Blockchain in the Federal Government

Risk vs. Reward

Blockchain is unquestionably the hottest technology being developed today in the private and government sectors. While “Blockchain” has been one of those buzz words that has popped up all over the commercial industry for the past several years it has more recently been a major topic of conversation in the federal government with several agencies adopting the technology.

To many government departments and agencies, blockchain is cast as a “dark-web” technology used for illegal purposes. However, some agencies have recognized blockchain as a powerful tool, and for those agencies that are willing to take the lead, blockchain has proven a fruitful option for innovative solutions to enhance security and transparency, as well as facilitate information sharing between agencies without a requirement to expose an entire data structure or sensitive information.

Cryptocurrency & Blockchain: The Internet of Value

As an emerging tech trend, blockchain is often mistaken as being synonymous with cryptocurrency. That is much like saying Google is the internet when in fact, the internet is the technology on which Google is a powerful tool for finding information. The same is the case for cryptocurrency where you can have a digital tokenized asset (cryptocurrency) that is created as a method of exchange on a blockchain.

So, what exactly is a blockchain? A blockchain is defined as a decentralized, peer-to-peer digital ledger of immutable transactions that are organized into timestamped blocks that are each confirmed by network consensus among all nodes or participants in the network. Each block that is created contains a reference to the previous block, forming a chain of blocks that represent a batch of transactions at a given time in history. On this blockchain, these transactions represent the transfer of value, either tangible (a product) or intangible (currency). Put simply, the blockchain is a digital ledger composed of transactions that are organized into timestamped blocks, and each new block is appended to the previous one, forming a chain of blocks, also known as a blockchain.

The Rise of Blockchain in Government

The federal government is expected to raise its blockchain spending to $123.5 million by 2022, which is over a 1,000% increase as compared with the $10.7 million it spent in 2017, according to a report from IDC Government Insights, published in April 2019. Moreover, federal civilian agencies, who spent less than $20 million on the technology in 2017 are forecasted to spend over $80 million by 2022. The government has begun to see the advantaged of utilizing the technology in spaces that focus on identity management, asset management, records management, and complex financial transactions. In the near future, blockchain is likely to become the cornerstone technology and the standard for many types of government procurement.

Already, blockchain is being used across the government. Some examples include:

  • The Centers for Disease Control adopting blockchain for the management of medical records.
  • The Department of Homeland Security which leverages blockchain to distribute ledger technology to prevent forgery and counterfeiting of certificates.  and recently,
  • Health and Human Service’s Accelerate program, which received authority to operate, allowing it to improve its own and other agencies’ acquisition and business processes using blockchain.

These examples and so many others show evidence that the so-called “dark-web” technology is now becoming more popular, more mainstream, and more in line with actually defeating the dark web using blockchain.

Just three years ago in 2016, White House Chief of Staff Mick Mulvaney and Colorado Governor Jared Polis established the Congressional Blockchain Caucus comprised of both Republican and Democrat Congressmen and Congresswomen who are aiming to be true blockchain champions in government and hope to broaden the understanding and determination of more members of Congress to promote real policy solutions for the industry.

Minnesota Congressman and Blockchain Caucus member Tom Emmer has enthusiastically stated, “Think about what blockchain could mean to finance,” he continues, “the individual’s control of their own data, the protection, and dissemination of healthcare records, what it might mean for our elections — this could be the solution to our cybersecurity issues.” The more blockchain and its use cases can be discussed by government, the greater understanding there will be amongst top-ranking government officials which, in turn, will create a greater demand for blockchain services.

Similar to how cloud technology at its inception was a point of trepidation for federal leadership, and the recommended migration to cloud infrastructure was a topic of contention, think about where government is now and how much cloud has grown and been implemented. We will surely see that blockchain, among other innovative technologies, represents the same opportunity to bring unprecedented value to the government’s operations. The question is, which agencies will be prioritizing blockchain’s research and adoption and which agencies will be sitting idly by wishing they had done it sooner.

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