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Blockchain technology could be most lasting impact of Bitcoin

Barry McNamara
MONMOUTH, Ill. – Bitcoin represents the next step in the evolution of money. That’s what students in a Monmouth College business class have been learning about the cryptocurrency, which has recently experienced wild fluctuations in value.

Students in Monmouth professor Mike Connell’s “Intermediate Macroeconomics” course have studied Bitcoin for the past three years. And Connell said that one of those students had a chance to show off her knowledge about the cryptocurrency – which at one point in 2017 increased in value by almost 20 times – at an internship last summer in Chicago.

“There was a meeting, and only she and one other employee knew anything about Bitcoin,” said Connell, the longtime chair of the College’s Department of Political Economy and Commerce. “Either you know all about Bitcoin, or you’re clueless.”

For those “clueless” about Bitcoin, Connell said it’s helpful to think of it the same way farmers think of commodities.

“Day to day, nobody knows the price of a bushel of corn – you have to look it up. Nobody knows the price of a barrel of oil – you have to look it up,” he said. “Bitcoin is similar. It’s speculative, and people are betting on what it might be worth. ... In my class, I try to introduce to my students the different kinds of money in a macroeconomy. There are many forms of money, and this is the new one.”

Connell said the cryptocurrency – which can be used for everything from e-commerce transactions to purchases at some physical U.S. stores – has several basic advantages and disadvantages.

“There are times you want to pay cash. Cash is anonymous. Bitcoin is anonymous,” he said. “You can see Bitcoin went from this account to this account, but you don’t know who owns the account. On the other hand, if you lose cash, it’s gone. If you forget your Bitcoin password, it’s gone. If someone goes insane, or gets in a car accident, it’s gone. The money only exists in computer memory, and it needs a password to be unlocked.”

Connell said that he is not necessarily bullish on Bitcoin’s future, but he is bullish on the general concept of cryptocurrency, especially the blockchain technology behind Bitcoin.

“Facebook was not the first social media platform – it was fifth or sixth,” he said. “Google was not the first search engine – it was fifth or sixth. It’s not clear if Bitcoin will be the one that survives. A lot of people think cryptocurrency might be the future, but Bitcoin might not be.”

Late last semester, Connell’s students read an essay by “Rational Optimist” blogger Matthew Ridley that Connell called “a big picture, political economy and commerce, liberal arts analysis of the use and importance of Bitcoin.”

“Whether and when the (Bitcoin) bubble will burst is beside the point, which is that Bitcoin works,” wrote Ridley. “What I mean by this is that Bitcoin has proved that the blockchains technology behind cryptocurrencies is capable of doing what it was (it) claimed it could: create an asset of limited supply and high security, like digital gold.”

Connell said that blockchain gives Bitcoin users the advantage of “memory.”

“All blockchain is is a computer documentation of the path of the money,” said Connell. “Blockchain tells you everywhere this piece of money has ever been. It’s in the memory of not one computer, but thousands of computers” – what Ridley called “trustworthy computing: programs checking up on each other’s work.”

Ridley’s blog cites legal scholar and computer scientist Nick Szabo, who said that Bitcoin “is now in important ways the most reliable and secure financial network in the world.” Because of that, blockchain technology may change more than money.

“It could do the title of a house, the title of a car,” said Connell of blockchain technology. “It’s going to be your transcript.”