Virginia Sleeps through the Blockchain Revolution

Blockchain - 2A bitcoin for your thoughts? Approximately eight years ago Satoshi Nakamoto published a white paper entitled, “Bitcoin: A Peer-to-Peer Electronic Cash System.”  CoinDesk, a company dedicated to reporting on bitcoin, defines bitcoin thus: “Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems. It’s the first example of a growing category of money known as cryptocurrency.” Bitcoin attained some mainstream media infamy when the FBI shut down the website named Silk Road which was accepting it as payment for the sale of illegal drugs. Silk Road and the man who founded Silk Road, Ross Ulbricht, had bitcoins worth approximately $100 million at the time of his arrest. Over the next two years the U.S. Marshal’s Services auctioned off the seized bitcoins for about $80 million.  As it turned out Mr. Ulbricht would have no use for those bitcoins since he was convicted on a host of charges and sentenced to life in prison without the possibility of parole. Today, over 100,000 merchants worldwide accept bitcoin payments.

Ian Drury and the Blockchains. At the heart of the bitcoin system was a brilliant bit of software design called a blockchain. Technically, the blockchain is a form of distributed database. Functionally, it serves as the public ledger of all bitcoin transactions. It’s the blockchain that gives bitcoin owners faith in the value and provenance of their bitcoins. That might have been an interesting footnote to the 15 minutes of fame enjoyed by bitcoin. However, as so often happens in technology, people began to see blockchain as much more than a foundation for a cryptocurrency. Blockchain-based systems are now seen as revolutionary changes to industries from banking to shipping to rental cars. Just as dirty dishes gave rise to penicillin, bitcoin has given rise to blockchain.

The Swiss Army knife of software. Blockchain-based systems are now seen as revolutionizing functions as diverse as stock settlements, diamond insurance, medical records management and government record keeping.

Asleep in River City.  Given the potential magnitude of the blockchain revolution one would think that the business development geniuses in our state government would be awash in blockchain ideas. It could make Virginia ports more competitive, add transparency to government record keeping, reduce the costs of government and the headaches of complying with regulations. Vermont has an active program in place to enable self-service government. Delaware is pioneering the use of blockchain-based smart contracts to help public and private enterprises lower transaction costs.  Virginia?  ** sound of crickets chirping **.

Not dead yet.  While the Virginia General Assembly slumbers through modernity a small group of Virginians hailing from Blacksburg see the future and are acting on it. Follow My Vote is a start-up trying to use blockchain technology to implement “a secure and transparent voting system for the modern age.” Excellent work!  Perhaps, one day, we can use blockchain voting software from Virginia-based Follow My Vote to finally throw the bums out!

— D.J. Rippert

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5 responses to “Virginia Sleeps through the Blockchain Revolution

  1. I’ll be the first to admit -that I do not fully understand bitcoin but I do recognize it can be used a a medium for transactions and that it could have the potential to totally undermine the concept of central banks, taxation, and basically anything that govt does with money to get part of it for it’s needs.

    On the downside – I do not understand how it’s value is determined and no I do not believe some geek programming mathematical algorithms is how we assign value to something.

    what that means is that if you want to move money QUICK – do it with bitcoins but if you plan on accumulating them as a nest egg 20-30 years from now – bad on you.

  2. You go first, Mr. Rippert. I just checked and today’s price is just over $446.

    However, the following gives me pause: “The bitcoin price is very volatile and has seen some large fluctuations since its inception in 2011 when you could buy one bitcoin for just a few cents. Since then the bitcoin price has increased each year until it reached its high of $1200 per bitcoin in late 2013. After that, the bitcoin price has declined to $300-$200 per bitcoin where it has stayed for quite some time.”

    As a prudent small business owner I am not quite ready to take the plunge (no pun intended).

  3. LarrytheG and John B:

    To clarify, I don’t believe Virginia has a substantial opportunity with bitcoin (although my opinion on that is subject to change). I think Virginia has a substantial opportunity with blockchain, a technical component of bitcoin. Blockchain is a hard concept to explain because it incorporates some pretty advanced technical concepts (like distributed database) and some new functional concepts (like distributed trust and provenance).

    If you remember the “bad old days” of Napster, people were shattering intellectual property ownership and copyright laws with that peer-to-peer application. The courts shut down the company and it eventually was forced into bankruptcy. At the core of Napster was peer-to-peer software. This design became the foundation for products like BitTorrent which is now used for streaming music, streaming video, cloud storage and a variety of other, quite legal applications.

    Napster bad, peer-to-peer good.
    Bitcoin bad (maybe), blockchain good.
    Mold growing on dirty petri dishes bad, penecilin good.

    You get the picture, I am sure.

  4. And a Colorado client of mine has developed a form of a peer-to-peer platform, with a database query in the middle to determine participation and price acceptance, that allows toll free calling to avoid the Public Switched Telephone Network and can cut out the interexchange carriers (e.g., Verizon and AT&T) from the calls and reduce prices substantially. I suspect different telecom companies will see this new platform’s inherent goodness differently.

  5. understanding blockchain technology is an example of the challenges our education system faces.

    blockchain technology is not going to go away – and it has the potential to totally transform our lives in many ways and yet – how many of us – or current graduates of high school – whether bound for college or not – understand the potential and implications of blockchain technology?”

    ” Blockchain technology is complex, but the idea is simple. At its most basic, blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value – money, titles, deeds, music, art, scientific discoveries, intellectual property, and even votes – can be moved and stored securely and privately. On the blockchain, trust is established, not by powerful intermediaries like banks, governments and technology companies, but through mass collaboration and clever code. Blockchains ensure integrity and trust between strangers. They make it difficult to cheat.

    In other words, it’s the first native digital medium for value, just as the internet was the first native digital medium for information. And this has big implications for business and the corporation.”

    every kid in school should be taught this concept because it’s going to be the world they live in.

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