BUILDING THE NEW NEVADA ON TRUST · ShapeShift, Bitfinex, Bitstamp, and Poloniex7 have exited...

CONFERENCE REPORTFebruary 6, 2018

Nevada Museum of Art Reno, Nevada

BUILDING THE NEW NEVADA ON TRUST

Conference Agenda

BLOCKCHAIN

www.buildnewnv.com | [email protected]

11:30 AM REGISTRATION OPENS – BOX LUNCHES AND NETWORKING

1:00 PM INTRODUCTION TO THE POWER AND POTENTIAL OF BLOCKCHAIN• Why a Blockchain Conference? Elisa Cafferata, Principal, Cafferata & Co

• Museum of Ideas, David Walker, Executive Director, Nevada Museum of Art

• What IS Blockchain? Ashley-Clift Jennings, Founder, Clift & Co

• SB 398 Put Nevada on the Map, Ben Kieckhefer, Nevada State Senator

• Nevada Ahead of the Curve, Paul Anderson, Director, Governor’s Office of Economic Development

1:30 PM PUTTING THINGS IN PERSPECTIVE• Technology No One Knew They Needed, Tod Colegrove, Director, DeLaMare Library, UNR

• Commercial Finance: What Opportunities Does Blockchain Present? Patricia Voorhees, Director, The Alta Group

2:00 PM LIGHTNING ROUNDS: INDIVIDUAL COMPANIES USING BLOCKCHAIN TECHNOLOGY• Mining and Natural Resources, Allison-Clift-Jennings, CEO, Filament

• Public Sector Identity and Assets Tracking, Eric Piscini, Principal, Deloitte Consulting

• Blockchain + Energy Convergence, Nathaniel Enders, Director, On-Demand Energy Cloud, Correlate

• Security Issues, Sarabjeet (Jay) Chugh, Senior Director Projects, Oracle

• Esports!, Kingsley Edwards, VP Business Development, Unikrn

2:45 PM BREAK

3:00 PM KEYSTONE CONVERSATIONS • How Government and Business are Investing in Blockchain Technology,

Jennifer O’Rourke, Illinois Blockchain Business Liaison, Illinois

• Venture Capital - Outlook for Blockchain, Meltem Demirors, Director of Development, DCG Group

4:00 PM BREAKOUT GROUPS• Policy Framework: What Policies Does Nevada Need Going Forward?

• Professional Services: What Do We Need to Do to Ensure Legal & Accounting Services are Available in Nevada?

• Public – Private Partnerships: What Do We Need to Do to Attract Blockchain Innovators to Nevada?

• Government Adoption: What’s Needed to Support Government Adoption of Blockchain Technology to Deliver Government Services More Effectively?

• Building the Ecosystem: What Else is Needed to Support Innovation in Blockchain in Nevada? Workforce Development?

5:15 PM CLOSING REMARKS

5:30 PM COCKTAIL RECEPTION AND NETWORKING

BUILDING THE NEW NEVADA ON TRUST

Tuesday, February 6, 2018 11:30 AM to 7:00 PM

3BLOCKCHAIN BUILDING THE NEW NEVADA ON TRUST

Introduction and BackgroundDuring Nevada’s 79th Legislative Session in 2017, Senator Ben Kieckhefer introduced SB3981, establishing various provisions related to blockchain technology. This bill, prohibiting city or county governments from imposing license requirements or taxes on the use of blockchain technology, passed with unanimous bipartisan support and “laid out a symbolic welcome mat”2 for high-tech businesses in the state. SB398 was important not just because it signaled to entrepreneurs that the State of Nevada understood and appreciated blockchain technology, but also because it created a stable framework for regulation which those same entrepreneurs know they can trust. Consequently, Nevada’s blockchain startup sector is flourishing – and the state has the potential - with knowledge, good policy, and support from the Legislature, Governor’s Office of Economic Development, and local businesses – to set the stage for Nevada’s next economic renaissance.

What is Blockchain Technology?

Blockchain technology is, at its simplest, a distributed ledger shared among multiple parties which is validated and secured by cryptography. None of the parties own the ledger. All parties in the network use a consensus algorithm verifying each other’s work, so the information is secure without requiring trust between parties. Trust is built into the system since every party is always watching everyone else’s work. Blockchain systems don’t require a central authority, which opens up the possibility for radically new, systemically decentralized frameworks for technologies and industries.

What the internet did for information, blockchain technology has the potential to do for finance, credit, information security, government services, and countless other fields. By decentralizing services, this transformative new technology can dramatically improve Nevadans’ quality of life – but understanding how and planning for the future is essential.

1 “SB398, ‘Establ ishes Certa in Provis ions Relat ing to the Use of Blockchain Technology. ’”SB398 Overv iew, 5 June 2017, www.leg.state.nv.us/App/NELIS/REL/79th2017/Bi l l /5463/Overv iew.

2 Messer ly, Megan. “Amid Tech Boom, Nevada Wants to Become Home for Blockchain-Related Businesses.” The Nevada

Independent, 28 Jan. 2018, thenevadaindependent.com/art ic le/amid-tech-boom-nevada-wants-to-become-home-for-blockchain-re lated-businesses.


