Sen. Greg Albritton, R-Atmore, speaks with Sen. Gerald Allen, R-Cottondale, on the floor of the Alabama Senate on April 9, 2024 at the Alabama Statehouse in Montgomery, Alabama. (Brian Lyman/Alabama Reflector)
Lawmakers and regulators met Tuesday to study the impacts of a novel technology for Alabama as it becomes a more significant part of the public sphere.
Members of the Alabama Blockchain Study Commission convened an organizational meeting to appoint a chair and the vice chair and form three committees to study different aspects of blockchain technology, in particular its application to financial services.
“Anytime a dollar is involved, traditional regulation should apply,” said Rep. Mike Shaw, R-Hoover, a member of the committee. “Where I get concerned is when you start getting into peer blockchain. A lot of the fraud that is happening has got nothing to do with blockchain. People are just taking the money, they don’t do anything with it, and they say they are investing in cryptocurrency.”
SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Blockchain amounts to a spreadsheet or database that tracks progress as new information is added by users with access to the system.
“That central repository of information is blockchain,” said Vijay K Madisetti, an adjunct professor at the School of Electrical and Computer Engineering at Georgia Tech, who spoke to the committee on Tuesday.
Committee members, composed of lawmakers from both parties; as regulators and representatives of the Secretary of State and Attorney General’s offices, appointed Sen. Greg Albritton, R-Atmore, as chair.
Albritton then began selecting the individuals that will comprise three subcommittees to study different aspects of Blockchain technology, from how the state could potentially apply it for its operations and how to protect the public from potential fraud.
One subcommittee will research 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 review how blockchain can be used both in public and in business.
Members of the committee had varying understandings of the technology and said educating the public would be an important responsibility.
Madisetti said blockchain had three phases. The first dealt with keeping track of cryptocurrency. The second was established to track business operations or dealings, and the third phase made Blockchain more efficient to use.
While it has expanded, its application to financial services, particularly to individual finances, engendered its reputation in the public lexicon.
“You cannot have cryptocurrency without a blockchain because, unless you are borrowing from your brother, you don’t trust anyone,” Madisetti said. “You need a centralized way by which every token, and how it is used, is documented in an immutable, or an unchangeable way, in the World Wide Web.”
Madisetti said that information in a Blockchain, a particular database, is encrypted. Information is added to the system only if people (miners) in the system confirm the “block” of information that is added is correct. Individuals are paid to confirm the sanctity and fidelity of the information that is tracked.
Those individuals an incentive for ensuring the accuracy of the system, Madisetti said, because the system is responsible for compensating them.
In that case, the system for ensuring accuracy is decentralized, because most of the individuals, more than 50%, must confirm the accuracy of each “block” for the information to be recorded. It is done at one central location.
Members of the committee appreciated blockchain’s application to financial services the most.
“It is the dollar that we are concerned about,” said Amanda Senn, director of the Alabama Securities Commission that oversees securities laws in the state. “The only way for most people to get in is the dollar, so it is a dollar in, and the only value that it has is the dollar out.”
Senn said this after stating to the other members how concerned she is about the potential fraud that is happening with companies with cryptocurrency operations.
“There is intrinsic value to 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 the security. The cryptography that backs that and the checks and balances that happen between that whole network, creates the security.”
DONATE: SUPPORT NEWS YOU TRUST
Most Popular
Comments / 0