The Texas State Securities Board is cracking down on crypto-currency scams left, right and center, but legitimate businesses are adopting the underlying blockchain technology to make money.
Texas Securities Commissioner Travis Iles recently entered a cease and desist order against Wind Wide Coin Inc., a company allegedly operating in Houston and fraudulently offering investments in cryptocurrency trading. The unidentified business operators listed a fake address in Houston and posted a photo of Britain’s Prince Charles as a satisfied investor.
The Wind Wide Coin scheme, like so many others, claimed to have a computer program that would guarantee one-day returns of 900 percent. Investigators are left playing a game of Whack-a-Mole as similar scams keep popping up.
Savvy investors are catching on, though. Bitcoin, the most famous cryptocurrency, has dropped from $19,343 each in December to less than $8,200 last week. But others have poured billions into 1,450 other cryptocurrencies, including 271 coins worth $1 billion that bear hallmarks of wire fraud, according to an investigation by the Wall Street Journal.
A blockchain is a digital register, or ledger, that is publicly shared and instantly records every transaction involving a limited set of digital tokens. Each token is unique and every time someone transfers a token, the transaction creates a block of data, which is cryptographically protected. The block is added to previous blocks, creating a chain of data that records every transaction.
That’s a big deal because today most companies wait for an invoice, cut a check and then allow 10 days for a bank to complete the transaction. If a buyer and a seller share a blockchain, though, the transaction can take place in nanoseconds.
Blockchain becomes even more valuable where multiple companies want to make dozens of transactions every minute. For example, when a number of generators and consumers want to buy or sell electricity every 15 minutes in response to shifting wholesale market prices.
Houston-based Direct Energy, a national retail provider of electricity and natural gas, entered into partnership with Brooklyn-based LO3 Energy to offer a blockchain-based platform called Exergy that allows businesses to decide when and where to buy electricity to lower bills.
The Texas wholesale electricity market updates prices every 15 minutes, and with more and more small, distributed sources of electricity entering the market, consumers have more choices about where to get their electricity, Jim Steffes, executive vice president of Direct Energy, told me.
“As we see price signals go up, do we want centralized or decentralized forms of electricity? Do we want more efficiency? And how do we engage customers?” Steffes asked. “If we have people generating and consuming electricity on the edges of the grid, can they buy from each other?”
If a Direct Energy customers wants to buy solar power, or just the cheapest available electricity, blockchain makes it possible.
Read more at: Houston Chronicle