Blockchain in Nevada: A Springboard for Economic DevelopmentPurposes for the Conference

Governor Brian Sandoval put Nevada on the leading edge of blockchain regulation when he signed SB398 in June 2017. Nevada can’t maximize the benefits of this technology, unless its business and policy leaders fully understand the potential it offers. With that goal in mind, in February 2018, blockchain industry experts, thought leaders, academics, and public servants convened to explore the possibilities for the future of this transformative technology in the Silver State. Asking where are we now, and where do we want to go next, this conference’s objectives were to:

• Create a blockchain brain trust by giving Nevada’s political and business leaders a fundamental understanding of the power and potential of this technology;

• Connect entrepreneurs, academics, and business leaders already using this technology to the legislators shaping policy in the space, and the agencies that could benefit from deploying the technology;

• Establish specific, concrete recommendations for Nevada’s policy environment going forward, keeping our state on the forefront of innovation.

February 2018 Blockchain Summit: Looking to the FutureNevada in Context: What are Other States Doing?

At the time of the conference, Nevada has some of the lightest-touch blockchain sector regulation in the country, while also acknowledging the technology in statute to offer a measure of legal certainty about the state’s intentions toward innovators. Other states vary widely. While some have implemented restrictive licensing requirements (New York, Washington State), others are in the process of adopting strong protections against regulation (Wyoming) or are looking for ways in which the state itself can use and encourage blockchain technology (Colorado, Illinois, Arizona). While Nevada has not considered any blockchain-related policies that would slow or harm innovation, competition among states to build a blockchain-friendly environment is fierce.


As of February 2018:

• New York imposed the BitLicense regulatory framework3 in 2015. This licensing regimen is extremely strict: “Any business engaging in virtual currency business activity involving New York State or persons that reside, are located, have a place of business, or are conducting business in New York must apply for the BitLicense, with no grace periods or de minimis exceptions.”4 Only four businesses have managed to register since the framework was enacted. While the big banks and large organizations can afford to register, the compliance cost for BitLicense is high enough that small companies may find it more economically advantageous to relocate. Consequently, businesses and entrepreneurs have either shut down operations or left New York behind for more favorable regulatory climates.

• Colorado has heard Senate Bill 0865, which encourages the state’s government and institutions to research and implement distributed ledger technology for any potentially valuable use cases. SB086 encourages the State to consider “developing public-private partnerships and contracts to allow capitalization of encryption technologies,” as well as urging state institutions of higher education to “include distributed ledger technologies within their curricula and research and development activities.” The bill also mirrors some language from Nevada’s SB398, prohibiting county or municipal governments from imposing taxes, fees, or license requirements on any private person or entity for the use of distributed ledger technology.

• Washington passed SB 50316 in 2017, requiring that cryptocurrency exchanges that do business with Washington residents register as money transmitters and hold a virtual currency bond tied to the amount of currency exchanged during the previous year. ShapeShift, Bitfinex, Bitstamp, and Poloniex7 have exited Washington’s market as a result, though Coinbase has not.

• Arizona’s Senate Bill 1091, which would allow the state’s residents to pay their taxes with cryptocurrencies, has passed out of the Senate and into their House of Representatives. If adopted, Arizona would become the first state in the country to accept cryptocurrency tax payments. Representative Jeff Weninger, one of the bill’s sponsors, said the tax measure is “sending a signal to everyone in the United States, and possibly throughout the world, that Arizona is going to be the place to be for blockchain and digital currency technology in the future.”8

3 BitL icense Regulatory Framework, New York Department of F inancia l Serv ices, http: / /www.dfs.ny.gov/ legal / regula-t ions/bit l icense_reg_framework.htm

4 Brennan, Sarah H. “Contort ions for Compl iance: L i fe Under New York’s B i tL icense.” 21 Jan. 2018. https: / /www.coin-desk.com/contort ions-compl iance- l i fe-new-yorks-bit l icense/

5 “SB18-086, “Cyber Coding Cryptology For State Records,”” Colorado Legis lature, 18 Feb. 2018, https: / / leg.colorado.gov/bi l l s /sb18-086

6 https: / / legiscan.com/WA/text/SB5031/ id/1604174

7 ““Reckless” Regulat ions Force Bitcoin Exchange ShapeShift to Ex i t Washington State,” CryptoCoinsNews, 31 Aug. 2017, https: / /www.ccn.com/shapeshift- leaves-washington-state-due-to-bit l icense-sty le-regulat ions/

8 Lapastora, Char l ie . “Ar izona might a l low people to pay taxes v ia bitcoin,” Fox News, 7 Feb. 2018, http: / /www.fox-news.com/pol i t ics /2018/02/07/ar izona-might-a l low-people-to-pay-taxes-v ia-bitcoin.html


• Wyoming’s House of Representatives unanimously passed two blockchain bills, HB70 and HB19, on February 20, 2018.

