Florida Banking April 2024

TRUST AND WEALTH MANAGEMENT

BANKING AT THE SPEED OF BLOCKCHAIN

BY DAVID K. SPENCER CPA

W hat a time to be alive! While financial engineering has provided us with a host of new products and opportunities, according to Gary Gastineau, author of "The Exchange-Traded Funds Manual," the first real attempt at something like an ETF was the launch of Index Participation Shares for the S&P 500 in 1989. We have come a long way since then. As of 2022, there were over 8,500 ETFs globally, in every variety and industry you can imagine. In January, we had a memorable event in financial history of similar import as the first ETF or the advent of fee-free stock trades. The Greyscale Bitcoin Exchange Traded Fund was approved in January

blockchain. So, as the internet is more important than any one site, the technology that is blockchain is more important than Bitcoin itself. That being said, this author does believe that someday Bitcoin will have a six-figure price. However, the blockchain will continue to reign supreme. I will spare you the technical details but suffice to say blockchain will affect every industry and spring up new players in every industry. Thus, we should expect to see blockchain industry ETFs to follow swiftly behind this first approval. But the question remains, what is a blockchain and why does it matter? A blockchain is a database, no more, no less. However, blockchain databases

2024. Since then, we have heard pundits nearly daily on the financial news opining about the implications of the approval. Reports are that over $3 billion dollars have flowed into the ETF. But what is all the hype about? The BTC ETF promises to allow institutions and retail investors access to Bitcoin in a regulated and safe way they are comfortable with. It also will allow institutions a more robust way to get involved in the asset class. However, these are obvious answers,

have some unique features that make them particularly useful. For starters, they are unhackable. But wait, haven’t we seen blockchains get hacked? No, we have seen exchanges get compromised and hacked. Blockchains cannot be hacked with current technology. There is a worry that quantum computers could hack a blockchain, but that is a long way off and beyond the scope of our conversation here. For the time being, the fact remains, blockchains cannot be hacked.

THE TECHNOLOGY THAT IS THE BLOCKCHAIN IS SET TO REVOLUTIONIZE THE WORLD IN MUCH THE SAME WAY THE INTERNET TOUCHED EVERY FACET OF OUR LIVES.

and there is much more happening in the digital asset space than just a new ETF. It is easy to follow the fascination with Bitcoin and the name recognition that is associated with the first blockchain-based digital currency ever created. However, Bitcoin is not the story. The blockchain is the story. Blockchain is the technology that allows the wonder that is Bitcoin. Put simply, Facebook runs on the internet in much the same way Bitcoin runs on a

Blockchains only contain accurate data. A major issue with any database is knowing if we can rely on the data stored there. One feature of blockchains is that they verify the data prior to the data being archived on the blockchain. Because the data is verified prior to being stored on the blockchain, there is no need for scrubbing data and constant updating of information. These are some of the unique features of blockchains. It is this author’s belief that every financial professional

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