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Blockchain will heat up your document strategy

Thursday, June 14, 2018

via Flickr - sicilianoWe recently attended and exhibited at a technology trade show for the commercial real estate industry. The technologies that were in the spotlight were wide ranging from remotely monitored and controlled water values to AI solutions for recurring administrative tasks. Less “hot” technologies were also represented like accounting, lease management and of course workflow and document management systems.

Blockchain is poised to spice up the future of the document management world. There is quite a way to go before transactions are conducted and documented with blockchain documents. However, the concept is promising and it is sure to have an impact on how documents are stored, created, shared and even alter the definition of a document.

First, some background. Blockchain is a word that is used to describe a method of storing information that makes it extremely difficult to alter. The information is encrypted and redundant copies are essentially kept in a de-centralized record system, blocks. Theoretically, if you open a document that is stored (or its code [aka hash] is stored) in the blockchain, you can instantly verify if it has been altered. All references to the document (hash) stored in the blocks will match, which validates the document.

Once a document has been signed by both parties and the final version is stored in the blockchain, both parties can feel comfortable they will be referencing the same, final document. The question is how do you do that? If your organization stores its legal documents on a network drive, how it is validated? Possibly, when the document is opened it will automatically use the internet to confirm the hash/code with the blockchain.

If your organization uses a document management system, it will need to allow some communication with the blockchains to verify documents. Notice the plural use of the word blockchains. There is no restriction on who can establish a blockchain so each industry might have one or some large company may create one. Therefore, your document management system must be capable of accessing all of them. In fact, that is how the current digital signature industry works, only each digital signature player acts as the blockchain (DocuSign, RightSignature, etc.).

Some documents, like the simple apartment lease or mobile phone service agreement, might actually be data files only and all data would be stored in the blockchain. Therefore, no document actually exists, but both parties can access the information about the unalterable terms via their contract application. Those are situations that are referred to as smart contracts since the data can include both banks account numbers and therefore, the blockchain can automatically request payment and make a payment. No real need for a document management system.

More complex transactions have more complex documents and would not likely be good candidates for smart contracts. And the blockchain doesn’t necessarily offer privacy, which also might deter use for complex transactions. Deeds and other property records, that are ultimately public record, might be good candidates for blockchain and might be cost effective compared to paper. The bottom line is that there is a lot to be worked out and some things may change and other things may radically change. There is no doubt, this will change how all organizations manage documents.  Stay tuned.

Millennia Group provides workflow and document management solutions.  Visit www.mgdocs.com for more information or send an email to info@mgdocs.com.