Two advancing bills allow the US government to look at blockchain
American Fork, Utah, United States, June 10 2020 (Wiredrelease) Tork Media LLC Two bills have advanced in the U.S. House of Representatives that would allow Federal agencies to look at future use of blockchain-related technology. Not to adopt blockchain, that is. Just to look carefully at it.
Whats going on here? Is the Federal government getting into the bitcoin business? Far from it.
The truth is that blockchain (or distributed-ledger technology in its generic format) is about much more than bitcoin. In fact, it could play a starring role in streamlining the countrys COVID-19 response, which has suffered from catastrophic delays and cost lives.
However, because the pandemic dominates the spotlight, these bills, which have bipartisan support, arent on the top of the congressional to-do list.
With enough political will, these two bills could lay the groundwork for critical agencies to take a serious look at technology that could help us through COVID-19 or the next pandemic.
What Is The House Considering?
The two bills in front of the House elicit cheers from fans of blockchain, not just cryptocurrency enthusiasts, but also techies who understand that the implications of blockchain go far beyond todays bitcoin valuation.
One bill is sponsored by Rep. Austin Scott (R-GA). It applies to the Securities Exchange Commission (SEC). The other bill, sponsored by Rep. Collin C. Peterson (D-MN), is part of the reauthorization of the Commodity Futures Trading Commission (CFTC).
The bills would alleviate the application of gift rules and enable an exhaustive two-year study of available blockchain models by third-party companies as a precursor to government adoption. The presumed application would be to create an impossible-to-falsify paper trail of securities trades that regulatory bodies like the SEC and CFTC could audit in the event of a suspected financial crime.
What Is Blockchain?
Why does there need to be an exception in the gift rules if the government wants to adopt blockchain technology?
To understand why, it is important to realize that blockchain is much bigger than cryptocurrency.
Why do cryptocurrencies have value in the first place? Theyre not made of gold; theyre made of computer code. It sounds easy for a fraudster to alter some computer code. Wouldnt bitcoin be even easier to counterfeit that watermarked paper currency?
Blockchain, and other distributed digital ledgers, are actually the reason why this is impossible.
Traditional currencies like the dollar or the yuansometimes called fiat currenciescarry value because they are backed by the full faith and credit of the governments that issue them.
Cryptocurrencies gain their value from the full faith and credit of a system that is nearly impossible to hack or falsify. Blockchain is the first example of such a system.
Why is it unhackable? The term distributed ledger means that the blockchain ledger exists simultaneously on thousands of networked computers. Any computer within the network can be used to confirm basic details about a confidential transaction.
If a record on the chain came into dispute, it could easily be checked against a thousand other records, and the fraud would be discovered almost immediately.
Thats the blockchain revolution. Not cryptocurrency, but an unimpeachable paper trail. What government wouldnt be better off with that as the basis of its record-keeping?
So where did blockchain come from? It just appeared. In 2011, a decentralized subculture of crypto-anarchist hackers issued a white paper called The Bitcoin Manifesto. In it, they outlined the complex coding process for mining a limited supply of a digital currency, and the groundbreaking distributed ledger technology (blockchain) to insure the integrity of the transactional chain.
So who owns it? Technically, no one. The Bitcoin Manifesto is attributed to Satoshi Nakamoto, but that is roundly considered to be a pseudonym and no one credible has claimed it. It is open source technology. The blockchain code is in the public domain for anyone to copy, for free, with no license.
Why Has the U.S. Been So Slow on Blockchain?
Both bills in the House are actually in response to an earlier bill, sponsored by Rep. Brett Guthrie (R-KY) called the Advancing Blockchain Act, which would have authorized an exhaustive study of available blockchain models by third-party companies as a precursor to government adoption.
If blockchain were a race, the U.S. would be losing, and not by a respectable margin. Countries like Sweden, the United Arab Emirates, and Japan are much further along in the process of government adoption of blockchain, but unsurprisingly Rep. Guthrie was most concerned about the pack leaderChina, an aggressive state adopter of distributed ledger tech.
Despite Chinas adversarial role in U.S. political life, Rep. Guthries bill stalled due to a strict reading of that pesky gift rule, which prohibits Federal agencies from accepting gratuitous goods and services. Gift rules perceive this as an unauthorized expansion of the agencys financial appropriation.
In other words, the problem stopping the U.S. government from adopting blockchain while China runs distributed-ledger circles around them, is that blockchain is free.
The bills authored by Reps. Scott and Peterson seek an exemption from these gift rules that ensures the free technology will be subjected to competitive bidding.
Applications of Blockchain in the COVID Era
If the government gets with the blockchain program, the implications stretch far beyond the prevention of financial crime. In fact, with the novel coronavirus monopolizing public discourse, we should be moving faster on blockchain adoption, not slower.
The healthcare industry is not waiting. According to Healthcare Weekly, 40% of healthcare executives see blockchain adoption as a Top 5 priority, with healthcare industry expenditure on blockchain adoption expected to hit between $100 and $150 billion by 2025.
According to Digital Authority Partners, the benefits of blockchain technology to the healthcare industry include the potential to:
Improve the pharmaceutical supply chain.Pair clinical trials to appropriate test patients.Streamline the bookkeeping burden for massive quantities of clinical trial data.Manage patient consent through ironclad smart contracts.
With pharma companies racing the clock to produce effective treatments and vaccines for the mounting COVID-19 pandemic, blocking blockchain feels like cutting off our nose to spite our face. Its time for the Federal government to catch up with fintech, the medical industry, and our geopolitical competitors.
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