American Blockchain Dream in Sight, but the Chase Not Over Yet

America still lags behind countries like China, the United Arab Emirates and Switzerland when it comes to blockchain adoption.

As blockchain adoption continues to garner mainstream traction across the private sector, an increasing number of government agencies are too looking to explore the potential of the technology. For example, the United States Food and Drug Administration recently released an elaborate blueprint as to how it plans to deploy blockchain for food safety-related purposes.

According to the FDA, the agency will combine the use of blockchain with other advanced technologies such as artificial intelligence and the Internet of Things to enhance the traceability of food sources as well as for the creation of novel platforms through which preventing and managing outbreaks of food-borne diseases along with retail distribution of daily groceries can be carried out in an effective manner.

While the FDA and other similar government bodies have just started exploring the potential of blockchain over the last couple of years, private firms have already successfully brought this technology into the mainstream such as through IBM’s FoodTrust program. That project is currently being used by a number of retail giants across the United States — such as Walmart, Nestlé, Tyson Foods, Carrefour and Albertsons — for various administrative purposes including product data storage, certification, recalls, etc.

That being said, blockchain adoption fueled by the U.S. government is definitely happening, albeit at a slow pace. For example, a few state governments have employed a voting system based on distributed ledger technology to ensure maximum transparency. Similarly, the Department of Homeland Security recently awarded Virginia-based Digital Bazaar a sizable $200 million grant to develop its blockchain security technology. Aidan McCarty, co-founder of Unum ID — a cybersecurity startup backed by Samsung and Draper Associates — told Cointelegraph:

“The U.S. government has not been especially proactive in exploring blockchain technology, as only specific departments have blockchain programs. One way to kickstart this is to create a blockchain task force that includes private sector representatives, public sector representatives, and blockchain technologists. This will start to bridge the gap between those who understand the technology best and those who know how to streamline the adoption process.”

Government-backed blockchain use cases

Department of Defense

On March 12, Simba Chain, an Indiana-based blockchain development firm, released a statement announcing that it had been contracted by the Department of Defense to devise a blockchain proof-of-concept for securing sensitive research and development data. 

Dubbed Project Alameda (which stands for Authenticity Ledger for Auditable Military Enclaved Data Access), the aim of the platform is to help government agencies share documents and highly sensitive scientific data with one another in a manner that not only protects the integrity and authenticity of the information involved but also allows for controlled access.

Defense Advanced Research Projects Agency

The involvement of the Defense Advanced Research Projects Agency, also known as DARPA, in blockchain technology has been quite prominent over the past few years, which could be in large part due to the Department of Defense receiving a huge portion (approximately 40%) of the government’s annual federal R&D funding. To be a bit more specific, for the fiscal year 2020, the Trump administration requested a whopping $59.5 billion for the Department of Defense to be used for research and development purposes alone.

With that being said, DARPA has been actively experimenting with blockchain technology since mid-2019 in an effort to create a more efficient, robust, secure platform using blockchain-based protocols. According to a report released by the Department of Defense in 2019, the use of a blockchain will enable government personnel located all over the world to “transmit secure messages or process transactions that can be traced through numerous channels of a decentralized ledger.”

Department of Health and Human Services

In 2019, the Department of Health and Human Services announced its decision to invest $49 million to help develop a number of blockchain and AI solutions to reduce its daily operational costs. 

Furthermore, the Administration for Children and Families division of HHS currently makes use of a service called GrantSolutions, a blockchain platform that seeks to reduce the application and reporting burden on grant recipients. Not only that, but HHS Accelerate is a federal government acquisition system that uses a distributed ledger to improve the timeliness of information in regard to pricing and terms and conditions for HHS contracts.

Air Force

Simba Chain partnered with the Air Force last year to help secure the military wing’s complex supply chain operations. Called BASECAMP (an acronym for Blockchain Approach for Supply Chain Additive Manufacturing Parts), it will make use of Simba’s native blockchain ecosystem to streamline the registration and tracking of additive manufacturing components during their entire lifecycle.

From a technical standpoint, it’s worth mentioning that Simba Chain uses Microsoft Azure to bolster all of its trust and reliability protocols. Furthermore, the use of the platform will ensure that any repairs made to vehicles or aircrafts owned by the U.S. government can’t be tampered with by a third party.

