Crypto, DeFi, and Montana’s Economic Future | Columnists


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The crypto industry has exploded over the past couple of years, leaving most of us scrambling to understand new innovations — let alone acronyms. What started with the invention of Bitcoin almost 15 years ago has evolved into a whole new ecosystem of products, services and ways of doing business.

Montana leaders have a choice to make: either welcome crypto entrepreneurs, or watch the economic activity generated by this rapidly growing industry shift elsewhere.

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One of the most exciting things about the crypto industry is the variety of investments and jobs it can bring. One example is cryptocurrency “miners,” who use super-fast computers to solve complex mathematical problems that verify transactions on the decentralized network, or blockchain, and receive lucrative cryptocurrency rewards for doing so. Neighbor States have become a hot spot in recent years for cryptocurrency mining, spurring job creation and significant investment in bolstering state power grids.

But in Montana, miners have faced hostile regulators. Missoula County, for example, has effectively managed cryptocurrency miners bankrupt with their punitive restrictions. And last year, Butte officials denied a massive solar project to power a large-scale cryptocurrency mining operation.

Two Missoula-based entrepreneurs recently announced a $1.9 billion cryptocurrency mining project just across the border in North Dakota, boasting of operating with a neutral carbon footprint and creating 100 well-paying jobs. One has to wonder if Montana has missed out on the economic activity of this project due to the state’s history of hostile crypto regulations.

However, the economic potential of crypto extends far beyond cryptocurrency mining. Entrepreneurs are also leveraging blockchain technology to create ultra-efficient “smart contract” systems that could disrupt entire sectors of our economy.

Take the Missoula Valley Internet Cooperative, which uses blockchain technology to create decentralized internet networks where customers are incentivized to serve as relays and facilitate internet traffic to their neighbors. Blockchain-based smart contract programs manage the entire system, automatically routing the best connections and processing payments. The supporters of the model combat that blockchain technology makes delivering internet to rural communities faster and cheaper than traditional broadband.

Proponents of decentralized finance, or “DeFi,” say they too can use blockchain technology and smart contracts to create more efficient and accessible systems for traditional financial services like lending, banking, transfers money, investment transactions, etc.

Despite the potential benefits, some states are targeting DeFi by forcing companies to comply with rigid, old-fashioned financial regulations or face lawsuits. The looming threat of misguided federal and state regulation is also a problem. major obstacle to the growth of businesses built around blockchain-based smart contracts like the Missoula Valley Internet Co-op.

Wyoming has paved the way welcoming the crypto industry, updating their laws to allow for new business models, and thereby attracting millions of dollars in investment to the state. Other states create regulatory sandboxesinviting crypto-entrepreneurs to test new products and services in their market under more flexible regulations.

As other states compete to attract the growing crypto industry, Montana simply cannot afford to fall behind. Montana leaders need to understand that hostile crypto regulations will just mean that entrepreneurs will move to friendlier states. By offering this fledgling industry a light regulatory touch with flexibility for new ideas, Montana could become the home of the next world-changing innovation.

Kendall Cotton is the President and CEO of the Frontier Institute, a Helena think tank dedicated to breaking down government barriers so all Montanans can prosper.


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