° HB70 “defines a ‘utility token,’ or ‘open blockchain token,’ as neither traditional money nor a security if it meets the following conditions:

1. The token has not been marketed by the protocol developers as an investment opportunity.

2. The token is exchangeable for goods or services. (This implies that protocols must offer a work-ing product or service before tokens are issued, similar to Switzerland’s recent ICO framework.)

3. The protocol developer has not entered into a repurchase agreement of any kind, or entered into an agreement to locate buyers for the token.”9

° HB19 exempts cryptocurrency from the Wyoming Money Transmitter Act. In 2015, the Wyoming Division of Banking interpreted the WMTA as requiring “licensure of entities which offer hosted wallet services.”9 Coinbase and several other businesses elected to cease operations in Wyoming as a result, but have promised to return should HB19 pass.

° If both bills along with the other bills sponsored by the Wyoming Blockchain Coalition10 became law, Wyoming will have the most blockchain-friendly regulatory environment in the country.

• Illinois, while it has not yet passed regulations governing the blockchain, has made a strong effort to support and research blockchain technology with the Illinois Blockchain Initiative. This is a consortium of Illinois state and county agencies who will “collaborate to explore innovations presented by Blockchain and distributed ledger technology. [The Department of Information Technology] is actively engaged in this effort.”11

While Nevada may currently be at the forefront of the blockchain technology space, states that implement and encourage it earliest will offer distinct first-mover advantages. SB398 is an excellent piece of legislation, but as other states begin to enter the field, Nevada will need to consider further action it can take in order to remain competitive.

9 Kuebler, Er ik. “Wyoming House Unanimously Approves Two Pro-Blockchain Bi l l s ,” Blockchain Magazine, 20 Feb. 2018. https: / /b i tcoinmagazine.com/art ic les/wyoming-house-unanimously-approves-two-pro-blockchain-bi l l s /

10 Wyoming Blockchain Coal i t ion, 20 Feb. 2018. http: / /wyomingblockchain. io/

11 “Blockchain in I l l inois ,” I l l inois Department of Information Technology, 18 Feb. 2018, https: / /www2.i l l inois .gov/s i tes/doit /Pages/BlockChainInit iat ive.aspx


Putting Things in PerspectiveTechnology No One Knew They NeededDr. Tod Colegrove Director, Delamare Science & Engineering Library, University of Nevada, Reno• Americans fear technology more than dying. There are two ways to approach technological change:

1. Unbridled enthusiasm that anything new is better; this leads to enthusiasm for potentially destructive technology. Society rushes headlong, heedlessly, towards its own destruction. See the atomic bomb for an example of pernicious enthusiasm.

2. Blind panic that every change will undo society and send us into a tailspin.

Progress is the path between those two extremes.

• Moral panic has plagued mankind since the dawn of time. When trains were first introduced, naysayers worried that traveling faster than 25 mph would be harmful to human health, but rail soon revolutionized both the transportation and shipping industries. When homes were first electrified, people fretted that it was unsafe, but we barreled ahead, and suddenly found our nights brightly illuminated. When radio and television began making waves around the world, naysayers claimed that we would soon be nothing but “invisible blobs” to one another, and yet, we’re now more connected than ever.

• 2017 was the best year yet in human history – as was each year previous. A smaller share of the world’s people was hungry, impoverished, or illiterate than ever before. Technology continues to revolutionize our world for the better, year after year.

• Technology has democratized creation. Humanity fears things that it depends on but can’t control. Ignorance drives the fear.

• Don’t give in to fear or worry about potential changes. Embrace the changes. They will be coming anyway. And if history is any indicator, we’ve done a pretty good job adjusting as change marches on.

Commercial Finance: What Opportunities Does Blockchain Present?Patricia Voorhees Director, The Alta Group• The importance of trust. After the 2008 financial crisis, the financial services industry realized how

essential trust was. Blockchain technology, as a tool of trust, can help build “confident reliance” in systems and organizations.

° Over $1 trillion in capital equipment was sold in the United States in 2017 (medical equipment, mining equipment, technology equipment). Of that, $800 billion in equipment sales was financed. Only $400 billion wasn’t. In Nevada, 1.6 billion of capital equipment was sold.

• Capital equipment is a very important driver of economic growth, but many businesses can’t find the type of financing that would be most appropriate for the equipment they’re buying.

° Traditional financing became harder to obtain in the wake of the financial crisis, which precipitated a 43% reduction in the number of small business loans.


° At the same time, the pace of technology has increased. Bitcoin, artificial intelligence, the Internet of Things, and cloud computing have rapidly shifted the way people interact with technology in daily life.

° A demographic shift has also occurred as digital natives (those born post-2000) come of age. Their expectations for banking and financial services are entirely different; they trust technology, but also expect confident reliance to be built in, and will readily look elsewhere if a service doesn’t offer that trust.

° Blockchain technology can offer new types of financing suited to this generation.

• Impact example: Financing a vehicle. A manufacturer, dealer, an individual car buyer, and a finance organization all have access to a given vehicle’s records, verified on a blockchain. This verification enables privacy, security, and frictionless transactions, eliminating the need for middlemen. Trust is built into the transaction because:

° The information is shared among all parties.

