Bitcoin and Blockchain 101 for lawyers

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Nicole Black
BridgeTower Media Newswires

Last month, the Nebraska Ethics and Advisory Committee handed down Opinion 17-03 concluding it was ethical for lawyers to accept Bitcoin as payment for legal services. It was the first opinion to address this issue and most certainly won’t be the last.

No doubt you’ve been hearing more and more about Bitcoin and Blockchain in recent months. And there’s a good reason for that: The use of Bitcoin as a form of payment for services, legal and otherwise, has been increasing significantly.

Unfortunately most people still have no idea what these concepts mean, and lawyers are no exception. However, because their use is increasing, lawyers should at least have a basic understanding of these terms in order to meet their ethical obligation to maintain technology competence. So let’s dive in and learn about “Bitcoin” and “Blockchain.”

Simply put, Bitcoin is a digital currency or “cryptocurrency” that differs from traditional currency because it is not backed by any country’s central bank or government. Like traditional currency, bitcoins can be traded for goods or services with vendors who accept bitcoins as payment.

In order to use Bitcoin, you’ll have to sign up for a Bitcoin Wallet app online at https://bitcoin.org/en/choose-your-wallet) or download a Bitcoin Wallet app to your smartphone. Your Wallet acts as a virtual bank account of sorts that allows you to send or receive bitcoins. You can buy bitcoins using your traditional bank account through a Bitcoin Exchange. Then you can spend bitcoins by locating businesses that accept it using a directory.

Blockchain is a public ledger of all digital currency transactions. In other words, Blockchain is essentially a chronological history of bitcoin transactions, and each individual “block” is similar to a bank statement.

Because Bitcoin is an emerging currency that is increasingly being used by consumers, lawyers need to familiarize themselves with it. As the general population begins to use Bitcoin more often, potential legal clients will begin to expect law firms to accept this type of digital currency.

So accepting Bitcoin may very well give you a competitive advantage. Of course, demand will vary by geographic region and practice area. But, as you well know, the more types of payment you accept, the more easily clients can pay your law firm for services rendered. That’s why so many lawyers now allow clients to pay online by making ACH payments or credit card payments. And, just as accepting debit and credit cards online makes you more marketable and appealing to potential and current clients, so too does accepting other forms of payment such as Bitcoin.

Another reason to familiarize yourself with how Bitcoin works is because it may soon begin to affect certain practice areas. For example, lawyers who handle securities law or financial litigation matters may find that their practices are increasingly impacted by Bitcoin.

That’s why now is the perfect time to get up to speed on Bitcoin and Blockchain. Educate yourself and then make an informed decision as to whether accepting Bitcoin makes sense for your law firm. It will be time well spent. You’ll learn something new and, if you decide to accept Bitcoin, you’ll offer potential clients one more reason to retain your firm over a competitor.

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Nicole Black is a director at MyCase.com, a cloud-based law practice management platform. She is also of counsel to Fiandach & Fiandach in Rochester and is a GigaOM Pro analyst. She is the author of the ABA book “Cloud Computing for Lawyers,” coauthors the ABA book “Social Media for Lawyers: the Next Frontier,” and co-authors “Criminal Law in New York,” a West-Thomson treatise. She speaks regularly at conferences regarding the intersection of law and technology. She publishes three legal blogs and can be reached at niki@mycase.com.
 

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