Voatz

Even though Voatz is not a governmental project, the Massachusetts-based company has been widely used by U.S. authorities. Voatz is a blockchain voting platform that has been used to facilitate elections across West Virginia; Jackson County, Oregon; Umatilla County, Oregon; Utah County, Utah; and Denver, Colorado. While the platform has gained a tremendous amount of traction in recent years, certain security concerns have also surfaced in relation to Voatz that have called into question the utility of blockchain technology within the domain of voting. 

For starters, researchers over at the Massachusetts Institute of Technology released a report earlier this year in which they identified a few security vulnerabilities within the app’s core framework, something that could potentially allow bad actors/hackers to mess around with existing vote tallies as well as compromise the individual privacy of its users. 

Following the release of the study, West Virginia announced that it would temporarily halt its use of Voatz for any future elections. Regardless of controversy, the application is still being used — for example, in the Utah Republican state convention in April.

Is the government doing enough?

As things stand, a majority of the American government’s federal blockchain initiatives seem to be affiliated with the Department of Defense. However, certain states such as Wyoming and Texas have taken a forward-looking stance and have sought to become hubs for blockchain innovation.

To date, Wyoming has passed a total of 13 blockchain-enabling laws, making it the only U.S. state to be taking steps toward establishing a clear, comprehensive legal framework that allows individuals as well as companies working with blockchain tech to grow in a fully regulated way.

Shedding more light on the matter, Nick Murphy, director and co-president of Beaxy — a Chicago-based cryptocurrency exchange — told Cointelegraph that it’s high time that the U.S. federal government creates a committee and explores the potential applications of blockchain:

“It’s important to consider that the U.S. government was somewhat late to delve deeper into blockchain technology, meaning that most applications are currently still being researched, or in a test phase, meaning there are limited real world applications we can draw on. By leveraging cryptographic proof of identity and reducing single points of failure with antifragile systems, blockchain can make the most complex government tasks more safe and secure.”

Positive developments taking place

Earlier in May, Representative Brett Guthrie introduced a bill to Congress, known as the Advancing Blockchain Act, calling on the Federal Trade Commission to conduct a thorough examination of the prevalence of blockchain use cases across various government agencies and public industries in America as well as all over the world.

If passed, the bill will give the FTC a total of two years to conduct a deep survey along with a further six months to advise Congress on what it learned. Not only that, but Guthrie’s proposed legislation also seeks to spur the adoption of blockchain tech on a state, as well as industry, level. Furthermore, it also includes a number of risk mitigation strategies along with a legislative framework in regard to how the technology should be handled.

In a similar vein, Representatives Austin Scott, Collin Peterson and Ted Budd also recently put forth three bills that would give the Securities and Exchange Commission and other relevant regulatory agencies the necessary funding and oversight to develop tools for blockchain analysis, aimed at preventing fraud, the financing of terrorism and other similar crimes across the United States. Expounding his thoughts on the need for government legislation in regard to blockchain, Jaian Cuttari, presidential appointee to the board of the Selective Service System and CEO of BDAM — a digital asset management firm — told Cointelegraph:

“I had the pleasure of speaking with US Under Secretary of Agriculture, Ted Mckinney, recently and from our discussions I saw that there is a clear initiative now by the United States Government to become competitive with the rest of the world in the utilization of technology in agriculture and also in government. Blockchain is a big focus in many sectors and some key areas for its use case can be seen in the agriculture sector.”

America can fall behind

While the U.S. has been rather slow in its exploration and adoption of blockchain, other countries such as China and the United Arab Emirates are recognizing the true social and economic potential of this technology. For example, the Chinese government recently revealed that Beijing was well on its way to becoming a blockchain-powered city, with local authorities releasing an application blueprint claiming that a total of 140 government agencies were already making use of the technology. Similarly, Dubai has also been quite proactive in regard to exploring blockchain-based governance systems. 

Estonia is another nation that seems to have delved quite deep into the use of blockchain, and it has integrated the technology into many of its core governmental systems. Switzerland is another country that offers financial technology firms an extremely favorable regulatory environment. The Swiss Financial Market Supervisory Authority, the administrative body also known as FINMA that is responsible for enforcing local Swiss financial regulations, has stated that one of its key four-year goals (for 2017 to 2020) is to systematically remove all of the unnecessary legal obstacles that stand in the way of innovative business technologies like blockchain.

Publication date: 
07/22/2020 - 17:14
Author: 
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