° The rules are codified.

° Privacy can be granular and protected.

• Impact example: IBM Global Finance. IGF implemented a blockchain-based dispute resolution solution for disputes between customers and suppliers. These disputes (generally because of discrepancies between goods ordered and goods delivered) were extremely costly and decreased efficiency for everyone. There were 25,000 disputes every year, tying up $100 million in IGF capital.

° Implementing blockchain technology has reduced dispute resolution time from 40+ days to <10 days, and has reduced time spent on dispute resolution by 75%.

° Based on the success of the new dispute resolution systems, IGF is now considering a blockchain-based global trade and finance (payments) product.

• Though it’s mundane, reconciliation is a matter of trust that happens within organizations constantly. Recognizing the common need for reconciliation, the power and potential of blockchain technology becomes apparent.

• Blockchain and the IoT. When implemented in an asset-tracking system, blockchain and the IoT combined can provide an unalterable history about an asset, including its location, conditions, and usage.

° An entire ecosystem of IoT-enabled assets creates a powerful opportunity to better manage assets and establish value on primary and secondary markets.

° Data from the network enables new data-based financial products, such as usage-based comparative fleet performance data, and creates baselines for funding in capital markets.

° Clear and complete asset records, including performance and depreciation, create whole new datasets; adding them to the IoT creates exponential opportunity.

• The credit gap. Financial services rely on larger organizations to provide their funding, and funding is based on risk. By implementing blockchain technology, companies can instill trust about borrowers, assets, and potential risks. Along with more and richer data, they can create financial products that streamline, reduce risk, and increase certainty.


Lightning Rounds: Individual Companies Using Blockchain TechnologyMining & Natural ResourcesAllison Clift-Jennings CEO, Filament• The Industrial IoT enables long-term operational efficiency.

° Seventy-five percent of all industrial infrastructure globally is offline. Three-quarters of our industrialinfrastructure, including power poles, factories, and devices, are not connected to each other or any type of network.

° By connecting these devices on a trustworthy platform, efficiencies can be dramatically improved, human time and well-being can be improved, and new types of economic transactions become possible.

• The most successful, most sustainable systems are decentralized. The human brain, global society,the internet, and computers are all decentralized in nature.

• Machines can be economic actors. When decentralized systems are mapped with economiccapabilities, other potentialities are realized. If decentralized devices can communicate and transact, wecan move toward an economy where instructions on the blockchain will allow machines to authorize andpay for transactions.

• What might this future look like?

° Potential use cases for blockchain technology in the IoT include asset management, provenance,identity, and more.

° The core issue is trust.

• Is that machine who it says it is? Can I trust it? Does it have a reputation?

• In the physical economy, buyers trust that merchants will be there, that dollars retain their valueday to day, and that goods are of reasonable quality.

• Blockchain technology can bring this kind of reputational trust to the IoT.

° Filament is a Reno-based startup developing the first blockchain-native semiconductor chip.

• When transactive capabilities (and even wallets) are embedded into machines, higher levels oftrust can be built on top of that fundamental infrastructure.


Public Sector Identity & Asset TrackingEric Piscini Global Blockchain Leader, Deloitte Consulting• Blockchain is coming to the public sector. Blockchain is a non-human trustee. Non-human trustees

and decentralized applications will disrupt and radically improve our public sector by increasing transparency, efficiency, and reliability. Potential public-sector use cases are broad, but in such a potential state:

° Taxes are collected, put to work, and have their impact transparently measured in real time.

° Currencies and payments are 100% digital, creating a more transparent and accessible financial environment. Medicare and Medicaid are fast and trustworthy. Economic activity is distributed and traceable, safer and faster.

° Public records are immutable, available, and updated in real time, creating a faster and more fluid economy.

• Current average is closing on a house in 60 days. Blockchain can reduce to six days, because we can share information in real time, trusting ownership of assets.

° Voting is cheaper and more accessible, resulting in vastly more engaged citizens, and elections are completely secure.

° Residents own and control the usage of their identities; blockchain permissions enable a new age of privacy.

• Top ten most active public sector use cases:

1. Digital currency/payments 2. Land registration 3. Voting 4. Identity management 5. Supply chain traceability 6. Health care 7. Voting (proxy) 8. Corporate registration 9. Taxation 10. Entitlements management

• Blockchain is bigger than you think – and harder than you think, too. Almost every platform can be replaced by a blockchain platform, but the transformation is not going to be easy. Implementation and adoption will be slow and difficult, but worthwhile. The use of blockchain technology decreases the cost of trust, increasing frequency and opportunity for usage across the whole economy.


Blockchain & Energy ConvergenceNathaniel Enders Co-Founder, Energy Blockchain Network• Technological convergence is coming. As the smartphone merged email, maps, texting, news,

music, movies, video games, our cameras, and – not least – our telephones into a single device, a similar convergence is on the horizon for energy technology.

