US State Department Seeks Blockchain Boost Amid $10 Billion Reboot

Could blockchain underpin a U.S. State Department overhaul? Members of the department and blockchain startups are encouraged after a recent forum.

AccessTimeIconOct 12, 2017 at 10:00 a.m. UTC
Updated Sep 13, 2021 at 7:01 a.m. UTC
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The U.S. agency that oversees foreign affairs is looking seriously at blockchain.

That's according to John Sullivan, U.S. Deputy Secretary of State, who encouraged the State Department and its private sector partners to embrace the technology as a way to "advance diplomacy and development objectives" at the Blockchain@State forum held Tuesday in Washington, D.C. 

Speaking to an audience comprised of other government agencies, members of the private sector and non-profits, Sullivan went so far as to suggest blockchain could be a key part of the massive restructuring of the department proposed by Secretary of State Rex Tillerson, who leads the agency.

Sullivan told attendees:

"This forum has implications for our ongoing redesign efforts. We're interested to learn whether blockchain technology can have direct applications to many of the key features of our proposed redesign."

Tillerson first proposed the redesign, which seeks to save as much as $10 billion over five years, in September. And while Sullivan acknowledged blockchain isn't a "panacea" to the agency's problems, he emphasized that he's keen to see the technology used to improve internal processes and capture efficiency gains.

The forum explored numerous ways in which blockchains might improve core agency mandates such as administering foreign aid, promoting democracy and improving governance and political institutions in U.S.-allied countries.

With that, Sullivan (who was appointed by President Donald Trump and sworn in this May) urged the agency and its stakeholders to think hard about how the technology could be deployed in a diplomatic context to strengthen national security and promote greater economic prosperity.

Identity is in

And at least some industry participants are taking Sullivan's encouragement to heart.

For instance, Joseph Lubin, founder and CEO of ConsenSys, the New York-based blockchain development firm that co-sponsored the event, argued that a blockchain-based self-sovereign identity scheme could have an immediate and far-reaching impact toward the agency's goals, especially those that have to do with humanitarian aid. 

Lubin told CoinDesk:

"Once people own their own identity, then they're less enthralled to their governments and less subject to adverse situations like natural disasters and wars. So, if someone is ejected from their country, if they've already established self-sovereign identity they can reconstitute their life."

Other speakers at the event agreed, with Ashish Gadnis, CEO of BanQu, a provider of identity and financial services in developing countries, highlighting the importance of end users owning, controlling and possibly monetizing their personal data.

"All the aid we give to refugees is one-sided. This means that they are recipients of transactions from people like us, yet ... they don't exist because they don’t own or control their own data," Gadnis said.

Sullivan also gave credence to the idea that blockchain could combat pervasive challenges in the area of foreign aid distribution such as corruption, fraud and the misappropriation of funds. He continued, saying these same challenges might not only be solved in aid distribution, but also in other areas, such as eliminating the corruption in government's control over land title registries in the developing world.

While the concept of a blockchain-based self-sovereign identity has been a favorite of the industry, it's a particularly hard problem to fix – one that some believe depends on how advanced smart contract technology becomes, another area Lubin called attention to.

In his mind, constructing international frameworks and treaties using smart contracts could serve as a means to combat the "free rider" problems associated with agreements like the United Nations or NATO, both of which deal with member countries frequently failing to fulfill their financial commitments with little consequence.

U.S. wakes up

Yet, the State Department's forum comes amid increasing interest by government agencies throughout the world to understand and harness the technology. While some governments have moved to ban cryptocurrency and the tools that have come from it, most are taking a more open-minded approach.

"Blockchain technology is on the move around the world, so it is, therefore, essential that we better understand this cutting-edge technology as it becomes more ubiquitous in our economy," Sullivan said, highlighting ongoing distributed ledger projects in Estonia, Georgia, Dubai and Singapore.

Sullivan's bullish remarks, coupled with growing interest from the State Department and other agencies within the U.S. government, are being well-received by the blockchain community.

Not only was ConsenSys a presence at the forum, but distributed ledger consortium R3, enterprise blockchain firm BitFury and a handful of industry startups were in attendance.

"We're particularly excited that the U.S. is waking up, big time, and realizing that this is a transformative technology," said Lubin, adding that he hopes the country will emerge as a critical agent in advancing the technology worldwide.

Lubin said:

"There are other smaller players who are embracing this technology strongly, but we do want to see America get out in front of this and transform society with it."

US passport via Shutterstock


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