Will Texas Become A Global Crypto and Blockchain Leader?
Isadora Teich wrote this article
For the past decade or so, blockchain and cryptocurrency have been in their wild west stage globally. However, that era seems to be coming to a close. Recently, China has banned crypto trading and speculation entirely.
While China has outright banned it, the US government has taken a different stance so far, instead favoring regulation. SEC Chair Gary Gensler told Congress on Tuesday:
“I am technology-neutral. I think that this technology has been and can continue to be a catalyst for change, but technologies don’t last long if they stay outside of the regulatory framework.”
China’s crypto crackdown and the US Government’s acceptance of this technology have set the stage for the US to harness influence and technological evolution in this space. Currently, especially in Texas, big things are happening.
Let’s take a look.
The Great Mining Migration
China’s decision to end Bitcoin mining and speculation caused many Chinese innovators and entrepreneurs in this sector to leave the country.
Many of them came to Austin Texas, as a part of what has been called “The Great Mining Migration.”
For example, in May, when China made crypto illegal, Kevin Pan, CEO of Chinese cryptocurrency mining company Poolin, got on a plane and left the country forever the following day.
He told the BBC:
“We decided to move out, once [and] for all. [We’ll] never come back again.”
Formerly based in Hong Kong, Poolin is a massive Bitcoin mining firm.
Mainland China was actually home to about 70% of the world’s total bitcoin mining power before the government outlawed it. Now, many of these businesses are looking for a new place to call home.
It is likely that we will see many new cities become hubs of crypto activity. Texas is smart to make itself one of those innovation hubs.
The State Government of Texas Embraces Blockchain
The Texas Blockchain Council has grown to 70 members, and this month hosted the Texas Blockchain Summit.
This council already has political sway in the state. They have met with Texas Governor Greg Abbott twice, who tweeted in favor of bringing crypto to grocery stores.
Texas will be the crypto leader.
Cryptocurrency is now coming to Texas grocery stores.
— Greg Abbott (@GregAbbott_TX) June 19, 2021
According to President of the Texas Blockchain Association Lee Brachter:
“Texas is poised to become the jurisdiction of choice for blockchain innovation for several reasons including; the business friendly climate that has been cultivated in Texas for many years, the efforts of our Texas Blockchain Council working alongside lawmakers like Representative Tan Parker and Senator Angela Paxton to create legal and regulatory frameworks that allow for entrepreneurs to innovate.”
In fact, Texas House bills 1576 and 4474 came into effect this September, after being signed into law by Governor Abbott in June of 2021. The first bill establishes a working group on blockchain technology.
HR 4474 changed the Texas Uniform Commercial Code to recognize cryptocurrency. So far, Texas, Rhode Island, and Wyoming are the only states to do this.
Texas Wants To Integrate Crypto Into The Everyday
At present, cryptocurrency is more widely used as an asset class than something people use to do their daily errands.
For example, you hear about a lot of people mining, speculating, and investing in cryptocurrency.
However, if you go out to Olive Garden today, and you try to pay for your Tour of Italy with Ethereum, you will probably end up washing dishes in the back.
Could Texas be at the forefront of changing this? And why might this be such a huge challenge?
The Roadblocks to Widespread Crypto Adoption
There are a few big things in the way of Crypto overtaking traditional money. For one, cryptocurrency is usually not stable.
Its value can vary wildly from second to second. As most of the world’s people are just trying to get by, it is really not practical to have 1000 currencies in use in one country that all vary in value greatly every time you blink.
This would make it almost impossible to do things like budget, pay wages, and even know what you can buy in a grocery store. It is really difficult to sell the idea of digital currency speculation as the future of humanity to people who don’t have the money to feed their kids right now.
For another, while it is debatable if any money is really worth anything, exploring whether or not traditional money is a collective hallucination we all are having is a headache for another time.
What matters is that, for example, in the US, we all agree that the American Dollar has value. If you get a paycheck for $2500, it will still be worth $2500 an hour from now.
Also, we have an infrastructure, laws, and entire culture built around using and understanding the US dollar. You don’t need to buy a special kind of virtual wallet or join an exchange to access US dollars. Sometimes, you can even just find them in the street.
Crypto does not come with any of these conveniences.
What’s Happening In Texas
So far, we have already explored Texas bringing crypto to grocery stores. However, there is a lot more going on. Governor Abbott has added four blockchain experts to the Blockchain Council. This includes academics and politicians.
The Texas Blockchain Council also wants to change the state constitution to allow Texans to pay property taxes with Bitcoin.
In addition, the Commissioner of the Texas Department of Banking has issued a letter authorizing all state-chartered banks to custody cryptocurrency.
Texas is already a country that has seen massive growth in the last 20 years. As a stand-alone state, it has the 9th or 10th largest GDP of any existing entity in the world. Despite this high GDP, about 1/6th of the state’s population lives in poverty.
In the future, it will be interesting to see how far Texas can push crypto adoption, and who exactly will benefit most from this? For the everyday Texan, will things actually change at all?
China’s decision to ban crypto, and the US’s decision to embrace it, will have profound changes on the entire landscape.
The US and China are usually famous for a sort of longstanding semi-unspoken war in the tech space. Since China has removed itself from the race, and the US is absorbing many of its innovators and entrepreneurs, the following years will be very interesting.
Also, it is important to note that crypto is just one of the things that blockchain can be used for. While China has banned crypto transactions, they have not banned blockchain technology.
While the Texas government’s infatuation with blockchain seems solely to revolve around cryptocurrency, at least so far, blockchain can be used for everything from cybersecurity to logistics to healthcare.
What’s next is anyone’s guess.
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