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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.
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.
Tech Snippets Today – Awa Sun Yin – Anoma
On the ground with 18,000 people humming about at Consensus 2022, I met with Awa Sun Yin the dynamic leader of Anoma in the crypto space. She has been at several very high profile organizations like Chainalysis and Cosmos. Currently she is solving for developers issues around privacy and security leveraging blockchain. She is based in Switzerland.
Podcast: The Hearing – Houman Shadab, Professor of Law NYLS
From the producers… Bitcoin: bringing FOMO since 2013.
What would your scream sound like if you had dismissed Bitcoin as a joke in your law class in 2013 at $100 dollars – when it sits at $60,000 today? Joe’s guest this week is Houman Shadab, the Director of the Innovation Center for Law and Technology at New York Law School. He’s here to tell us how lawyers can navigate, benefit from and translate today’s new wave of rapid technological advances.
Houman talks us through the greenroom snacks at the US Capitol before he testified – what we really wanted to know. And, in a throwback to Mark Zuckerberg’s uncomfortable testimony before congress (“Sir, we run ads”), he tells Joe about his experience of sitting in front of the US government explaining the implications of various securities laws on hedge funds.
We’re a curious bunch at The Hearing, so we asked Houman to tell us what lawyers and legal students can do to better enable themselves for success. The answer seems to lie in no-code. Houman explains what the heck this is and why it matters to the legal ecosystem. So, get your notepad and digital wallet ready and press play!
Apple Podcasts – https://podcasts.apple.com/gb/podcast/ep-86-houman-shadab-new-york-law-school-icme/id1389813956?i=1000541095827
Spotify – https://open.spotify.com/episode/44txkHGm3JqLe3EKgewSCd
SoundCloud – https://soundcloud.com/user-264672855/the-hearing-episode-86-houman-shadab-new-york-law-school-icme?si=1b56a97e30e5402397fb3bbca4c2b613
The Metaverse is coming: Is the legal market prepared?
Are you ready for the Metaverse? Probably not, but please bear with me, because the legal implications will be enormous. Open your creative mind first, and at the very end apply your critical thinking legal intellect. Here we go.
Originally published on Thomson Reuters Institute.
Imagine, if you will, a world resembling our physical one, but a completely virtual, immersive, colorful, all-encompassing one with land, rivers, houses, farms, people, animals, full cities, stores, businesses, concerts, and everything else contained in our physical world. Sauntering down a bustling city street, minus the smells, is as easy as walking on a moon that orbits an earthlike place. Platforms with full replication of our physical world are being built through a wearable device to create this Metaverse. Why? That seems a tad ridiculous.
Yet, before the iPhone was launched 14 years ago, we didn’t imagine the myriad of things we could accomplish by simply touching a piece of glass-faced, hand-held technology today. It would have been a leap of faith to see where we sit now. Thus, the Metaverse is that next leap.
Over the next 18 months, following an era of Zoom and Teams virtual meetings on laptops and mobile devices, Apple will be releasing the first mixed or virtual reality headset, allowing for people to interact virtually. Initially the focus will be on new Zoom-like meetings with far more immersive business engagements, but then it gets more profound. Wait for it.
Concept of virtual reality glasses
The Metaverse, or Web 3.0, is developing, but what led us here? First came layer one: blockchain, an immutable database to store information, in concert with the proliferation of cryptocurrencies, an ability to transfer value akin to currency initially, but later representing all assets. The tokenization of assets is a seminal concept and means that anything physical, or more important in this instance, digital, can be proven and has authority via code on an immutable ledger.
The latest manifestation of this authenticated representation of ownership are NFTs (Non-Fungible Tokens), and their popularity is the slippery slope of the Metaverse. Initially, people are buying digital art. In building out the Metaverse, art will be displayed on the walls of homes. However, the assets, living in smart contracts on the blockchain represent all assets. Homes, offices, land and even designer clothing of this world — legally represented by deeds, contracts, and leases — have been tokenized. This means you can buy digital land, homes, and other objects on a platform like OpenSea, to prove you own it. That value creates a network effect, enabling interactions within an ecosystem, and therefore a new Metaverse (world) is born.
Digital land for sale on Decentraland
Indeed, OpenSea is just one of several marketplaces where individuals can buy the future of asset ownership in the Metaverse. All asset ownership, both digitally and physically, could be ported over to an NFT on blockchains. All of these critical pieces are then layered on top of a platform of animation — the actual space inside the headset, which has been with us for many years. It is the asset tokenization that makes this paradigm shift most pivotal. Transactional attorneys should beware, and litigators should feel their eyes widening at the possibilities ahead.