• Energy Technology Convergence. The maturation of four technologies has put society on the edge of a revolution in energy technology:

1. Distributed Energy Resources (DERs), like solar panels, electric cars, and batteries.

2. IoT (connectivity of devices), via the cloud, distributed networks, or existing information technology infrastructures.

3. Technology cost reductions, as technologies develop and become accessible to regular consumers.

4. Blockchain (distributed ledger) technology.

• This is the rise of the “prosumer.” Peer-to-peer transactive energy markets and new emerging business models and products have become possible.

• Energy + Blockchain Firms will change the way energy is sold. Imagine a two-person economy: A consumer, a “prosumer.” The prosumer produces energy via a solar panel. The consumer can purchase tokens that it then pays to the prosumer in exchange for renewable kWh. The prosumer trades the tokens with an exchange for fiat currency (dollars, euros, etc.). This creates a person-to-person economy (P2P).

• Emerging Business Models & Products, 2018 – Future. This revolution in energy-sharing means that companies have an opportunity to:

1. Recognize and reward value in real time as energy patterns shift.

2. Build asset registries using blockchain technology.

3. Establish new models around fractional/shared ownership.

4. Build revenue sharing into their systems.

5. Develop new standards for cross-chain communication.

• Cross-chain communication is vital for smart contract execution. While energy companies can establish platforms which will allow them to purchase renewable energy on prosumer markets via smart contracts, there will be no one blockchain which owns energy. With multiple players involved, the blockchains need to be able to talk to each other. Building in cross-chain communication so blockchains can talk to each other is essential.


Data and Security ConsiderationsSarabjeet “Jay” Chugh Head of Blockchain Product Marketing, Oracle• Blockchain is great for cyber and data security. Every cybercrime has something to do with data.

Identity theft, forgery, data hacking, and money laundering can all be avoided or prevented entirely using blockchain technology. Blockchain technology is valuable for data security because it’s:

° Decentralized: there is no one point of failure.

° Permanent: which enables traceability.

° Tamper-proof: can’t be forged or destroyed.

° Highly reliable: making it admissible as evidence.

° Transparent: every actor confirms the other actors’ information.

• Oracle Blockchain Conversations in the Public Sector. Governments are interested in blockchain technology’s potential to offer solutions for public records, regulatory certifications, procurement, customs, and citizen services.

° Case 1: Public Records. Car and land titles, birth and death records, social security, government benefits are areas where forgery and tampering can be avoided. Implementing blockchain-based systems can help prevent identity theft, fraud, human trafficking, and terrorist attacks.

° Case 2: Silk Road. Launched in 2011, this online market on the darknet was one of the earliest uses of Bitcoin; it was shut down in 2013 due to the traceability of the ledger.

Esports!Kingsley Edwards Vice President of Business Development, Unikrn• Esports and blockchain: A perfect match. Unikrn, founded in 2014, uses Bitcoin for online skill-based

wagering on organized video game competitions.

° Raised over $33 million selling Unikoin Gold (UKG), an Ethereum-based token, for its digital esports market.

• Esports is the fastest-growing sport on the market. The average MLB (major league baseball) fan is 52 or older; the audience for esports is digital natives (anyone born after the year 2000).

• Blockchain and cryptocurrencies are creating entirely new ecosystems of value.

° For years, gamers have been trading and gambling with digital assets, creating an underground, unregulated market worth more than $7 billion.

° Unikrn is engrossing crypto into its offerings, leveraging the virtual economy for the company’s licensee esports book, jackpots, P2P spectator matches, and other forms of digital exchange.


Keystone ConversationsHow Government and Businesses are Investing in Blockchain TechnologyJennifer O’Rourke Liaison, Illinois Blockchain Initiative• The Illinois Blockchain Initiative (IBI)12 is a collaborative effort exploring blockchain’s impact on

government.

° The organization brings together six areas of state and local governments:

• Illinois Department of Commerce and Economic Opportunity

• Illinois Department of Innovation and Technology

• llinois Department of Financial and Professional Regulation

• Illinois Pollution Control Board

• Illinois Department of Insurance

• Cook County Recorder of Deeds

° By bringing these organizations together, the IBI assured that regulators had a voice at the table from the very beginning; strategies were, therefore, informed by the regulatory framework.

• The IBI’s Six Design Principles for Government:

° Trust & Integrity

• Trust is intrinsic in a distributed ledger system, encoded in every process and not vested in a single member. Blockchain’s immutability makes data uniquely authoritative. This increases confidence in integrity and reduces the need for federal, state and local governments to separately reconcile individual registries.

° Shared Value Creation

• Blockchains systematically align incentives, generating value through collaborative coordination. Systems that reward shared-value creation have the opportunity to more granularly and accurately link policy to the needs of constituents.

° Embedded Security

• Governments using protocols based on strong cryptography and distributed computing can ensure services are highly reliable and available, while securing citizen data, confidence, security, and authenticity are hard-coded into the system.

° Privacy & Rights Preserved

• Cryptographic protocols allow governments to balance transparency and privacy. Blockchains can cryptographically link owners with assets so that ownership is clear and rights are enforce-able. By decentralizing data control, governments can vest privacy rights in the hands of the citizens who create the data.

