Unlike China, US Should Use Blockchain as a Force for Good

Bitcoin buttons are seen displayed on the floor of the Consensus 2018 blockchain technology conference in New York on May 16, 2018. (Mike Segar/Reuters)

Commentary

What’s the purpose of bitcoin? For some, it’s a transcendent, egalitarian force. For others, it’s little more than a Ponzi scheme, a glorified gimmick full of false hope and empty promises.

In July, the Chinese Communist Party (CCP), no fan of bitcoin, issued a sweeping ban on crypto mining. More recently, Beijing declared all crypto transactions illegal. Interestingly, but not surprisingly, the CCP has embraced blockchain, bitcoin’s underlying technology.

Blockchain, a distributed software network, acts as a digital ledger. By eliminating the need for an intermediary, it allows the secure, almost instantaneous peer-to-peer transfer of assets. Similar to the internet, blockchain is a technology that has helped to facilitate “the digital flow of information” and “facilitates the digital exchange of units of value,” according to researchers at the Blockchain Institute. Almost anything, from currencies to property ownership, “can be tokenized, stored, and exchanged on a blockchain network.”

In the same way that the internet revolutionized commerce and communication, blockchain possesses the power to revolutionize the ways governments operate—a fact not lost on the CCP.

Now, before I continue, I must state the following: Although blockchain is an impressive and important technology, it can be used by bad actors such as the CCP. Just as a knife in the wrong hands can become a deadly weapon, blockchain can be weaponized. Blockchain is an amoral technology, but it can be used by immoral people.

In a recent comprehensive article, the Stimson Center’s Sara Hsu and Gabrielle Green outlined the many ways the CCP is turning to financial technologies (fintech) to transform the country’s business sector. Powered by blockchain, the CCP intends to usher in a fintech revolution. Across the land, the “adoption rate of fintech” is fast approaching 90 percent, according to the authors.

One of the benefits of blockchain is its heightened security. With the digital ledger, any information stored is immutable and instantly traceable, thus making finance-related crimes easier to track and easier to prevent. For years, China has been plagued by financial scams, including daigou, a form of money laundering with very specific Chinese characteristics.

Now, in a desperate attempt to exert even more control over society, the CCP is using advanced technologies to further this data-driven dystopia. Beijing’s willingness to embrace blockchain should surprise no one. After all, totalitarian governments will always attempt to use new technologies in despicable ways.

But even though the CCP will likely use blockchain to punish its citizens, the United States has an opportunity to use blockchain as a force for good. Unlike their counterparts in China, members of the Biden administration have the opportunity to use blockchain to address highly important issues that affect all U.S. citizens regardless of their political affiliations.

A graphic rendering of blockchain technology. (Nico El Nino/Shutterstock)

Take fraud, for example. In 2020 alone, there were more than 323,000 cases of COVID-19 fraud. By August, that number had grown to more than 500,000, according to finance writer Lyle Daly. As Daly notes, “government benefits fraud, in particular, skyrocketed as criminals stole stimulus checks and unemployment benefits.”

The COVID-19 crisis has exposed the federal government’s glaring weaknesses. The direct stimulus payment methods, highly flawed and easy to manipulate, have proven to be both embarrassing and costly. By streamlining payments, blockchain technology has the power to share information in real time; it promotes visibility and transparency, thus reducing the chances of fraud.

Besides financial crimes, blockchain also has the potential to address illegal immigration and child trafficking—two issues that continue to plague the United States. According to the Pew Research Center, there are more than 10 million undocumented immigrants in the United States. Migrant encounters at the U.S.–Mexico border are at their highest point in 21 years.

Blockchain technology has the power to prevent those with fake passports or illegally obtained immigration documents from ever entering the country. Unlike traditional paper passports, which can be duplicated and manipulated all too easily, blockchain allows for the encryption and digital storage of personal information on a device such as a smartphone. Such information could then be verified alongside biometric information.

Of course, the idea of biometric data scares some people, and that fear is understandable. To combat illegal immigration, blockchain technology must be embraced. Whether we like it or not (and most of us don’t), biometrics are here to stay.

As my own research documents, more than 1 billion people worldwide lack any form of legal identification. Obviously, this makes identifying individuals difficult, if not impossible. It also creates an industry for illegal documents (fake passports, for example) that are routinely used in the trafficking of individuals, including minors.

Each year, as many as 17,500 foreign nationals are trafficked into the United States. According to the Department of Justice, an estimated 200,000 U.S. children, many of whom lack proper documentation, are at risk of being trafficked into the sex industry. If a child without proper identification documents goes missing, how is one supposed to trace his or her whereabouts?

Again, by using biometrics to identify an individual, a “virtual identity” that exists solely on the digital ledger can be created. Paper documentation, easy to manipulate, is no longer required. Instead, metrics such as iris scans and fingerprints are used for identification purposes. Blockchain technology, immutable by design, could render forged documents obsolete. This is a technology that transcends borders. And victims of crime, even without traditional forms of identification, have a greater chance of being identified and assisted.

Although far from perfect, blockchain has the power to make the United States a safer place, with less illegal immigration, less trafficking, and less financial fraud. The Biden administration would do well to explore its potential. If implemented correctly, it can be used to protect the country as well as the American people.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.