Jose Lineros, Ph.D., from the University of North Texas College of Business, speaking at last week's meeting.
 
Members of the Lewisville Noon Rotary last week received a crash course in Cryptocurrency during a detailed presentation by Dr. Jose Lineros, Clinical Assistant Professor of Accounting at the UNT College of Business. For the purposes of the top-level overview, Lineros spoke primarily about Bitcoin, which was invented in 2008 and is the best-known digital currency. One Bitcoin was worth $0.75 when the currency first was launched, whereas today, a single Bitcoin is worth more than $33,000. “Bitcoin has lost about a third of its value this year, but it's kind of tracking the stock market,” Lineros noted. However, the digital currency is both durable and portable, cannot be inflated, and is essentially impossible to counterfeit, he added.
 
Although various types of cryptocurrency, like Bitcoin, may come and go, blockchain isn’t going anywhere, Lineros explained. Blockchain is the public ledger or computerized operating system on which Bitcoin and other forms of digital currency are traded. Also called a payment rail, blockchain uses cryptography to encode financial transaction data, eliminating the possibility of fraud. Without blockchain, there is no cryptocurrency, Lineros said.
 
He explained Bitcoin and other forms of digital currency would not exist, were it not for the combination of the 2008 financial crisis and enhanced computing power that started to take shape in the late 20th Century. Traditional financial transaction processes have built in redundancy, in that multiple parties are involved in every transaction (e.g., someone writing a check, the local branch of the bank where they have the account, the national financial institution, etc.). As a result, there are multiple versions of the truth, and mistakes on someone else’s books also are not readily apparent. Bitcoin, using blockchain, eliminates intermediaries by having all parties “share” their transactions (not their identity) on the network. That means more transparency, enhanced security, increased provenance (end-to-end traceability), and reduced costs. 
 
“There’s also no inflation,” Lineros stated. “If you have $10 million and the government doubles the money supply, you have $5 million.” Taken to the extreme, the current financial system can lead to the kind of hyperinflation that happened in Germany during the Weimar Republic in the early 1920s. Blockchain is coded in such a way that there is a built-in cap—you literally cannot create inflation, Lineros said, creating yet another layer of security and leveling the playing field for all users. On the downside, the value of a particular cryptocurrency can fluctuate significantly, and newcomers continue to disrupt the marketplace.
 
Those interested in learning more about cryptocurrency can reach Dr. Lineros by email at Jose.Lineros@unt.edu.