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State Rep: Bitcoin and blockchain here to stay as Illinois leads the way

CHICAGO (Illinois News Network) — With the soaring price of digital currency Bitcoin, and the Chicago Mercantile Exchange Group set to launch futures beginning Dec. 17, one state representative says the technology is here to stay.

Bitcoin broke $19,000 per coin Thursday before dropping 20 percent and then settling at more than $16,000. That’s more than triple what it was just three months ago. Back in 2010, Bitcoin prices were around $30.

CME Group said on its website the value “of a Bitcoin has increased exponentially this year … as investors clamor to join the cryptocurrency stampede.”

“CME Group plans to launch Bitcoin futures on Dec 18, offering investors a secure and regulated platform to trade the virtual currency,” the derivatives marketplace said.

There will never be more than 21 million Bitcoins, unlike paper money and central banks that can print more dollars or add assets on spreadsheets. Blockchain.info puts the current amount of Bitcoin in circulation at more than 16.7 million as of Dec. 5.

Erik Norland, executive director and senior economist of CME Group, wrote in a blog post to the group’s website, “[t]his feature makes supply almost perfectly inelastic.”

“Bitcoin’s limited and highly inelastic supply is also a major factor driving its price,” Norland wrote.” But he said rising transaction costs could cause a crash.

Illinois state Rep. Mike Zalewski, D-Riverside, is part of the Illinois Legislative Blockchain and Distributed Ledger Task Force. The blockchain is the decentralized, secure yet transparent digital ledger behind the digital currency Bitcoin. He said while some think the decentralized currency is a gimmick, it’s here to stay.

“I’m skeptical there’s a bubble and I’m skeptical it’s going to burst,” Zalewski said. “Anything’s possible. Just based on the testimony we’ve received, the agency input, I’m very skeptical this is going to go away anytime soon.”

Zalewski said Bitcoin and the blockchain is transforming monetary policy at the federal and state level.

“It’s just another piece of the evolution of Bitcoin and the blockchain into the mainstream of our markets, our economic activity and our commerce,” he said.

Zalewski said Illinois is embracing the technology, unlike other states.

“New York took a very harsh regulatory stand on Bitcoin and blockchain and it opened opportunity for Illinois to step into a vacuum,” Zalewski said, “and we’re taking advantage of that right now, and I hope it will continue.”

Zalewski said the blockchain isn’t just for digital currencies like Bitcoin. It can also be used for consumers to have better control over things like medical or other vital records without having to rely on centralized databases.

“Imagine having your health records on the blockchain,” Zalewski said. “You control who gets them. You control to what level they’re disposed to other providers and on a real anecdotal level you don’t have to go to the office to get your transcripts delivered from one doctor to another, you just give them a thumb drive [with an encrypted key] and say ‘here it is.’”

Zalewski expects a legislative report from the blockchain task force in the next month or two.

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State Rep: Bitcoin and blockchain here to stay as Illinois leads the way