Unpacking tech lingo and why you cannot ignore it

technological
04 Oct 2022

Our daily conversations these days are around a new world of cryptocurrency, the metaverse, NFTs and Blockchain, to name a few. This may seem like fiction or perhaps a trend that will pass, so we do not pay too much attention to it. However, technology is ever evolving and is not just a trend. Businesses must stay informed and evolve and adapt to remain relevant.

Let’s start where it all began – the internet 

There are two generations of the existing word-wide-web: Web 1.0 (the 1990s) and Web 2.0 (2000s). The key points are that web 1.0 was the foundation for web 2.0 but consisted mostly of static websites. Web 2.0 made interaction with other users and online content possible and took the user experience from a spectator to a collaborator. Unfortunately, this also meant that the less constructive human behaviours started to exhibit themselves online such as defamatory social media posts, fake news and an unprecedented era of data collection and invasion of privacy.

Let’s move to blockchain 

Cryptocurrency is essentially a token on the blockchain and the value is driven by perception or linked to an underlying asset. It is therefore not the blockchain but an application thereof. Non-Fungible Tokens, on the other hand, are unique and noninterchangeable and non-divisible assets recorded on a blockchain. NFTs are commonly used to track the ownership of an associated asset. Fungible tokens or assets are divisible and non-unique, for example some cryptocurrencies and legal tender.

Decentralised Autonomous Organisations (DAOs) are groups whose rules are encoded and transactions executed using a blockchain without intermediaries. They are self-regulatory. According to Bloomberg Law, “In the absence of remedial legislation, DAOs have been viewed as partnerships in terms of joint and several legal liability. Wyoming and Tennessee enacted remedial statutes in 2021 and 2022 to address this concern.

… Of all the tools available to address the world’s deteriorating conditions, DAOs appear to be among the most efficient, cost effective and “trustless” organisational structures available at this time. DAOs are “trustless”: Like other blockchain applications, they do not rely on a centralised oracle to conduct business on behalf of the members and associates. Decentralised DAOs become “trustless” due to the autonomous consensus-based decision making unavailable in centralised systems.

So, what is Web3.0 or the metaverse?  

While Web 1.0 and 2.0 use the client-server model, Web3.0 would use a blockchain-based “peer-to-peer” and data would be hosted across participating nodes in a distributed network rather than servers operated by a company providing such services (as in Web 2.0). There would be no intermediaries and more control over the user itself. However, this significant shift would entail paramount awareness of the technical components for users to protect themselves in this self-regulating environment effectively.

What could the legal world look like? 

According to Bloomberg Law: “The practical benefits of meeting the needs of lawyers, clients and courts through DAOs created for the specific purposes unique to each could include:

  • Charitable support for global associations of immigration lawyers serving the world’s displaced populations
  • Virtual courts operating remotely with high levels of cryptographic security for conducting hearings, trials and document filing
  • An automated real estate practice by which documents are produced, shared, executed and filed securely, virtually and remotely
  • Swiss Verein structured legal groups with automated client conflict checking, creating digitally secure Chinese walls to ensure client confidentiality
  • Legal reform associations for local, national and multi-jurisdictional interdisciplinary facilitation of proposed legislation
  • Specialised global practice groups collaboratively serving unique legal industry needs such as Web3, NFTs, DAOs and other blockchain applications
  • Dispute resolution groups which provide DAO experienced mediators, arbitrators and automated mechanisms by which conflicts can be promptly addressed and resolved at low cost and little disruption to the DAO.”

Conclusion  

We are already in a situation where our legal frameworks grapple with keeping up with technological advancement. As such, the more we move into a user-directed and controlled environment that is democratically self-regulated, the more we need to be better equipped to make informed decisions about the exposure of our personal information and commercial risk.

As we start to embrace these technological advances as a business community, we must ensure that we communicate our offer adequately, as well as the terms and conditions of our interactions. This is specifically not only from a contractual point of view but also from a data protection point of view.

In addition, as consumers we must ensure that we educate and inform ourselves of the risks or nature of the assets we are seeking to acquire, the terms of the contracts in this environment, what the tokens we have entitle us to do and the regulatory frameworks that we interact in. Knowing that we are soon to be positioned as the makers of our fate, there are no intermediaries who would offer some level of protection or share the responsibility of safeguarding risk as we interact and contract.

Our role as legal professionals is therefore likely to shift, where we ensure that the layperson develops an understanding of the fibre of laws and regulations and how they are meant to regulate interactions for the collective good. Hopefully, the not so far off self-regulation will transition with a healthy progress and not ultimate destruction.

In closing, according to Bloomberg Law: “Lawyers and other professionals can lead the challenging work to be done on many fronts.”

See also:

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Nicolene Schoeman-Louw

Mrs Nicolene Schoeman – Louw founded the firm in 2007, aged 24, and is now the Managing Director of the firm. Nicolene is an admitted Attorney of the High Court... Read more about Nicolene Schoeman-Louw

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