Theresa Clancy, Attorney at Law (708)819-1580 www.theresaclancylaw.com

My dad was likely one of the most intelligent people I will ever know. He was the only person I have known who was invited to be a member of the Mensa Society (his IQ was 142). He turned it down, stating “I am just not a club person.”

After my dad served in the Korean War, he was asked to enroll at the United States Naval Academy. He turned that down too, stating, “Your Mother was waiting for me in Chicago.” Instead, he married my mom and earned a degree from the University of Chicago majoring in physics.

Dad was a ferocious reader and a problem solver. He fixed everything around the house himself. If he did not know how to fix something, he found a book to teach him. It was no surprise that my dad was intrigued by computers. In the 1960s he checked out numerous books from the library and started to learn more about computers.

By the mid-1970s, my dad started to build his own personal computer. To me all those panels, circuits, and wires looked like a bunch of gobbledygook. But my dad had the intelligence, education, and experience to see the potential in personal computers. Unfortunately, work, three kids, and other life obligations drained his time and his money. So, my dad never finished building his personal computer. But to me the fact that he figured out how to do it was inspirational.

I am no Mensa Society candidate, but my dad and I do have one thing in common; a love of learning. My intrigue is not personal computers but cryptocurrency.

My “crypto” education is still a work in progress, but I predict cryptocurrency will evolve in the 2020s the way the Internet did in the 2000s and the personal computer in the 1990s.

Therefore, we all would benefit from a little more crypto conversation in our lives. To me it is best to start at the beginning.

Since the 1980s people have been interested in creating a digital currency. The difficulty in digital currency creation was twofold. One, how to maintain the user’s anonymity the way cash is anonymous and two, how to prevent the currency from being double spent.

The solution to the anonymity problem started with understanding blockchain. Blockchain technology was introduced in 1991 as a computer solution for time-stamping digital documents so that they could not be backdated or tampered with.

The blockchain is a data system kind of like a spread sheet. However, instead of spread sheet’s rows and columns to store information, blockchain uses a chain of blocks. When a block is filled with information it is timestamped, added to all the other blocks in the chain, and becomes part of a chronological timeline.

Blockchain is great for digital currency because each digital transaction is publicly recorded and reliable but the people doing the transactions are anonymous.

Blockchain solved the anonymity problem but there was still the double spending problem. In 2004, a check your work type system was created. In this “proof-of-work system,” a computer is required to solve a computer problem before it’s allowed to take some desired action. A second computer can quickly verify the work to prevent tricksters from cheating.
Then in late 2008 the blockchain and proof-of-work concepts were combined to solve the double spending problem.

A digital currency called Bitcoin combined blockchain technology, a proof of work system, and a worldwide decentralized (peer-to-peer) computer network.

To create a Bitcoin a participant (“miner”) uses their computer to solve a difficult math problem (“work”). The miner’s “work” is verified (“proofed”) by all the other computers in the network. If the math problem is correctly solved and verified, the “miner” earns a percentage of Bitcoin for their effort. (If the work cannot be proofed the miner loses all their work and receives nothing.)

The mined Bitcoin then can be bought and sold. The Bitcoin transactions are recorded in a blockchain making the transactions public and verifiable yet anonymous.

Bitcoin currency will be capped at 21 million Bitcoin thus creating scarcity and value. Since Bitcoin is finite (21 million) and its network is decentralized (not tied to any governmental body) Bitcoin should never have an inflation problem. Thus, its appeal.

Bitcoin has paved the way for other cryptocurrencies (Ethereum, Dogecoin, etc.) and a whole cottage industry to support and facilitate the use of cryptocurrencies (i.e., exchanges, trading, lending, etc.).

Cryptocurrency is held by the owner in an anonymous password protected account. Thus, without documenting crypto’s location and password in something like an estate plan, a person’s cryptocurrency can be easily lost.

This problem is like life insurance and bank accounts, that although inheritable, can go unclaimed because the family does not know they exist. Don’t let that be you, create an estate plan that includes the information about your cryptocurrency and other assets. Check that estate planning off your to do list today!

Theresa Clancy, Attorney at Law
(708)819-1580
www.theresaclancylaw.com
 

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