February 1, 2019
What Small Businesses Need to Know About Blockchain
by Benjamin B. McKelvey, Thompson Hine LLP
“Blockchain” is an increasingly trendy buzzword in discussions about the future of business and technology. But what exactly does it mean, and how is it relevant to the business environment in Ohio? This article provides answers to these questions.
Blockchain is a type of distributed ledger technology. Utilizing consensus algorithms and cryptography, blockchains enable users to trade, send or record information in a self-validating, secure environment. Third-parties are not required to manage or secure the ledgers of information that are stored on blockchains. Instead, these systems operate on distributed networks of computers and are managed entirely by computer science and mathematics.
So what exactly does this mean? Take any example of an important information database in the public or commercial world: the price of equities, activity on a consumer credit report, patient medical records, or even the tally of votes in an election. In each of these and many other scenarios, people rely upon the accuracy and security of the underlying information. In a world where digital security breaches at Fortune 500 companies and government agencies are increasingly common, blockchains offer a new paradigm for addressing these concerns. Blockchains also offer the potential for a marketplace of “peer-to-peer” transactions, enabling people to contract, trade, rent and gig directly with each other, without having to go through a company or public authority.
This all may sound like an abstract fantasy, but blockchains are making big news in Ohio with concrete advances in the private and public domains. Ohio is already home to some promising startups and a major conference held in 2018 suggests that more will be on the way. Votem, based in Cleveland, is offering a blockchain-powered voting system that has already been used successfully by the Rock and Roll Hall of Fame and for absentee voting in the State of Montana and the District of Columbia. In the real estate sector, SafeChain is a Columbus-based startup developing blockchain technology for property transactions, title verification and property record systems. In September 2018, SafeChain announced that it had facilitated the sale of 36 forfeiture properties in a partnership with the Franklin County auditor’s office. In January of this year, it announced a partnership with Perry County to digitize the County’s deed transfer and conveyance system.
Given these real-world blockchain applications developed here in Ohio, it was fitting that the Blockland Solutions Conference was held in Cleveland in December 2018. Blockland Solutions convened developers, entrepreneurs and technology experts for several days of presentations on blockchain concepts and networking among industry leaders. Startup incubators including JumpStart and FlashStarts announced an ambitious plan to fund $100 million worth of blockchain startups in the coming years.
On the public side, Ohio’s government has led the way in its embrace of this innovative technology. In November 2018, the Office of the Treasurer of Ohio announced a plan to begin accepting bitcoin and other cryptocurrencies as a method of payment for certain forms of business tax through a special portal called “OhioCrypto.com.” Cryptocurrencies, or new forms of digital money, are a type of application that is possible with blockchain technology. With this announcement, Ohio is attempting to position itself as a leading destination for blockchain businesses.
While blockchain technology is still the subject of confusion and speculation among many, these advances by Ohio businesses and the state government demonstrate the momentum that is underway. As with the internet, you don’t necessarily need to understand all of the technological details to understand that blockchain will likely have a major impact on the future of commerce.