While bitcoin has gradually become a household word, the underlying technology behind it — known as blockchain — isn’t quite there yet, though it has found a recent home in Nevada law.

Blockchain is, at its simplest, a kind of distributed ledger technology. It can be used to track and keep secure all sorts of different records, things like financial transactions, shipping data and birth certificates.

Economic development officials, tech companies and blockchain advocates see a bright future for the technology here in Nevada, with the state’s vast amounts of land and relatively inexpensive energy costs. To top it off, they say that the state laid out a symbolic welcome mat when it passed a blockchain bill last year, signaling to companies that Nevada understands what blockchain is and is interested in giving companies the space they need to innovate as applications of the technology continue to emerge.

“Even putting it on the books is a strong statement from a state Legislature,” said Allison Clift-Jennings, the CEO of the Reno-based startup Filament, which uses blockchain to secure industrial data. “That’s huge.”

Blockchain has been compared to knitting. You take a list of records, known as a block, and encrypt it. The next set of records, or block, is assembled, but also includes a specific reference to the previous block. Each subsequent block is encrypted and contains a reference to each block before it, like the rows of a knitted scarf. It’s essentially impossible to go back and manipulate old records without leaving a trace and breaking the chain.

It’s the technology that allows bitcoin and other forms of cryptocurrency to exist on a decentralized basis, without the need for banks or governments to get involved. A peer-to-peer network of computers is responsible for both keeping a record of the public ledger and verifying individual transactions against it. Because all of those computers continually talk to each other and validate the ledger, it’s impossible for one individual actor to go back and edit the ledger on their own. (More on the relationship between bitcoin and blockchain here.)

But blockchain has almost an infinite number of potential applications outside cryptocurrency, with some calling it the biggest thing since the Internet.

The Baltic country Estonia, for instance, maintains a distributed ledger that records all sorts of data about its citizens, from property records to medical history. All Estonians can log in to view their own health-care records using a unique, secure digital identity and even see which doctors have accessed their records.

Blockchain can also be used to execute smart contracts, which essentially automatically enforce the terms of a regular contract by using cryptographic code. The contract can automatically execute itself on a certain date or after certain independently verifiable terms and conditions are met.

Here in the U.S., the state of Illinois is piloting an initiative to log birth certificates on a blockchain, which would allow companies to verify and authenticate someone’s identity by requesting encrypted access to that birth certificate database. The pilot is a small part of the state’s overall blockchain initiative.

A blockchain bill

State Sen. Ben Kieckhefer, a Republican who represents the burgeoning tech hub that is Reno, said he was interested in putting together a package of legislation focused on entrepreneurs and startups headed into the 2016 session. He decided to focus one of his bills around blockchain, after hearing more about the technology through conversations with some of the young entrepreneurs in the area.

The bill, at first blush, contained seven different definitions, from “blockchain” to “cryptographic hash,” and two full pages specifying exactly how transactions using blockchain must be conducted. Clift-Jennings, who describes herself as “pretty apolitical,” said the original version of the bill would have been “detrimental” to her company.

Kieckhefer acknowledged that the first version of the bill was probably “a little too heavy-handed, trying to do too much.”

“We ended up really slimming it down, locking down a definition of blockchain we liked and we really felt was specific enough but still broad enough to allow innovation in the space, which is inevitable,” Kieckhefer said.

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