The virtual spaces being developed have cities in which you can buy almost anything. Land, upon which you can build your house, then you can fill that house with pieces of art (via NFT), and wear an outfit that is a verifiable Ralph Lauren suit with Nike shoes. The concert you attend requires a ticket (another NFT), and the subsequent music you want to purchase is also digitally saved and copyright enabled. Again, all of this is purchased from companies with underlining NFT ownership.
These digital worlds will likely be our future in the next decade, and a substantial amount of your time will be inside of these worlds. I know, it’s terrifying. If you are skeptical, however, note that OpenSea processed transactions of more than $3.3 billion in August alone, and this is just the beginning.
In the Metaverse, people will interact, transact, own assets, have relationships, build things and companies, create intellectual property (IP), have copyright issues, and advertise. Further, crimes may happen, insurance likely will be developed, and a massive host of other IRL (In Real Life) concepts that now all now require will evolve — and that will require legal professionals to be involved.
Not to mention the scaling of DeFi (Decentralized Finance), which has already begun and will continue to ramp up. Clearly, this is a burgeoning market. While I have been engaged in this space for several years, a recent white paper from Reed Smith on the Metaverse underlined its importance for the legal industry. It is a worthy read if you wish to continue down the rabbit hole.
What is on the horizon as we move into the Metaverse? DAOs, for one,
DAOs (Decentralized Autonomous Organizations) are entities that have been built by humans. Likely a business initially, but once the code has been written, the code acts as the law and it runs the business autonomously. These DAOs will proliferate both inside, but more importantly for the foreseeable future, outside of the Metaverse. They are already very successful, supporting $25 billion on one DeFi DAO right now. (I will examine the magnitude of DAOs in an upcoming post.)
The implications of the Metaverse for the legal community and within the regulatory community as well as every other facet is enormous. While this space is being built, it is still early. Over the course of the next several years, the Metaverse and all its implications will move from the fringe to a more important arena for lawyers to contemplate and eventually address. Now is time for those lawyers to apply their critical thinking legal intellect.
The impact of blockchain, cryptocurrencies, and NFTs on the legal industry with Joseph Raczynski
It was a ton of fun recording this podcast with the omniscient and ever engaging Joseph Gartner at the ABA Center for Innovation – (full transparency, I sit on the Council). With Joey’s new role as Director and Counsel, we chatted all things #blockchain, #cryptocurrencies, and #NFTs and their impact on the legal industry. It is fantastic to be a part of a group pushing on #innovation in the legal industry at the ABA with Chair, Don Bivens and the entire Center for Innovation Governing Council.
Podcast: The Hearing – Stevie Ghiassi, Co-founder Legaler and Legaler Aid
Question: What do the Iranian national football team, NFTs, Hotel Rwanda and tennis great, Andy Murray have in common?
Answer: Stevie Ghiassi, Co-founder of Legaler and Legaler Aid. And my guest this week!
In this episode, Stevie chats with me about his unlikely journey from running a chain of souvenir shops to becoming a legal tech entrepreneur. He also talks about the important work that Legaler Aid is doing, and ways in which legal tech and blockchain have helped them pivot after Covid took away traditional fundraising streams.
Yet again we’re seeing innovative ways that cryptocurrency and blockchain are being used, and how they offer real opportunities for the legal industry.
Bye-bye, banks! Hello DeFi… Our bankless society has officially begun
Decentralized Finance (DeFi) is a multi-billion-dollar movement that may end up changing the way we all bank
Imagine a time where banks are not needed. Think about all the financial instruments we use today — currency, loans, insurance, bonds, credit cards, stocks, futures, options, interest bearing accounts — being converted to a new model, one that doesn’t require a traditional banking institution.
This is happening now. For those of you who sit on the bleeding edge of technology with me, this has been looming for a few years. However, I have purposely held off writing about it until the data was sound. Now, we have the data.
Decentralized Finance (DeFi) is a multi-billion-dollar movement involving several intermingled concepts. At its core it is blockchain-based and uses an immutable, trustless computer network that verifies transactions without human intervention. The most established platform on which DeFi is built is Ethereum, which was the first major blockchain to move beyond a simple currency replacement, such as Bitcoin. Instead, Ethereum has moved toward completely revolutionizing our ability to automate actions with the introduction of smart contracts, which themselves enable code to facilitate actions stored on that blockchain public ledger.
What is pivotal here 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.
There are hundreds of examples of DeFi applications on the Ethereum ecosystem today. For context, Ethereum has a $475 billion market capitalization, just shy of JPMorgan Chase and Visa, making it the 14th largest company in the world. We are extremely early, and I project Ethereum to be the most valuable asset in the world within the next few years; and there is $90 billion invested in Ethereum-based DeFi protocols as of this writing. Addressing concerns since its inception, the platform is currently being upgraded to speed transactions — that is, provide scalability — as well as moving from proof of work to proof of stake, meaning that the previous maladaptive environmental impact will be reduce dramatically.
