Joint Economic Committee Sees Blockchain as ‘Mainstream’ Tech That Can Secure Government Infrastructure
A new report by the Joint Economic Committee of the U.S. Congress last week indicated that federal legislators see the emerging blockchain technology as a “potential tool for securing America’s digital infrastructure” and making the government “more efficient,” especially in health programs like Medicare and Medicaid.
“Blockchain is going mainstream,” the report said.
“Blockchain technology could compete with existing mechanisms, goods, and services. Its initial application as a payment medium prompted questions about whether it might replace national currencies and challenge the U.S. dollar,” explained the committee report. “Cryptocurrencies and ICOs create headlines, and the pace of financial innovation in the blockchain space amazes skeptics. Yet, with all the headlines focusing on the financial applications, people may miss the digital revolution now happening with other blockchain applications.”
The report notes that blockchain technology offers a “decentralized, secure, and efficient way” to store almost any form of data across multiple platforms for federal government agencies.
“On the regulatory side, Representative David Schweikert currently coordinates with institutions like the Massachusetts Institute of Technology and the National Institutes of Standards and Technology (NIST) to develop encryption standards that would protect Americans’ private medical data,” the report’s authors noted. “The United States Department of Health and Human Services (HHS) recently announced the Use of Blockchain in Health IT and Health Related Research Ideation Challenge. The initiative requested 213 white papers examining how blockchain technology could change health information technology. Researchers submitted 77 papers and 15 won awards from their work.”
As a result of this success with medical data, the panel is recommending that the federal government, at agencies from the IRS to the HHS, deploy blockchain technology as a way to improve the “efficiency” of their daily operations.
The study, furthermore, notes that new technology presents “evolving challenges” and also generates new solutions. “Blockchain technology essentially stores and transmits data securely, in large volume, and at high speeds. So far, the technology has proved largely resistant to hacking, and given this feature, developers first applied it to digital currencies,” the report concluded. “Yet blockchain has many more potential applications, such as portable medical records and securing the critical financial and energy infrastructure.”
The economic researchers recommended the following to Congress:
* Policymakers and the public should become intimately familiar with digital currencies and other uses of blockchain, whose applications are becoming more widespread daily.
* Regulators should coordinate with each other to ensure coherent policy frameworks, definitions, and jurisdiction.
* Policymakers, regulators, and entrepreneurs should collaborate to ensure developers can deploy these new blockchain technologies quickly and in a way that protects Americans from fraud, theft, and abuse, while ensuring compliance with relevant rules.
Congressional Blockchain Caucus
Republican Rep. Schweikert, of Arizona, and colleagues, recently launched the Congressional Blockchain Caucus, a bi-partisan group of legislators whose goal is for the government to help foster the growth of blockchain, but take a hands-off approach as it largely did during the emergence of the Internet during the 1990s.
The Congressmen are in this legislative session pushing a bill that would create a structure for taxing purchases made with cryptocurrencies based on blockchain technology, like Bitcoin and Ethereum. As with foreign currency transactions, the new rules allow consumers to make small purchases with cryptocurrency up to $600 without onerous reporting requirements.
“Cryptocurrencies can be used for anything from buying a cup of coffee to paying for a car, to crowdfunding a new startup, and more and more consumers are choosing to use this type of payment. To keep up with modern technology, we need to remove outdated restrictions on cryptocurrencies, like Bitcoin, and other methods of digital payment,” said Rep. Jared Polis (D-Colo.). “By cutting red tape and eliminating onerous reporting requirements, it will allow cryptocurrencies to further benefit consumers and help create good jobs.”
Indeed, another report from the consultancy Deloitte indicates the blockchain has the power to “transform the public sector,” mostly behind the scenes. Government agencies in more than a dozen countries—including the U.S., Canada, the United Kingdom, Brazil, and China—are running pilots to examine the architecture as a basis for government services and developing new blockchain-based applications for government use, or monitoring, according to the Deloitte report. An opinion piece in The Wall Street Journal last week by a retired American diplomat, Mounir Ibrahim, embraced this line of thinking, and said blockchain could even be used to authenticate images of human rights violations in Syria, and other rogue states, and as a way to hasten international efforts to “monitor elections, fight fraud, audit supply chains and enforce anti-corruption measures.”
–Gene J. Koprowski is an Emmy Award-nominated technology journalist who has covered IT and public policy issues for more than 30 years.