RENO, Nev. — The price of a Bitcoin on Jan. 1, 2017, hit a milestone as it passed $1,000. While those in the know projected 2017 to be a banner year for the cryptocurrency, most would be duplicitous if they said they projected an increase of 16-times to close out the year.
As Bitcoin continued its meteoric rise throughout the year it quickly caught the attention of more than niche investors and early adopters — institutional investors, day traders, and average people from all walks of life learned how to buy and sell Bitcoin — and many have realized tremendous returns.
Bitcoin is famous for being extremely volatile, and skeptics are quick to opine that, “it’s not backed by anything tangible like gold.”
However, what is not commonly understood is that the technology that underpins and ultimately makes transacting of Bitcoin possible — blockchain — is what holds the most long-term promise, both from an investment and an economic development perspective.
So, why are companies so interested in blockchain? Because of its high level of security and its incredible possibilities.
Blockchain, at its simplest, is a new form of data structure that is the backbone of digital currencies. It is a growing list of records secured by cryptography, and by its nature, is resistant to manipulation by involved parties or outside actors.
Balancing a cryptocurrency ledger becomes essentially a math problem that is constantly trying to be solved by networks of computers (a process known as “mining”). Each time the ledger is solved (about every 10 minutes for Bitcoin), a block is created that illustrates where every fraction of each Bitcoin is at that point in time.
That time-stamped block becomes part of the chain to which all future ledgers are based off — creating an immutable record of transactions over time held by all parties on the network.
In the case of Bitcoin, this ledger is accessible to the public — whereas other blockchain ledgers are only viewable to those who have explicit permission to be a part of the network (i.e. all electric utilities that are part of a connected energy grid, or hospitals and clinics that are part of a health care record network).
Blockchain offers a heightened level of security in transactions, and is making its way into a wide variety of industries at a fast pace. PricewaterouseCoopers has projected that by the year 2020, 77 percent of all financial tech companies will be utilizing blockchain as part of their business process.
In 2017, at least 30 different public companies have modified their name to include “blockchain” or announced a pivot to blockchain technologies. For example, Bioptix changed its name to Riot Blockchain, ($RIOT on NASDAQ) and saw its stock increase from $7.25 to $23.60 in 10 days, and all the way to $38.60 a month later.
Long Island Iced Tea rebranded itself to “Long Blockchain Corp” (LTEA on NASDAQ) and saw its stock price jump from $2.40 to $6.91 the day after. While $RIOT has found itself leveling off to $17.60 on February 12, LTEA holds strong at $6.39.
Beyond these two examples, there are hundreds of familiar publicly traded companies that have made a play in blockchain, including: Microsoft, IBM, Deloitte, Overstock.com, Forbes, Walmart and Oracle. Investing and implementation of blockchain is now a common strategy among blue-chip companies — a validation of its potential.
Blockchain in Nevada
The Silver State made a big splash in blockchain news with the passage of SB398, signed by the Governor in June of 2017. With the passage of this law, Nevada became the first state to proactively prohibit local governments from taxing blockchain transactions.
The bill also amended the state’s electronic record laws — meaning a record stored in a blockchain can also now be used as evidence in state and local courts.
In response to this new law, there has been enormous interest from blockchain companies around the world who are interested in taking advantage of Nevada’s new laws that recognize blockchain transactions as legally binding within our electronic records law.
Nevada-based startups companies, along with businesses looking to make a move to the state, stand to gain significantly from this legislation that was sponsored by Nevada State Sen. Ben Kieckhefer.
Validating the legislation, just a couple months ago, a company with the literal name of Blockchains announced what could amount to be the largest private land deal recorded in terms of acreage in our state’s history — 67,000 acres (almost exactly the acreage of the City of Reno) by purchasing most of the remaining land at the Tahoe Reno Industrial Center. There are many reasons to suggest that this is only the beginning of things to come.
While SB398 truly put Nevada on the map for blockchain technology, Nevada also features other advantages that can’t be written into state law — an ideal climate for massive data storage and processing facilities (namely aridity, plentiful sunshine, and huge swaths of developable land), a favorable business climate, fiber optic connectivity to international markets, and proximity to the technological and venture capital mecca of the Bay Area.
These are the same advantages that helped to attract Tesla, Google, Apple and Switch — also cutting-edge technology companies.
Taking all the above into account, Nevada is poised to become a blockchain haven for decades to come. However, it is important for policymakers, economic development officials, bureaucratic agency heads and the community to remain proactive in keeping Nevada ahead of the blockchain curve.
To that end, over 200 of these individuals gathered at the Nevada Museum of Art on February 6 to discuss blockchain with a world-class group of blockchain speakers that traveled across the country to share their expertise.
During the breakout session of the conference, those in attendance discussed what the next steps should be in blockchain policy development. One step discussed involved myriad future policy measures to be considered during the 2019 session to keep Nevada as a leader (since the passage of SB398 last summer, over a half-dozen state legislatures have introduced legislation seeking to catch up to Nevada).
Also discussed were possible pilot projects between industry and local governments that would help pave a path forward for the transition of Nevada public services onto the block chain.
The Internet in the ’90s democratized the “sharing of information” — no longer were third parties needed to transmit, copy and share information around the globe. Similarly, blockchain has the power to democratize the “sharing of value” by eliminating the need for third party validators.
Nevada now has a once-in-a-generation opportunity to lead the nation (perhaps the world) in fostering and supporting this nascent industry that many believe is as transformational as the Internet itself.
Tyson Falk is a member of the Government Affairs & Advocacy Group at the Reno-based law firm McDonald Carano. Visit www.mcdonaldcarano.com to learn more.
