Blockchain Industry: Nevada Overview
Blockchain technology, officially recognized in Nevada in 2017, has attracted about $300 million in investments statewide, according to Blockchains LLC. Nevada is one of many states to test and encourage adoption of blockchain technology, both in its markets and inside government offices. Nevada became the first state to free blockchain taxes. The state enacted Senate Bill No. 398 in June 2017. Nevada has also taken steps to recognize Smart Contracts and introduce blockchain in the State's Uniform Electronic Transactions Act.
- Nevada is one of the leaders in developing and crafting laws that keep up with the latest in this kind of technology. In June 2019, Nevada enacted four new laws accommodating blockchain.
- These four blockchain-related bills, SB 161, SB 162, SB 163, and SB 164, create a sophisticated and light-touch regulatory environment for individuals in the Nevada emerging technology ecosystem to leverage.
- All four bills were introduced by Republican state Sen. Ben Kieckhefer, who explained earlier this year that the legislation is designed to spur economic growth and promote innovation in business.
- SB161 creates a regulatory sandbox for emerging technologies companies through a program in the Department of Business and Industry.
- SB162 creates a definition for “public blockchain” within Nevada Revised Statutes and requires government agencies to accept electronically certified documents, including those on a blockchain.
- SB163 authorizes businesses to store and maintain corporate records on a blockchain.
- SB164 defines virtual currencies as intangible personal property and therefore exempts them from personal property taxation.
Major Growth Drivers of the Blockchain Market
- Increasing demand for distributed ledger technology: Companies are taking notice of blockchain benefits and embracing blockchain technology for its wide-reaching possibilities. From manufacturing to retail to supply chain and beyond, blockchain has much to offer. Some of the possible use cases include payment processing, copyright protection, reliable data backup, record-keeping, title transfers, and even tax regulation and compliance.
- Reducing the total company's costs: The most significant advantage of blockchain’s distributed ledger is reduced operational costs. Cost can be taken out of existing processes by removing intermediaries or the administrative effort of record keeping and transaction reconciliation.
- Time savings: No more need for a data intermediary since blockchain allows companies to quickly and easily trace products and transactions all the way back to their roots. Walmart, for example, successfully decreased the time it takes to trace food from store shelves to the farm from seven days to 2.2 seconds using a blockchain. That time savings also results in considerable cost savings.
- Additionally, this streamlined efficiency provides transparency, reliability, and authenticity. Because data is shared on multiple systems in multiple countries, and validated before it’s recorded, it’s more secure. Each data block is encrypted and linked to the one before it.
- Blockchain technology can be adopted in various industries. Obviously, financial services benefit most from embracing of blockchain technology. Other industries primed to benefit from the technology are agriculture, insurance, manufacturing, property, public sector, retail, technology, transportation, arts, recreation, and utilities.
- Another driver that can grow the blockchain market is the evolution of the blockchain technology itself.
- Leading IT providers such as Amazon, Azure, IBM, Oracle, Samsung, and SAP are rising to the call with Blockchain as a Service (BaaS) offerings. These cloud-based solutions are helping businesses embrace and create blockchain technology without having to start from scratch.
- In addition, Google’s parent company Alphabet is working to develop its own blockchain that could be used by third parties to accurately track transactions. Intel has developed Software Guard Extensions to ensure privacy and security in blockchain dealings. And Salesforce has teamed up with the Blockchain in Transport Alliance to smooth supply chain handoffs.
The Challenges of the Blockchain Adoption
- Scalability: A major challenge of blockchain networks is related to the technical scalability of the network, which can put a strain on the adoption process, especially for public blockchains.
- Before scalability can be realized, standardization needs to be addressed. And efforts are underway in that regard. Blockchain platforms, such as open-source Corda by the R3 consortium, can help lead to globally accepted standards. The International Organization for Standardization (ISO) is also working on blockchain and distributed ledger guidelines.
- Another aspect that needs to be considered is interoperability. Although full interoperability among all of the different blockchain platforms may not become reality, much energy is going into ensuring enterprise blockchain networks can communicate with each other in a consistent and scalable manner. Additionally, assets need to be digitized in order to take full advantage of blockchain capabilities. This is especially tricky with physical items, such as computer parts — but IoT sensors could potentially help.
- Lack of skilled developers: A research conducted by Glassdoor indicates that the demand for blockchain-related jobs has increased by 200% between 2017 and 2018. Having a sufficient pool of qualified developers is a top industry concern.
- Ineffective energy consumption: The majority of blockchains present in the market consume a high amount of energy. This is because Proof of Work, the consensus mechanism used to validate transactions and ensure trust in the network requires high amounts of computation power to solve a complex mathematical problem to verify and process transactions and to secure the network.
- The amount of energy consumed by computers that compete to solve the mathematical puzzle has reached an all-time high. Add to this the energy needed to cool down the computers, and the costs increase exponentially.
Key players of the Blockchain Industry in Nevada
- Filament builds comprehensive blockchain systems for the enterprise and the Industrial Internet of Things (IIoT). Its hardware, software, and service solutions allow connected devices and machines to securely interact with and transact value against distributed ledger technology, such as a blockchain. Filament is headquartered in Reno, Nevada, with offices in Denver, Colorado and Saint Paul, Minnesota.
- The Nevada Blockchain Association (NBA) is a non-profit organization that has been set up to promote the wide adoption of blockchain technology, cryptocurrencies, digital assets.
- Coin Cloud is building the largest and fastest growing fleet of bitcoin ATMs. Creating an instant cash to bitcoin network across the US and beyond. Their mission is to make bitcoin trade easier and become more accessible.
The research team first explored and browsed relevant industry reports, articles, and publications on blockchain technology in Nevada and the globe. We found that Nevada is one of the leaders in the development of blockchain technologies around the USA and the world. In 2019, Nevada enacted a series of laws promoting the adoption of the blockchain. Companies and enthusiasts within the emerging technology landscape will benefit immensely from the clarity and blockchain development opportunities provided by these laws. Also in this research, we found the main growth factors of the blockchain market as well as the challenges in adopting blockchain technologies. In addition, we included several major Nevada companies that use and promote the wide adoption of blockchain technology, cryptocurrencies, digital assets.