Governments will shape the future with blockchain
Governments hope to use the blockchain technology behind bitcoin to shape our future. But it's not as insidious as it sounds.
Quite the opposite in fact. Nations ranging from the large and influential (like the U.S. and U.K.) to the small and ambitious (like Croatia and Mauritius) have identified opportunities perfectly suited for blockchain in the hopes of solving seemingly insurmountable economic and social challenges.
When bitcoin launched the cryptocurrency revolution in 2009, a handful of players recognized the opportunities that resided in crypto and its underlying technology, blockchain. What we didn't know then was how soon (or how much) government would involve itself in a space that few outside our cadre understood.
Regulation was inevitable, but at first governments took a 'square peg, round hole' approach, trying to apply existing rules to the seeming entropy of crypto because there were no regulations specific to cryptocurrencies. Most of us knew regulation was coming and we fought hard to get a seat at the table, because we knew if we didn't, we'd be on the outside looking in while being regulated out of existence or marginalized through a death by a thousand cuts.
What we didn't know at the time was that governments don't want to shutter (or even hinder) this transformative tech. Quite the opposite: we discovered that they want to know more about it. They want to understand it better so they can approach regulation intelligently. More than that, countries across the globe have identified many of the same opportunities in blockchain as those of us in the crypto ecosystem.
There are two approaches that nations – led in no small part by the G7 and G20 and organizations like the Organization for Economic Co-operation and Development undertake when considering blockchain and cryptocurrencies: the regulatory environment and how blockchain can be leveraged. On the regulatory side, governments focus on know-your-customer and anti-money-laundering principles that ensure digital identity can be established and that cryptocurrencies can't be exploited for criminal activities. Nations understand that a misstep could impede their ability to do business with other countries, so of course regulation is going to be on their radars.
But we didn't expect the way nations would respond to the opportunities beyond regulation. Officials in the countries we visited were eager to learn more about crypto, how the technology works, and how they could use it in their respective nations. They were thrilled to learn from real experts in the blockchain space.
Government bodies want to educate themselves because they realize blockchain has tremendous potential as a force for economic growth. People even marginally familiar with blockchain are aware of its uses in banking and fintech, but it goes far beyond that. Blockchain has tremendous potential to affect healthcare, real estate, supply chain management and even taxation.
Its social impact will be equally impressive: using cryptocurrency, money can be sent to individuals in countries where corruption or political instability limits access to funds; there's a strong case for using blockchain to combat human trafficking; and blockchain's distributed ledger provides a secure method for voting, a key issue for emerging democratic nations or countries whose voting systems are large and subject to fraud or inaccuracy.
Many of the conversations we've had with governments and international organizations center around digital identity and passports; voting solutions; currency pairing of digital money and central currency; and incubators designed to accelerate innovation and generate employment opportunities. We have lots to say about how the technology can be applied, and governments are listening.
We're doing it in such a way that the people who inform regulators are grassroots players from our ecosystem. They must believe in the technology and recognize its potential. Bureaucracies don't need sole-sourced sales pitches from corporations with a vested interest in a specific aspect of the technology. This has to be an organic process that focuses the discussion on relationships, awareness, and ultimately, application. So far, it's been a successful model and the government organizations we've worked with are listening.
All of this has happened in a remarkably short period of time. Ten years after the birth of this technology, it feels like we’re moving the pieces. When we set out on this journey, our hope was to engage government bodies and shed light on real opportunity.
A common misconception about blockchain is that it can solve every problem; it can solve many problems but there are problems for which it simply cannot be used. But the biggest misconception about crypto is that it's all about technology. Those of us inside the ecosystem know differently. It's all about information and collaboration and ultimately, it's about humans — and therein lies the intersection of government and blockchain and the fuel for their rationale.
Written by: Joseph Weinberg, Paycase Financial
Photo credit: Istock.com