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Lawmakers, regulators to study impact of blockchain and cryptocurrency in Alabama • Alabama Reflector
Lawmakers and regulators met Tuesday to consider how a new technology will impact Alabama as it takes on a larger role in the public sphere.
Members of the Alabama Blockchain Study Commission have called an organizational meeting to appoint a chair and vice chair and form three committees to study different aspects of blockchain technology, particularly its application to financial services.
“Anytime there’s a dollar involved, you should have traditional regulation,” said Rep. Mike Shaw, R-Hoover, a member of the committee. “What concerns me is when you start getting into peer blockchain. A lot of the fraud that’s happening has nothing to do with blockchain. People just take the money, don’t do anything with it, and say they’re investing in cryptocurrency.”
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The blockchain is equivalent to a spreadsheet or database that tracks progress as users with access to the system add new information.
“That central repository of information is the blockchain,” said Vijay K Madisetti, an associate professor in Georgia Tech’s School of Electrical and Computer Engineering, who spoke to the committee on Tuesday.
Members of the committee, made up of lawmakers from both parties, acting regulators and representatives from the offices of the secretary of state and attorney general, nominated Sen. Greg Albritton, R-Atmore, as chairman.
Albritton then began selecting people who will make up three subcommittees to study different aspects of blockchain technology, from how the state could potentially apply it to its operations to how to protect the public from potential fraud.
One subcommittee will study potential regulation to help address some of the technology’s potential pitfalls. The second group will study protections for the public as the technology develops in the future. The final group will examine how blockchain can be used in both the public and business sectors.
Committee members had differing opinions on the technology and said educating the public would be an important responsibility.
Madisetti said that blockchain has three phases. The first is about monitoring cryptocurrency. The second was established to track trades or deals and the third phase made Blockchain more efficient to use.
Although it has expanded, its application to financial services, particularly individual finance, has increased its reputation in the public lexicon.
“You can’t have a cryptocurrency without a blockchain because unless you’re borrowing from your brother, you don’t trust anyone,” Madisetti said. “You need a centralized way for every token and how it’s used to be documented in an immutable or immutable way on the World Wide Web.”
Madisetti said that the information in a Blockchain, a special database, is encrypted. The information is added to the system only if people (miners) in the system confirm that the “block” of information being added is correct. Individuals are paid to confirm the sacredness and fidelity of the information being tracked.
Such individuals are an incentive to ensure the system’s accuracy, Madisetti said, because the system is responsible for compensating them.
In this case, the system for ensuring accuracy is decentralized, because most individuals, more than 50%, must confirm the accuracy of each “block” for the information to be recorded. This happens in a central location.
The committee members were the ones who most appreciated the application of blockchain to financial services.
“We care about the dollar,” said Amanda Senn, director of the Alabama Securities Commission, which oversees securities laws in the state. “The only way for most people to get in is the dollar, so it’s a dollar in, and the only value it has is the dollar out.”
Senn made the statement after telling other members how concerned she is about potential fraud occurring in cryptocurrency businesses.
“There is intrinsic value in cryptocurrency,” said Wade Preston, who is part of the Alabama Blockchain Alliance. “The intrinsic value of cryptocurrency is security because it is the consensus of the entire network. That consensus is security. The cryptography that underpins it and the checks and balances that happen across the entire network create security.”