, demonstrated significant gains over last year.  Specifically, each of the following jumped by a minimum of 10% over 2014; Laptop Hard Drive Encryption, Automatic Email Encryption, Removable Media Encryption, and Smartphone Encryption.

Intrusion Prevention Systems (IPS), Advanced Threat Detection, Data Loss Protection, Intrusion Detection Systems (IDS), are all on the rise across the various sizes of the organization.  One interesting tactic that I heard about several firms doing this year is Spear-Phishing their own users.  According to the survey this is on the rise and firms are indeed testing their own employees.  The goal is to educate and increase awareness with cybersecurity threats and how to avoid troubled waters.

Other Interesting Technology Trends:

  • The firm’s top management is viewing IT departments less as an expense, going from 44% last year to 39% of respondents this year.
  • Technology spending sees a mix between a slight increase 3% and staying the same up 3% respectively by respondents.
  • The two primary reasons for firms not moving to the Cloud; 44% Security and Cost 38%
  • Firms that have been through audits by a client in the last three years, 33% said yes and 67% no.
  • SharePoint is trending down slightly in adoption with 48% in 2015 versus 53% in 2011.
  • iOS dominates with Android second, but most surprising is that Windows Mobile dropped off considerably, down 13% from last year.
  • Additionally on the mobile front, support of one platform, i.e. OS or Android grew considerably last year up 11%
  • Office 2010 still reigns atop at 77% compared to Office 2007 at 12% and 2013 at 8%.
  • Desktop Operating System is dominated by Windows 7 (64-bit) at 73% followed by Windows 7 (32-bit) at 23% and far behind is Windows 8/8.1 at 3%.

Exponential Growth – The Data Explosion and Resulting Challenges and Opportunities for Law Firms, Part 1

By Joseph Raczynski

We are currently living in the hockey stick portion of explosive data growth. That is, 90% of data humans amassed has been collected during the past two years. According to IBM Watson, this is gathering speed exponentially such that 2.5 billion gigabytes of new data is generated every day and the majority of this is unstructured. Simply stated, the numbers are massive and the data is not organized—and this impacts all businesses, but increasingly is a challenge to law firms.

True expertise is fading without computer learning tools

Recently I had the opportunity to watch Robin Grosset, Distinguished Engineer and Lead Architect at IBM Watson Analytics steer an entertaining and provocative discuss around data analytics. His focus was on how big data can impact expertise and how cognitive analysis or computer learning can meet this massive data challenge and build abundant opportunity.

True human expertise is at a crossroads. No one person can possibly absorb the vast quantity of data that is being produced in various disciplines. Traditionally in the eDiscovery space, firms hired first-years out of law school to review and classify thousands of documents for a case. Now, in many instances, data has ballooned well beyond what a team of attorneys can handle. Expertise is lost among the data. Audio, video, pictures, database information and social media are increasingly in profusion around cases to be analyzed. The ability to be an expert with a complete understanding of a case is nearly impossible now without the proper tools.

The solution to this dilemma of data and expertise is to wrap instruments that interpret and understand this data around the information. With cognitive computing it begins by dealing with the volume, variety and velocity of the data. Once that is understood, the real key is adding a human intuitive interface on top of that massive data-crunching, cloud-processing power. This aspect is the edge of where this field is headed currently. It then allows an expert to unearth the data through analytics and their own analysis. Firms can then sort through the mountain of information to understand and interpret trends and more importantly find white space. Now the expert can reclaim their seat, and from this challenge start to seek out opportunities for their firm.

In the next part of this series I will focus on how law firms can turn the big data challenge into opportunity.

White Paper – Customized Integration, Thomson Reuters Legal

By Joseph Raczynski

In the ever-evolving legal marketplace, law firms, corporate legal, and government agencies are seeking to deliver rich, more dynamic, intelligent environments for their users. As the new normal solidifies, tailoring specific content through selective dissemination embodies the essence of this new reality. At West, two primary complementary services exist to best position a legal department for success. Web Parts provide pointed, personalized information integration in a portal, while deeper levels of true customization of West’s products and services also exist. Both can be requested by any West client. We continue to develop innovative, customized solutions to correspond with evolving user workflow. In this White Paper, I outline current West Web Parts and other customized integrations.

Full Report Here