Prepping for DeFi
Practically speaking, how does this all work, and where is it going? Your blockchain-based “digital wallet” — such MetaMask — is your new on-ramp to DeFi. This will be a nearly universal tool all over the world in the coming years. And while the majority of people in this space now use a wallet stored on a centralized exchange, the path forward will be to “own your own keys”, meaning the private and public keys (which are essentially two elongated number-letter strings) that prove you own that wallet. The private key is akin to your password and should never be given out, while the public key is your address (like your mailing address) to where people can send you assets.
When you use a central exchange, like Coinbase, you do not own your own keys. Once you own your wallet you can load any number of assets into that wallet, including Non-Fungible Tokens (NFTs). Soon this wallet will contain all your assets, including deeds to your house, car, health information, your own digital identity, and much more.
How do you interact with DeFi?
To navigate this process, you begin with an asset (like Ethereum, or ETH, for example) in your wallet. Now you have countless possibilities to go bankless. With that token, you can simply hold it and hope its value appreciates. Each token has a fluctuating value in currencies from around the world.
Another option would be to “stake” that token, which means you are paid to offer that token up as collateral to participate in the network which confirms transactions from one person to another. When you stake a token, a binding smart contract is being created on the blockchain. You are committing to offer your 1 ETH to the network for a set amount of time, and during that time, you may get 10% or more interest. The legal contract is in the code.
Progressing down the complexity scale of DeFi, nearly all financial instruments can be leveraged on this platform through various applications. You could loan out that 1 ETH and receive a yield, which tends to be very high these days, at around 7% to 100% per annum. There are hundreds of tokens on the Ethereum platform that have distinct purpose, although there are other competing blockchain platforms in this space. These platforms too are building out DeFi solutions.
One of the most prominent examples of DeFi is Uniswap. It is the most popular Ethereum-based decentralized exchange (DEX), which allows people to swap tokens that run on the Ethereum network. What is special about Uniswap is that it is an Automated Market Maker (AMM), which means it uses algorithms to price assets instead of buy and sell orders. Individuals can also earn money on the platform by providing liquidity by locking up tokens they own; others can then borrow the tokens and pay interest to the liquidity providers. All of this is using smart contract code without human intervention. All of these assets can be sent from one wallet to another without a bank — this DeFi in action now.
But what does this mean for the legal industry? In short order, government agencies, law firms, corporations, and others will be impacted by DeFi. Each party will need to look at it through their own lens, examine the benefits and understand the risks as well.
- If you are a law firm with a big bank as your client, partial short-term disruption is a risk. DeFi offers firms the opportunity to leveraging this technology for the “banks” of the future, which of course, will be code-based. The long-term disruption to the traditional banking sector is real. Unless banks can figure out how to compete when code can facilitate what they’ve been doing for the last 200 years.
- For government agencies that provide guidance, this technology can usher in opportunities that previously were only available to the wealthiest people and organizations. The vast amount of “unbanked” individuals — those without access to a bank or credit — can now participate in the economy. However, these same agencies need to determine if there are enough regulatory rails to prevent harm to individuals or businesses.
- As for corporations, if they see themselves as “middlemen” that facilitate loans or provide currency, bonds, credit cards, stocks, futures, options, or interest-bearing accounts, they might have to pivot.
DeFi will change the way we bank and interact with assets of all sizes. This shift is as large as the move onto the internet with the tokenization of all assets and value represented digitally.
The legal industry needs to lean into the conversation now, to better digest how to help their clients, and possibly properly guide regulation for the coming codification of our financial world. Because the next iteration of this space will be Decentralized Autonomous Exchanges (DAOs), which will not only impact the financial industry, but will carry over to any entity — firm, business, or government agency — that can and will be run by code.
Non-Fungible Tokens (NFTs): Asset ownership via blockchain rockets into legal
In a two-part series, we will look at Non-Fungible Tokens, explaining what they are and how they will impact numerous industries; and how decentralized finance (DeFi) is critical to understanding NFT’s importance within the legal industry.
Originally published on the Legal Executive Institute.
By Joseph Raczynski
Welcome to the early days of where blockchain goes mainstream, and the legal industry needs to take notice.
While Non-Fungible Tokens (NFTs) have been around for several years — remember CryptoKitties or even the original NFT, called CryptoPunks? Even if you don’t, NFTs have officially exploded into popular culture, begging the question: So, what are they?
