By: Jim Verdonik – Securities Lead, Ward and Smith, P.A.; Counsel to Causam eXchange
[This blog was originally published in Triangle Business Journal on Jan 3, 2018.]
If 2017 was the year of the bitcoin millionaire, what will this year bring?
Answer: Coins and blockchain entering your everyday life. Think that’s a wild prediction?
Well, did you know there’s a bitcoin ATM at Raleigh’s Crabtree Valley Mall? It’s outside of Sears on the second floor.
If you can buy bitcoins at your local mall, how long will it take until you can spend bitcoins at the same shopping mall? The answer – not long.
SEC-compliant tokenized securities offerings facilitated by blockchain will replace unregulated Initial Coin Offerings (ICOs) for companies raising capital. I’m working on such an offering now.
One bitcoin was worth about $11,000 the last time I looked [updated to Jan. 26, 2018]. And people around the world are spending fractions of bitcoins. A friend of mine paid for movie tickets in Japan using small fractions of a bitcoin.
Remember, the American quarter used to be called “two bits.” Two bits is derived from the Spanish Piece of Eight (the first global currency) and was legal money in America until the 1850s. People used to literally cut these coins into eight pieces, because a whole coin was worth eight Spanish Reales. So two bits were two eighths (or one quarter) of an American dollar.
So people around the world have a long history of using whatever currency works best for them. Don’t think it won’t happen again.
What about coins other than bitcoin?
The second biggest coin, Ether, is issued by the Ethereum Network. In many ways Ether is more useful than bitcoin. The Ethereum Network executes “smart contracts” that work in a very determinative process. If a network of computers verifies that X happens, then the smart contract automatically causes a payment to occur. That means you can do business with people all over the world without worrying about getting paid.
The best part is you can do all this without paying an intermediary to hold money or verify transactions. Two people anyplace in the world can interact directly and securely record their transaction. Wow!
Of course, blockchain and coins are interrelated, but blockchain is much bigger than coins.
Blockchain is a distributed ledger that records transactions in blocks of information. The blockchain is a chain of these information blocks. Once the blocks have been accepted by the network of computers, it’s impossible to secretly change recorded data.
That means it’s an extremely secure system of tracking who owns what. Because the information is encrypted and stored in hundreds of computers, hackers can’t steal or change it on one computer.
This is vital to many industries, including real estate, financial institutions, supply chain management, and energy.
If you want to know more about blockchain, let me know. I coordinate the Research Triangle Blockchain Working Group.
To read more blogs from me on this topic, go to Gateway Capital X.