What are cryptocurrencies and blockchain technology? How do they affect me, my business and my industry? How about society at large? Should I invest?
These are some of the questions swirling around the minds of many in Rhode Island and across the globe, as cryptocurrencies and blockchain technology repeatedly make their way into headlines.
They are also why more than 100 business owners, bankers and financial advisers – including the state’s top liaison to the business community, R.I. Commerce Secretary Stefan Pryor – attended an event on the subject earlier this month held by BNY Mellon in Providence.
“There are millions of people investing billions of dollars in cryptocurrencies today,” said Guy Asadorian, wealth director at BNY Mellon. “Everybody is asking us: What do you think of bitcoin?”
Cryptocurrencies, including the ever-familiar bitcoin, are decentralized digital currencies traded on a virtual ledger known as blockchain. There is no intermediary, or central bank, but rather an open-source software powered by its users.
The digital currency has yielded billions of dollars in investment. New cryptocurrencies are introduced every day and they continue to grow. In 2016, the combined market cap totaled about $7 billion. At the time of the event, it had grown to roughly $751.4 billion.
But if blockchain technology evolves as advocates hope and predict, cryptocurrencies could just be the beginning.
“It took three decades after the automobile to come up with the steering wheel,” said Dave Fragale, co-founder of Atonomi, a Massachusetts-based company that uses blockchain as a security tool to connect internet of things devices.
Fragale, a 2015 Massachusetts Institute of Technology Sloan Fellow in Innovation, has advised the U.S. government on cryptocurrency and national security threats such as terrorist financing and transnational organizational crime.
Besides the financial sector, Fragale sees blockchain technology disrupting and improving upon such industries as energy management, real estate, file storage and food safety. The technology is inherently efficient, transparent and – so far – secure, giving advocates reason to believe it could help cut down on fraud, waste and corruption across sectors.
“It’s very disruptive, but it can also help solve a lot of problems in society,” he said.
But the technology – and its future evolution – is also difficult to understand, which helps explain why there’s such extreme volatility in the cryptocurrency markets.
“If you’re in it, invest what you have to lose,” Fragale said, pointedly.
Asadorian said the technology will continue to evolve.
“The early winners … are these cryptocurrencies,” he said. “We don’t know at this point whether the early winners are going to be the long-term winners.”
Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or follow him on Twitter @Eli_Sherman.
