Why Blockchain Is the Future of E-Signing
As the professional world moves more and more into the digital space, the days of physical records are rapidly coming to a close.
The benefits of electronic documents, such as worldwide accessibility, ease of archiving and searching old records, cost savings on paper storage space, and decreased environmental footprint, go hand in hand with the concerns that electronic records can be more easily manipulated or even forged.
When it comes to digital documents and e-signing, it is blockchain technology that looks to put those concerns to rest.
How Blockchain Works
Put most simply, a blockchain is an electronic ledger of transactions.
Unlike traditional ledgers, which are maintained in a centralized location (even in digital form as a file on a computer), a blockchain ledger is maintained across a network of computers. The data itself isn’t stored in its original form, but rather in the form of cryptographic “fingerprints”. Each “fingerprint” is completely unique, and inextricably tied to the underlying electronic file or digital data.
The appeal of a blockchain ledger comes from the fact that once a data point or “fingerprint” is added, it is virtually impossible to alter. The only way to affect the blockchain is to add to it, an action that would be recorded and time-stamped, making blockchain “tamper-evident“.
Moreover, each new data point or “fingerprint” that is added to the ledger must be verified by the previous one, adding further security and validation and creating an indisputable record of transactions. This essentially makes blockchain records “tamper-proof”.
Because blockchain records are tamper-proof, electronic records cannot be improperly manipulated or forged.
The legal field has taken notice of the potential applications of this technology. A permanent record with transparency baked directly into its DNA can have myriad uses in the legal world, for both law firms and clients alike.
Ultimately, it is not far-fetched to predict blockchains becoming the standard “backbone” technology that is used maintain integrity and verifiability in the ever more ubiquitous world of electronic records and e-signatures.
The Better Way to E-Sign
By all indications, e-signing is here to stay. Its superior convenience and accessibility over traditional hard copy signing are largely indisputable. The only real point of concern comes from the threat of electronic records being more easily altered than paper records. This is something that blockchain technology is tailor-made to address.
The term ‘unhackable’ can often make those with even a cursory knowledge of cybersecurity wince. However, blockchain gets about as close as possible. This level of security comes from the fact that complete copies of electronic documents or other data are not what is being shared and stored on a blockchain ledger.
A bad actor scanning a blockchain ledger won’t find a digital copy of compromising documents or any other type of digital files (video, audio, spreadsheets, etc.). Instead, they will only find the digital “fingerprint” of the document or digital file.
This “fingerprint” is only a completely unique cryptographic sequence (or ‘hash’) that is inextricably tied to the document or digital file. The “fingerprint” is actionably useless outside of the context of the blockchain, and cannot be reverse engineered to reconstruct the document or digital file.
However, the digital “fingerprint” is forever anchored on the blockchain ledger. Because the digital “fingerprint” is inextricably associated with a specific document or digital file, the “fingerprint” can be used to verify that the document or digital file is exactly the same as the original.
If a document or digital file at hand does not have the same “fingerprint” as that which is permanently stored in the blockchain ledger, the document or digital file at hand is not the same as the original.
This is a rather stark contrast from the more prevalent electronic data storage methods currently employed, some of which have led to massive and embarrassing breaches. With confidentiality being a hallmark of law firm’s stock and trade, such a data breach is often catastrophic. It not only compromises current clients, but shatters the confidence of prospective new ones.
Moreover, most blockchains are public and not proprietary. This means that, if e-signing is done using one type of application, the integrity and authenticity of the e-signing can be verified years later using a completely different application or software system. The unique digital “fingerprint” of a document or other digital file can be accessed and verified by anyone, even years or decades later.
The Future of Blockchain and the Legal Industry
Innovative firms have already begun to incorporate blockchain information management solutions for data and transaction management.
The National Law Review suggests blockchain technology will significantly influence how attorneys conduct smart contracts, corporate filings, dispute resolution, and more. It is anticipated that the use of blockchain will allow attorneys to “free up time that is currently spent on the more mundane aspects of developing routine contracts and transactions.”
Similarly, IBM envisions the use of blockchain to reduce the complexity of ordinary transactions and move towards the elimination of paperwork.
The multinational information technology company incorporate blockchain-powered technology into their business operations free up capital, speed processes, and provide security and trust.
Blockchain technology will also potentially allow for the creation of indisputable records in numerous legal fields including:
- Transactions and contract negotiations
- Intellectual property rights management
- Estate planning
- Loans and finance
- Personal injury and other types of litigation involving audio or video evidence
When searching for the best e-signature and verification app, consider application features that use blockchain technology to create permanent and system-independent digital “fingerprints” of documents and files.
For lawyer and law firms, the e-signing application should be integrated for easy use with legal management systems like Clio, Rocket Matter, ActionStep, and Practice Panther, as well as cloud-storage services such as OneDrive, Dropbox, and Google Drive.
In addition, the e-signing application should include features that allow users to quickly import, sign, and verify many different kinds of digital files – such as audio and video files that might contain import evidence – and not just PDF and word processor files.
Law firms now have the power to limit the impact of manipulation and forgery, by protecting client information and documents with the power of blockchain.
As blockchain is adopted and incorporated into the legal sphere, allegations of forgery and alteration could very well become a thing of the past. Blockchain e-signing puts sensitive data under an additional level of lock and key (or more accurately, a cryptographic ‘hash’), providing peace of mind for both law firms and clients.