12 The I l l inois B lockchain In i t iat ive, I l l inois Department of Innovat ion & Technology, https: / /www2.i l l inois .gov/s i tes/doit /Pages/BlockChainInit iat ive.aspx


° Inclusion & Participation

• No single participant controls a blockchain; everyone has consistent, equal access to all records added to the ledger. An integrated government automated by distributed ledgers allows lead-ership to focus its policy on governing processes that are inclusive of all citizens and can tailor services specifically to their needs.

• Illinois’ Project is Three-Fold.

1. Developing an ecosystem for growth and collaboration.

• Fostering a talent pipeline by partnering with educational institutions to incorporate curricula into schools and colleges to support workforce development.

Supporting entrepreneurship, fostering a supportive environment for startup and investment.

• Encouraging startup/enterprise collaboration, helping state government enterprises partner with promising startups in the ecosystem.

• Importantly, the state is depending on the private sector to develop solutions and to partner with state agencies to beta test specific, prioritized projects.

2. Modernizing governance for a distributed economy.

• Governance in a distributed economy will require a thoughtful balance of broad goals, partici-pation in standards-setting, and developing technical code to maximize value for both citizens and businesses.

3. Integrating services for a highly efficient government. Potential pilots include:

° Property deed recording.

• The Cook County Recorder of Deeds will be the first land titling office in the US to record prop-erty transfers on the blockchain. The goal is to expand the scope of the program to other Illinois county recorders.

° Academic credentialing.

• Partnering with the University of Illinois to issue academic credentials/transcripts on a block-chain. MVP focuses on credential verifications, with the goal of recording transcripts of all Illinois institutions on a distributed ledger for students/employers.

° Health provider registries.

• Healthcare payers spend more than $2.1 billion a year reconciling health provider data. Entering this information on a distributed ledger, which would serve as a single source of truth dataset, would save money and improve reimbursement protocols for providers and payers.

° Energy credit marketplace.

• Energy producers are issued tax credits when producing “green” energy. This program would include a marketplace where renewable energy credits (RECs) could be traded. RECs would be granularly divisible. Such a system would improve traceability and liquidity, providing better “green” energy policy outcomes.


° Vital records.

• Records such as birth events could be placed on a distributed ledger, allowing the state to issuea digital identity tied to a person’s birth that could be managed on the ledger. Attributes couldbe added to the ledger as the citizen interacts with different agencies throughout his/herlifetime.

• What Has Illinois Done So Far?

° Built the Illinois Blockchain Initiative, connecting regulators with innovators.

° Released guidance from the Department of Financial and Professional Regulation (IDFPR) taking a light-touch regulatory approach to digital currencies while also providing certainty for businesses operating within the space.

° Submitted an RFI for Blockchain,13

providing valuable information for the State as it moved forward

with the technology.

° Opened the Chicago Blockchain Center, where citizens can interact with a variety of participants in the industry.

° Worked with the Blockchain Educators’ Network (BEN) to sponsor a month-long remote hackathon, engaging as many people as possible.

° Released a 32-page report14 on the state of blockchain technology.

Venture Capital – Outlook for BlockchainMeltem Demirors Digital Currency Group• 2013 was an inflection point for Bitcoin – and for blockchain technology. Since Bitcoin was

introduced in 2008, blockchain technology has evolved rapidly, going from scarcely mentioned tonearly commonplace.

• So far, the federal government has taken a permissive stance toward regulatingcryptocurrency.

° “We owe it to this new generation to respect their interest in this new technology with a thoughtfulregulatory approach.” – Chairman Giancarlo, Commodity Futures Trading Commission.

• Cryptocurrency offers a new investing paradigm.

° Unlike early investment in internet technologies which focused on the protocol layer first, tokens are enabling capital formation and investment at multiple layers of the blockchain infrastructure stack.

13 “State of I l l inois : Request for Information, Distr ibuted Ledger and Blockchain Appl icat ions in the Publ ic Sector,” Department of Innovat ion and Technology, https: / /www2.i l l inois .gov/s i tes/doit /Documents/BlockchainInit iat ive/RFI+-Blockchain+and+Distr ibuted+Ledger+Appl icat ions+in+the+Publ ic+Sector.pdf

14 “ I l l inois B lockchain and Distr ibuted Ledger Task Force F inal Report to the General Assembly,” 31 January 2018, State of I l l inois , https: / /www2.i l l inois .gov/s i tes/doit /Strategy/Documents/BlockchainTaskForceFinalReport020518.pdf


There are four layers:

• Blockchain itself – an innovation in value transfer.

• Application layer – smart contracts, distributed computing, tokenization.

• Network layer – miners, nodes, staking.

• Protocol layer – Bitcoin, Ethereum, IPFS, Blockstack.

° Over the past year:

• The number of digital currencies has gone from 100 to more than 1,500.

• The market cap of all cryptocurrency has gone from $6.5 billion to $329 billion.

• Daily traded volume has gone from $70 Million to $38 Billion.