A Non-Fungible Token is a token stored on the blockchain, which itself is a secure distributed database with redundancy, immutability, and clarity into tracking data or ownership. A token proves ownership of an asset. For example, a deed to your house is a sign of ownership to that plot of land and building. In the case of the first digital token, Bitcoin, a single Bitcoin is the title of ownership to the underlying value of the Bitcoin.
The best part about a token on the blockchain is the ability to track ownership and therefore authenticity, undeniably proving ownership.
Fungible refers to an asset that is easily exchangeable. In the classic example, a dollar is very fungible — you can hand a dollar to me in exchange for some gum, and I can then re-use that dollar for a can of soda. The physical dollar maybe different because I swapped with another in my wallet, but it is easily replaceable and exchangeable, so it is fungible.
Now, it gets interesting. A non-fungible token is a unique token that is not easily exchangeable or replaceable with another. With the mania that is occurring with NFTs, the best example is with art. Recently, Mike Winkelmann, known as @Beeple, a renowned artist who has worked with Nike and Apple, sold 20 pieces of his own work on the digital marketplace Nifty Gateway for a total of $3.5 million. And in the latest eye-opener, he sold a collection of many of his works combined into a masterpiece, titled EVERYDAYS: THE FIRST 5000 DAYS at Christie’s for $69 million. These transactions occurred on Ethereum, the primary blockchain platform of record for storing value, but Winkelmann’s art itself was simply digital images.
With the NFTs, we are proving that rare and scarce representation of things can create value, and that value can be captured on the blockchain. Let your imagination run wild for a moment: What this means is that nearly anything and everything that is represented digitally could also carry provable value.
For example, Jack Dorsey, CEO of Twitter, is in the process of selling his first Tweet, the original Tweet of Twitter. It is, as of this writing, estimated at a value of $2.5 million and projected to go higher. Why might you ask? Well, it is feasible to collect royalties on that tweet once you own it; or, you could hopefully resell it in the future. Lastly — and again, I beg your imagination for this thought — in the not too distant future, with people living in virtual reality, these pieces of art will have a home inside those worlds, too. Other examples, the NBA has now gotten in on the action by leveraging NBA Top Shot, selling limited edition, finite numbers of virtual basketball cards, including a short clip of a LeBron James dunk, which recently sold for more than $200,000.
In the past, I discussed asset tokenization, which is the simple idea that nearly anything could be represented on the blockchain as having value. It this is now happening. This could be a painting, your car, a house, or even a Tweet. Essentially, if you have something original, that you can then prove is yours, that item can derive value.
Through the lens of the legal kaleidoscope, we are entering a complicated but colorful place, and there are an incredible number of areas this will touch. As technology push us to rethink what we know, NFTs shall do the same. In this nascent area, contemplation about the impact on both the practice and business of law will hit multiple fronts. Here are just a few:
- Intellectual property — NFTs carry a huge target on their virtual backs from the IP angle. At the heart of these tokens is uniqueness and ownership, and that means that eventually, litigation will follow.
- Trust & estates — Possession comes in the form of a digital wallet. Access to the private and public keys will need to be accounted for and administered for these sorts of new assets.
- Anti-money laundering — One worry, at the moment, is that the buying and selling of these digital assets could be a way to disguise or launder dirty money. Although the underlining technology of the blockchain is leveraged, a general misunderstanding of its complexity makes it a temporary safe haven for the scofflaw.
- Tax & accounting — Millions of dollars are being transferred, soon to be billions; and those in the tax & accounting field will need to better understand this space to assist their clients. How are sales treated? What does appreciation impact? And how can we account for the transactions?
NTFs are likely here to stay. They will continue to evolve, however, representing nearly every assets class going forward. Law firms, corporations, tax & accounting firms, and government agencies will need to pay attention to this space in order to account for how this new technology impacts their individual [digital] pictures of the law.
Podcast: The Hearing – Federico Ast – Cofounder & CEO – Kleros
From the producer: Here at The Hearing HQ we’ve really missed travelling. So being whisked (virtually) to Buenos Aires for this week’s episode was a real treat!
Meet Joe’s guest, Federico Ast, the CEO and founder of Kleros. He’s deeply intelligent, thoughtful and one hell of an aggravator in the world of justice. Federico has a philosophy-centered approach to improving judicial systems around the world, and talks to Joe about how deliberative democracy can fast-track access to justice.
Kleros is an online dispute resolution system based on blockchain, crowdsourcing and game theory. We hear how Federico has used his experience of the Argentinian economic collapse of the 90s to problem-solve dispute resolution for the internet age.
Apple: The Hearing – A Legal Podcast – EP. 73 – Federico Ast (Kleros)
Google: The Hearing – A Legal Podcast – EP. 73 – Federico Ast (Kleros)