On 17 September 2018, the Randolph Technical Career Center (RTCC) Business Management Program in Randolph, Vermont hosted Roger Glovsky and Ryan Munn as guest speakers, two local blockchain/cryptocurrency experts. Roger Glovsky writes a daily blog on Cryptosrock.com, commenting on the past, current, and future performance of the cryptocurrency market. His blogs frequently track Bitcoin, the largest and most recognized cryptocurrency today. Ryan Munn is the Founder of Interchain, LLC, a business advisory and consulting firm actively educating Vermont and the surrounding community about the implementation of blockchain and other emerging technologies.
Speaking to not only Business Management but Criminal Justice and Advanced Manufacturing students as well, Glovsky and Munn began their presentation by discussing the concept behind money. Specifically, what gives currency its value? In the past, the U.S. money supply was tied to the gold standard. However, since gold no longer backs the U.S. dollar, the Federal Reserve increases or decreases the value of the dollar by contracting or expanding the supply of money. For example, the Federal Reserve can lower the value of U.S. currency by printing and putting into circulation more dollar bills. In contrast, the Federal Reserve can increase the value of U.S. currency by taking bills out of circulation. Glovsky and Munn also described how the value of money is based on trust. Specifically, money will retain its value depending how much users of a specific currency trust the particular government that is printing the money. Currency will hold its worth if users are confident the government will repay its debts.
So how does the concept of monetary value and trust relate to blockchain technology and cryptocurrencies? Glovsky and Munn described blockchain as a digital ledger that can be used to record not only monetary transactions but also to distribute information. For example, documents can be digitized, coded, and logged or hashed for authenticity into the blockchain. Consequently, the blockchain systems are naturally designed to support transparency and accountability. Furthermore, blockchain technology allows digital information to be transferred and not copied; creating a permanent record that is next to impossible to change. Blockchain technology was originally developed to account for the Bitcoin cryptocurrency. The most basic blockchain functional component is cryptographic hashing where a set of information is run through an algorithm that generates a unique identification (ID) or “hash.” Each hash is included in the next set of new data when generating a subsequent hash, creating a linkage that prevents any inconspicuous alteration of records in the blockchain. It’s possible for the linkage to be altered in an individual record set with enough time and skill. However, the broadly distributed corresponding network protocols make it almost inconceivable that a bad actor would actually corrupt blockchain or Bitcoin records.
In contrast to printed currencies such as the U.S. dollar, cryptocurrencies exist without backing by a government. However, many governments are beginning to embrace the technology. For example, Japan has classified Bitcoin as legal tender. Currently, cryptocurrency value is based on a variety of factors. Prominent researchers, economists, and thought leaders are currently debating the importance and relevance of these factors in an effort to determine how they impact the trust of blockchain technology and cryptocurrencies. Factors include the trust of blockchain software programs and the community of network participants; market liquidity, depth and volatility; adoption and usage; and extended functionalities, consensus model, and codified monetary policies.
When cryptocurrencies such as Bitcoin are exchanged between users, cryptocurrency transactions are entered into a pool and confirmed by the network and its designated trust protocol onto a distributed ledger or “shared database.” This distributed ledger or database is held by countless participants in a large decentralized network. Network participants review and confirm the validity of all cryptocurrency transactions. When participants reach consensus on a batch of validated transactions, the transaction “block” is recorded in the blockchain. As a result, the ledger is updated with new blocks, exponentially increasing the relative permanence of the previous transactions.
In response to a student question focusing on the supposedly increased use of cryptocurrencies by criminals, Glovsky and Munn debunked the myth that the majority of cryptocurrency transactions are illegal in origin. Many critics allege that cryptocurrency users are “anonymous”, but in reality, users are “pseudonymous”. Although blockchain addresses do not identify the owners name exactly, they allow law enforcement to effectively track criminals who use cryptocurrencies to fund criminal activities such as drug trafficking, theft, and pornography. Additionally, recent studies have shown that criminal activities involving Bitcoin are relatively small, amounting to less than 1% of all transactions.
According to Glovsky and Munn, blockchain technology is here to stay and it is imperative for companies to embrace the technology in order to retain their competitive edge. Although blockchain technology is in its infancy and the potential of the technology is unknown, many companies view blockchain as a disruptive technology that could revolutionize the way future business is conducted. Consequently, these companies are budgeting large sums of money to develop blockchain technology in order to increase their competitiveness in an increasingly complex business environment.
About the blogger: Wayne Goulet is the Business Management Instructor at Randolph Technical Career Center (RTCC) in Randolph, Vermont. In addition to teaching Business Management, Wayne teaches three dual enrollment courses with the Community College of Vermont and Vermont Technical College. Prior to teaching at RTCC, he taught Air Force Junior Reserve Officer Training Corps (AFJROTC) at the Department of Defense Kaiserslautern and Ramstein American High Schools in Germany. Wayne retired from the Air Force in 2011 after serving in the active duty for 25 years. His permanent Air Force assignments included Panama, Japan, Korea, Germany, California, Ohio, and Maryland. Wayne’s operational deployments include Saudi Arabia, Iraq, and Afghanistan. He is an avid runner, completing 25 full marathons.