5 Things You Should Know About Blockchain
Nine times out of 10, you may have heard the term ‘blockchain’ and dismissed it as a fad, a buzzword or even technical jargon. If you made that assumption, you might be wrong. In essence, blockchain is a technological advancement that has become one of the most disruptive technologies in decades.
Additionally, companies in Greater Phoenix have found success and security in this landscape and educational institutions are producing the workforce to support its expansive growth.
To learn more about this emerging technology sector, we sat down with GPEC Director of Emerging Technologies, Leslie Gahagan.
What is blockchain? What is bitcoin? Can you differentiate between the two?
Blockchain technology is an open-source protocol incorporating elements of mathematical computation, code and cryptography, to record transactions onto a ledger system distributed across a network of specialized computers.
Three fundamental features of blockchain technology are security, scalability and decentralization; omitting one, negates the value and brilliance of the technology. Elements of blockchain technology have existed for decades, but culminated in producing the Bitcoin Blockchain, which was introduced to the world in 2007.
The Bitcoin blockchain intends to serve as a peer-to-peer payment solution to reduce transactional latency, tampering and reliance on intermediaries. Additionally, it serves as a new network infrastructure built on specialized hardware found in the nodes and impenetrable code; since its inception, the Bitcoin blockchain has not been hacked or compromised.
Bitcoin is a blockchain network and a token store of value capable of acting as a currency. The token is produced as the network algorithms solve complex equations to validate new ledger entries. In network, computers or people can use the token to transact.
Another notable blockchain is Ethereum. Its principals are rooted in security, scalability and decentralization, but is fundamentally different from the Bitcoin Blockchain as it relies on coding language, Solidity. Ethereum also utilizes a network currency token called Ether, which serves as the ‘gas’ to power transactions or activities on its blockchain.
Both blockchains and their respective currencies have several use cases and application possibilities across industries and governing authorities worldwide.
What are the three things that drive blockchain companies to Greater Phoenix?
Arizona has passed legislation recognizing the legitimacy of blockchain capabilities and functions such as Smart Contracts and Digital Signatures. Additionally, the state passed the nation’s first FinTech Sandbox, freeing entrepreneurs and unique business models from burdensome regulations. From the state to federal level, Arizona legislators play an active role in educating regulators on blockchain technology; U.S. Rep. David Schweikert co-chairs the U.S. Congressional Blockchain Caucus and State Rep. Jeff Weninger champions significant advancements statewide.
Regional academic institutions and trade schools are active in developing curriculum and certifications for blockchain technology. For example, Maricopa County Community College District (MCCCD), University of Advanced Technologies (UAT) and Arizona State University (ASU) are all offering coursework.
Affordable Power Supply
The region offers competitive power supply rates and is open to working with blockchain mining [server farms] facilities. Despite the heat, Arizona does support a growing number of blockchain mining companies traditionally clustered in colder climates.
Who are three notable companies in the region?
Bitmain, a pioneering company based in Beijing, announced this month they would be growing their Chandler, AZ workforce by 50%. Bitmain is a leader in producing mining hardware and supports the world’s largest mining pools for the Bitcoin network, while also contributing to the development of Artificial Intelligence.
Dash, a homegrown success, specializes in improving money systems through the use of digital cash and mobile phones. Their operations are expanding worldwide for customer use and merchant acceptance. Most recently, the announced user access in Venezuela, a country ravaged by inflation; families are sending nearly $2 billion in remittances, and now through Dash, they can send or receive payments near instantaneously and without devaluation.
Propy, a residential real estate platform built upon the Ethereum blockchain, accelerates transaction time for home buying. In collaboration with a Scottsdale-based residential realtor, Sarah Richardson of Tru Realty, Arizona’s first home purchase on a blockchain completed earlier this year. Additional transactions are in the pipeline.
Unique industry activity is putting Greater Phoenix and Arizona in the spotlight.
Tangentially developing with blockchain scale is the commercialization of space. Tucson-based company Vector Space Systems is developing low earth orbit (LEO) satellites for sending payloads to space. Historically managed by the government, Vector is disrupting the space launch industry and democratizing it for multiple use cases. SpaceChain Foundation, working in partnership with Vector, is creating a constellation of mining nodes for grander scale, security and processing power. The commercialization of space spurs significant investment and economic activity; merged with blockchain, Arizona is poised to attract meaningful companies and talent.
Where do you see blockchain in the next 5-10 years, especially in Greater Phoenix?
In the next 5-10 years, three key areas are crucial for blockchain development:
- Known as the Trilemma, network scalability for Bitcoin and Ethereum are top of mind for developers. Currently, substantial scalability cannot be achieved without sacrificing security and decentralization.
- Next generation smartphone deployment will ease the adoption of consumer storage of cryptocurrency, private keys and function as a network node. Taiwanese-based HTC is soft launching their blockchain smartphone, Exodus 1 starting in December of 2018.
- The stabilization of cryptocurrencies will indicate a decline in speculation and a rise in consumer confidence. A driver of currency volatility is the exchange between the respective token and fiat since average buyers cannot transact in cryptocurrency at the convenience of fiat currency.
For Greater Phoenix specifically, our welcoming state regulatory environment will enable the region to position itself as the proving ground for blockchain-based products as well as subsidiary industries, which support them; for example, the developments in the space race.
Most importantly, the region’s emphasis on trade skills education for coding and blockchain development, will empower local talent to build proprietary blockchain-platforms. Additionally, it will help shape the standards for the technology’s scale, which will drive organic growth and expertise in Greater Phoenix’s technology and entrepreneurial ecosystem.
Sign up for The Connected Place newsletter to learn more about blockchain in Greater Phoenix.