• Consistent Trends in Blockchain Companies

° Companies are starting to find useable business models and scaling them successfully.

° Revenue across models is growing 5-20% month-over-month, however, reliance on key partners can set back progress.

° Most companies are heavily focused on building and scaling customer acquisition strategies.

° Converting enterprise sales pipelines into revenue is an expensive and slow process.

• Types of Capital Investors Provide

° Financial: Their own investment capital, or access to additional capital via their networks and introductions they’re able to make.

° Social: Investment and networking from respected firms and angels provides validation and social signaling.

° Human: Operator-led firms and angels have experience operating early-stage companies, and can share their insights to help founders.

• Collaboration is key. By working together, blockchain companies, corporates, investors, academia,regulators, and institutions can build a new ecosystem that takes advantage of the unique features ofdistributed ledger technology: security, reliability, immutability.

• Biggest Challenges for Companies:

° Access to banking services and fiat currencies (dollars, euros, etc.) is a challenge for many startups.

° Clear regulation (and compliance) across jurisdictions does not yet exist.

° Making long-term strategic decisions in a frothy marketplace is difficult.

° Finding product market fit and monetizing it may require further maturation of the technology.

° Hiring at all levels of the organization – not just programmers, but communicators – requires finding and training enough people who can be knowledgeable and well versed in rapidly evolving tech.

° Changing the narrative around the industry is vital to moving forward.

• Biggest Challenges for Investors:

° Given existing funding models, allocating capital across tokens, equity, and new investment structures is difficult in practice.


° To drive investment, reducing compliance and regulatory risk so that investors feel comfortable with these new markets will be necessary.

° Making long-term strategic decisions is as difficult for investors as it is for companies in a frothy marketplace.

° Building relationships with partners who can help projects grow and succeed is essential.

° Educating and advocating on behalf of the industry in order to open minds is a long-term project.

• The Path Forward

° Begin building ecosystems around protocols and their associated tokens, leveraging a broad global network.

° Focus on building banking and regulatory alliances to help projects and companies find, engage, and maintain access to fiat currencies at scale across jurisdictions.

° Increase the human, social, and financial capital accessible to companies through new models for public-private partnerships and long-term investing.

Summary of Recommendations: Breakout SessionsGovernment Policy & AdoptionWho's taking the lead? Senator Ben Kieckhefer, Assemblyman Steve Yeager, Assemblywoman Jill Tolles, Assemblyman Al Kramer, Clift & Co, Cafferata & Co Government Relations

Where does the work live? Government Blockchain Association Chapters in Nevada In Reno: www.meetup.com/meetup-group-govBC-Reno

Next steps:• Nevada’s elected officials need to introduce innovative blockchain legislation during the 2019

Legislative Session if the Silver State intends to retain its competitive edge in the marketplace.

° While SB398 was an excellent foundation, Nevada must do more.

° Pass legislation that will ensure a stable, friendly, light-touch framework for blockchain businesses to

keep Nevada on the forefront of this economic wave.

• Rework the Request for Proposal process. The State’s existing RFP process is operationally inefficient,often requiring separate proposals for goods and services when they’re frequently offered together.

• Introduce a Nevada Blockchain Initiative. Given the success that Illinois had unifying the state’sagencies, entrepreneurs, and thought leaders in the blockchain space, Nevada may consider doing thesame.

° Lesson learned: There is a trade-off in how the state approaches this work. A strategic, policy-drivenstructure can connect work that now takes place in silos (avoiding the need for future restructuring), but is slower-moving than allowing individual agencies to implement small, discrete projects.

http://www.meetup.com/meetup-group-govBC-Reno


• The State can potentially get the best of both worlds by encouraging small-scale projects,but issuing guidelines to ensure interoperability.

° Encourage individual state agencies to consider internal pilot projects, including:

• Digitization of signatures (digital notaries)

• Property deed recording

• Identity management

• Corporate registration

• Entitlements management

• Voting

• Inter-agency payments

• Carefully consider how cryptocurrency technology interacts with Nevada’s existing money transmitterand Nevada state business licensing statutes.

Professional ServicesWho's taking the lead?

Matt Digesti, Tyson Cross, Anna Durst, and Brian Dickson, [email protected]

Where does the work live? Informal legal working group; Nevada CPA Society, collaborating with the Nevada Bar

Next steps:• Professional services organizations, such as law and accounting firms, must become more engaged in

the conversation about blockchain. Interested professionals should attend conferences and professionalevents in an effort to enhance their knowledge and participate in the ongoing conversation.

° Professionals would like additional professional educational offerings as well as trainings that buildon themselves.

° Brian Dickson volunteered to create and lead a sub-group to hold conversations, with Matt Digesti’s support.

• The first breakfast series meeting is to be held in early May, possibly offering CLE credits.

• Before the breakfast, the group will distribute helpful industry vocabulary and possibly a videoglossary to help the professional services sector better understand use cases for blockchain.

• Email [email protected] for more information.

