Why I Consulted a Lawyer About My Blockchain Project Early in the Game
When launching any new business venture, often times the very last thing you want to think about is all the potential legal concerns you’ll need to account for. Between getting your product finished, handling your customer base and support, and marketing your finished product to the masses, it’s easy to get lost along the way.
However, after going through this process on our own when developing V-Vote, we realized something. We learned — by doing it ourselves — that early legal advice should not be avoided and that, in fact, seeking legal counsel early on in your project cycle can significantly benefit you and your team. After meeting with a legal professional early on, we were able to ultimately nail down our final product and define what our goals were, which ultimately ended up saving us time (and a lot of headache) along the way.
At the very beginning, we weren’t entirely sure where we were heading. We both had an interest in artificial intelligence (AI) and AI prediction systems because we thought it was an interesting way to use our mathematics background. And, to be frank, the AI industry is rapidly gaining attention, so we thought that combining AI with predictive systems would be a lucrative market.
At the same time, we were also witnessing the underlying technology behind the cryptocurrency movement, blockchain, gaining traction as well. While that was happening, the number of blockchain forecasting projects was growing in both number and scope with nearly endless variety in what predictive use cases they offered. DataConomy, in fact, has referred to blockchain as the “great equalizer for predictive analytics.” We knew that this could go beyond just predicting cryptocurrency prices in the future, but that’s where we first began with blockchain.
As we started getting involved with blockchain technology, we began studying algorithmic trading and the cryptocurrency markets. Early on, we had some different ideas about what we would eventually build. Looking at the trading trends in the cryptocurrency markets was interesting, so we began looking at ways to implement predictive analytics into the markets.
Not only were hobbyists and enthusiasts able to learn more about the markets they were trading in and witnessing with predictive analytics in the crypto markets; they could also make informed financial decisions. Eventually, we found ourselves at a point where we could consistently make a profit from correctly predicting cryptocurrency price movements and market trends. That was great, but it didn’t stop there.
Getting More Involved with Blockchain
The more we investigated blockchain technology and the different pattern designs and blockchain software properties, the more we realized improvements could be made. We looked into different designs from many well-known names like ARK, Ethereum, NEO, EOS, and more, but there was one thing we could both agree on: we didn’t like how complicated implementation was for all of them!
As we continued our investigation and researched various approaches, we came to the conclusion that
We wanted free, straightforward code that was both easy to implement and safe to use.
So what do you do when something doesn’t exist that you see a strong need for? You build it!
Once we looked through all the explanations, repositories, and data documentation associated with different models, we came to the conclusion that things were unnecessarily complicated.
Since things weren’t as simple as we thought they should be, we decided to create our own system that would simplify blockchain code and could be easy to implement and safe to use.
With that in mind, we set out to build our own blockchain bases on ERC-20 protocol and Bitcoin organizational properties. Ark was a game changer by helping people communicate between blocks, so we’re using that in our voting system. We created a readable open source code that can be forked and combined the documentation of Ethereum and Bitcoin-Combined PoW and PoS for our platform. We were implementing crypto into prediction markets through social voting.
Then came the legal questions…
Meeting With a Lawyer
While our platform was finally starting to come together, we saw a lot of other blockchain-based companies experiencing legal issues along their journey. Knowing that the industry is so young and that many entrepreneurs eventually run into difficulty with their projects from the law, we decided it would be best to learn a bit more about why that was the case and to check out business plan out early. We figured better sooner, rather than later.
After calling a few different lawyers early in the game, we realized just how expensive legal help can be! The first lawyer we contacted said he wanted 1,000 NIS upfront without even asking us a single question. Then another was charging 900 NIS an hour, and two wouldn’t even meet with us since we were working with blockchain.
In the end, we ultimately met with 2 lawyers. The second lawyer taught us the valuable lesson of how important early legal advice can be. We ended up changing our business idea several times in order to explain our concept in a way for lawyers to understand since they initially thought it was related to binary options, which had just been recently outlawed in Israel along with other countries. The response we got from lawyers made us tighten up our business model and plans for the future.
Defining Our Product
Meeting with a lawyer is what really helped us start molding our final product to the point that it’s at now. When discussing things with our lawyer, and ensuring that we would have a tight legal case for our product, we began realizing all the improvements that can be made in the voting system itself, not just what we had been thinking about.
In recent history, there are plenty of reasons why people are skeptical about the future of voting. There are some nuances that many people don’t see in voting, and that’s one of the problems with voting, it requires trust, whether that trust is warranted or not. The American elections with Donald Trump had people questioning the potential involvement of third parties, Russian hackers, and others who may have been able to interfere with the elections, and that’s not even mentioning the scandal with the voting procedures in Florida that occurred during the Bush elections!
That got us thinking.
A voting system can help people interpret public sentiment and make informed decisions. Thus, we settled on a new direction for our product that focuses on creating more security and limited risk of potential hacking in a Gallup Poll style system. We implemented secure weighted voting with an algorithm that only counts valid votes.
Bitcoin introduced a revolutionary decentralized consensus mechanism (PoW), however, it wasn’t quite perfect for our rollout so we created a new consensus mechanism called Proof of Vote (PoV). We feel that blockchain-based voting is incredibly beneficial for prediction markets because it matches a global liquidity pool with global knowledge on a variety of subjects.
With the new platform, we are able to bring a decentralized approach to handle voting with the ability to write in votes, award voters for participating, and allow others to see the statistics/predictions in all categories across the board (and even create categories of your own). In addition to everything else, we were able to completely remove the requirement of trust from the equation by eliminating all third-parties in the system and allowing transparency in the process for all.
The end result: voting you can trust.
The Bottom Line
At the end of the day, there’s one crucial point along the way that made an incredible impact on our project, seeking early legal guidance. Had we not sought out the help of legal aid at the early stage we did, we likely would have found ourselves in a position with legal issues much later down the line and would have been required to pivot.
As with any startup, there’s nothing wrong with pivoting, but there is a problem when that pivoting happens too late in the game and you no longer have the ability to make such drastic changes to your original plans.
For us, early legal consultation helped us drastically by forcing us to tighten up our plan and gave us the confidence we needed to start approaching investors and potential partners with our pitch deck.
Now, we’re looking even bigger for the future. Blockchain voting could be the solution to voting to fight corruption within political systems, corporations, and even non-profits.
I hope my story can help others out there to see that it’s a better idea to start thinking about the legal ramifications of your project now rather than later. And who knows, maybe it will end up putting you in the right direction for the future of your project!