A peer-to-peer ledger for conducting transactions allows users to receive payments and donations directly without taking time to pass through banks, proponents say.
Although the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, millions of people have waited for weeks to receive stimulus checks.
Blockchain proponents say the federal government should consider implementing the technology to distribute and track relief programs. In early May, a group of 11 members of Congress sent a letter to Treasury Secretary Steven Mnuchin asking him to consider the tech to distribute those checks. The letter stated in part that the US should be utilizing blockchain on several fronts "to continue its standing as a world leader in technological innovation."
Proponents say blockchain, a peer-to-peer ledger for conducting transactions, can allow users to receive stimulus checks and donations directly without taking time to pass through banks.
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In a statement, the Chamber of Digital Commerce applauded the letter, saying it is the "first step in making blockchain technology…a national priority." The letter noted that the US government already supports "key technological advances in 5G, artificial intelligence, and quantum computing. Blockchain technology is widely recognized to have similar transformational potential and must be developed and promoted as a key technology that will fuel cutting edge industries of the future."
Right now, distributing economic benefits is mired in inefficiencies, proponents say. "Every big organization and even government [agencies] have a lot of people who need to give approval," said Fabio Canesin, CEO of financial services platform provider Nash. "It's really hard to get these new programs or innovations to boil through from the bottom up to the top."
Meanwhile, stimulus checks have been slowed by the fact that "banks aren't working,'' he said. "The reality is there already is a much better way to do these things…why not use the digital dollar?"
A mobile app can do a better job distributing cash than the government, Canesin maintained. "The banking system is outdated" and digital currencies are the future, he said, noting that Nash launched in September 2019 and has around 55,000 users.
There are three compelling reasons blockchain should be used to distribute stimulus and other government funds, he said: "It is efficient and cheap, it is transparent and auditable, and it is fast."
The Nash platform doesn't hold people's assets—it's a tool to manage digital currencies, kind of like a wallet, Canesin said. "If Nash goes away you still have access to these funds."
The Federal Reserve could do direct transactions to the account a user has registered and "you could get your stimulus check within seconds at zero cost," Canesin said. "Imagine the power of that; how much frustration and money could have been saved."
Nash makes a small percentage on the conversion of different currencies, he said.
Canesin said federal agencies are looking interested in blockchain; they just move slower than global innovation networks. The Federal Reserve did announce it would be using a real-time payment system by 2024 to support faster payments in the US in August 2019.
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Canesin said that it is critical for the US to adopt blockchain and digital currencies if it wants to stay competitive with other countries.
"The process is actually very simple. The Fed already has an online account system—like yours in your commercial bank," he said. "All it has to do is to mint a blockchain dollar and say that it is corresponding to this other dollar that is in this other account that can be redeemed in exchange."
He stressed that this requires just a technological change for the means of exchange since the Federal Reserve already has its governance and policies. "Nothing…has to change for the digitalization of the dollar, the technology for a consortium network is already established."
Not much has to happen for cryptocurrencies and blockchain to become more widely accepted, according to Canesin. Both are already on "a path of strong development that should make competing technologies uneconomical in due time," he said.
He contends there are no drawbacks to blockchain because it is "not a single technology, but a big basket of different solutions for a common set of problems." That said, Canesin added that it is important to select the correct properties for the requirements when implementing a network.
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