• The financial services industry should develop or invest in technologies to:

° Democratize access to credit for small businesses and individuals. As we move into an economydriven by digital natives, the demand for agile, trustworthy, individualized frameworks will skyrocket. Providing those entrepreneurs the access to credit they need to build their products can drive innovation and economic growth.

mailto:bdickson%40mcdonaldcarano.com?subject=

mailto:bdickson%40mcdonaldcarano.com?subject=


° Track capital equipment and assets. Together, blockchain and the Internet of Things can provide an unalterable history about an asset, including its location, conditions, and usage. Data from such a network of devices can enable new data-based financial products, as well as creating baselines for funding in capital markets. Businesses with large equipment fleets can document their value and use, making it easier to get financed.

° Reconciliation and dispute resolution. As the blockchain offers a method for trustless transactions and information-sharing between multiple parties, it’s an ideal tool for building frameworks to resolve disputes (or prevent them altogether).

• Evaluate whether blockchain can significantly enhance the speed of deliverables from the professionalservices sector.

Building the EcosystemWho’s taking the lead?Doug Erwin, Kyle Dalpe

Where does this work live? EDAWN, TMCC

Next steps:

• Education and training are key. State educational institutions and the Governor’s Office of EconomicDevelopment should build a blockchain initiative, creating opportunities at each level, with a focus onthe varied skillsets needed for blockchain development.

° Nevada needs educational resources to train programmers, cybersecurity experts, and engineers.Nevada’s educational institutions should be encouraged and funded to promote or create relevant courses, including cryptosecurity, cryptoeconomics, and the programming languages most essential to blockchain development.

° Communities and local governments must collaborate to develop the local amenities to attract and retain professional talent in this ecosystem.

° Convene a group of industry companies, workforce development, RDAs, and GOED to talk about what training/programs are needed.

• Be aware of and attempt to mitigate, to the extent possible, the costs of land, development and energy.

• Keeping ahead of regulations is important. This is a watershed moment for the industry, and Nevada caneither stay on the forefront or fall behind the other states currently implementing blockchain-friendlypolicies.


Public-Private PartnershipsWho’s taking the lead?Blockchain businesses in Nevada

Where does this work live? Alliance of blockchain businesses to be created

Next steps:

• Educating the Public:

° The public needs a curated, unbiased source of non-technical information as a first point of contactwith blockchain technology.

• Consider use of Nevada’s university system and the Governor’s Office of Science, Innovation andTechnology to build public-private educational opportunities.

• Establish Blockchain Education Network (BEN)15 chapters in the state.

• Economic Development entities statewide and GOED can work together to educate the privatesector, acting as unbiased voices.

• Consider creating a non-profit for public education, perhaps under DRI, GOED,or in the Center of Analytics.

• Exploring opportunities for economic development:

° The state should consider public-private partnership pilot projects, including:

• Asset tracking and management of capital goods

• Renewable energy marketplaces

• Building “smart cities”

15 B lockchain Educat ion Network, https: / /www.blockchainedu.org/


Challenges & QuestionsSiloed architecture. Cross-chain communication and interoperability remain a challenge. Getting widespread adoption to enable cross-chain communication is going to be slow and difficult as we get into the granular details of implementing systems for different use-cases. However, introducing blockchain-based systems piecemeal can still offer dramatic cost savings, improvements in transparency and trust, and improvement in Nevadans’ quality of life.

Drawing skilled workers to Nevada. In order to build and implement complex technological systems, Nevada will need to draw individuals with the right education and training and retain the talented minds it already has. Cost of living, access to education, and quality of life all play important roles in establishing a high-quality pool of potential coders, thought leaders, innovators, and employees.

What really needs to be on a blockchain? A lot can be solved by a cloud database instead. Does it make sense for all parties to have access, full or partial, to a given record? How do we determine which organizations ought to implement blockchain-based systems first? Prioritization for both development and investment is key.

ConclusionsThe Silver State has an open regulatory environment, enthusiastic and tech-savvy legislators, and a business community eager to pursue the possibilities the blockchain offers. The state can play a direct role in shaping the nationwide conversation around blockchain technology by driving light-touch regulation in state agencies and the Legislature, encouraging workforce development and training programs in its educational institutions, and establishing innovative public-private partnerships with local businesses. By prioritizing the needs of Nevada’s citizens – and keeping the goal of good policy in sight - Nevada is well-positioned to remain on the forefront of this transformative new technology.


Conference Organizing Team

Conference Report TeamWendy Stolyarov | FilamentFilament.com

Stuart Murtland | PhotographyStuartMurtlandphoto.com

Ashley Clift-Jennings | Clift & Co. Cliftand.co

Elisa Cafferata | Cafferata & Co. Government Relations Cafferata.co

Kathleen Conaboy | McDonald Carano mcdonaldcarano.com

Tyson Falk | McDonald Carano mcdonaldcarano.com

Lindsay Knox, McDonald Carano mcdonaldcarano.com

Conference materials available at: www.BuildNewNV.com

Presentations are posted under “Media Packet.”

http://Filament.com

http://StuartMurtlandphoto.com

http://Cliftand.co

http://Cafferata.co

http://mcdonaldcarano.com



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