Home Former White House Advisor Explains Why Bitcoin Should Become Official

Former White House Advisor Explains Why Bitcoin Should Become Official

This post appears courtesy of the Ferenstein Wire, a syndicated news service. Publishing partners may edit posts. For inquiries, please email author and publisher Gregory Ferenstein.

Bitcoin, the digital currency infamous for wild swings in value and black market transactions, could have profound implications for the future of public services. Tech optimists at the highest levels of government are exploring how the same technology that makes bitcoin anonymous could make government services less bureaucratic and more secure from hackers. 

I spoke with Brian Forde, MIT Media Labs’ new director of digital currency and former senior advisor at the White House Office of Science and Technology Policy, at the Atlantic Aspen Ideas Festival to discuss bitcoin technology and how it could eventually become a cornerstone of modern governance. 

See also: Braintree Betas Bitcoin For U.S. Merchants

His perspective could be our best indication yet that the technology may, in fact, see bona fide and official adoption someday. Entrepreneurs may also want to note that some of Forde’s insights on government use of bitcoin could apply to private operations as well. 

Biting Off Bitcoin

Over the last few years, Bitcoin has slowly gained mainstream acceptance, expanding from the hobby of libertarian digital activists to the portfolios of billionaire Silicon Valley investors. But Bitcoin and its associated cryptographic technology has largely been viewed by governments as a dangerous technology in need of regulation.

See also: Bitcoin Receives Nod From Financial Sector In Coinbase Funding Round

Noted investor and Twitter philosopher Marc Andreessen has championed the idea that bitcoin’s “blockchain” technology, a sophisticated public ledger of transactions, could prove much more useful than the currency itself. Yet, there’s been little, if any, indication that senior members of American government are taking this optimistic view seriously. 

Forde also sees potential in this newfangled digital currency. When I spoke to him, he explained various scenarios illustrating some of the potential benefits for governments, including the following: 

Bitcoin’s Tech Could Have Big Impact On The Most In Need

Digital currencies have immense potential to improve human welfare by strengthening the capacity of governments to deliver more responsive services and secure the rights of their citizens to property, identity and increase financial inclusion… And because it is an open-source protocol for innovation, a wide range of services and products can be built by entrepreneurs and non-profits on top of it. 

In other words, the major benefactors of bitcoin technology are the folks who need government the most—financially beleaguered citizens, public officials targeted by foreign hackers, or entrepreneurs who need agencies to get their business paperwork approved.

Basically, any piece of official documentation, from liquor licenses to medical transcripts could be made portable and secure.

Bitcoin’s Value Is More Than Currency

Digital currencies like bitcoin are the network of transactions. If you think bitcoin is just for money transfer, that’s like thinking the internet was only built for email—today we know that internet is used for so many more applications. The true innovation that bitcoin solved was the elimination of the “double-spend.”

Forde is talking about the blockchain, the principal technology underlying bitcoin, which allows users to verify whether a digital piece of content is authentic. The blockchain acts as a public ledger of all transactions. 

Bitcoin transactions are logged publically and distributed throughout a network of nodes that produce the currency. That structure verifies the authenticity of transactions. But it’s become broadly accepted as an ownerless and hacker-resistant alternative to traditional third-party verifiable sources, such as banks or notary publics. (For a full explanation of the blockchain process, see this link.) 

The blockchain could make public services much more efficient, since there would be no need for banks or regulation agencies to check for forgeries, or what Forde called “the double spend.”

A Way To Reach Out To “The Unbanked”

More than 2 billion adults around the world do not have access to a bank account. Without a connection to the financial support services that typically accompany formal bank accounts, the unbanked have very limited access to the savings and borrowing mechanisms necessary to drive broad-based economic growth.

Forde imagines bringing “the unbanked” into the economic fold through super-efficient money transfers (like SMS). Credits for food or other services could be given in similar ways without the need for complex bureaucracies. 

Bitcoin Use Could Boost Security

Today we practice a lot of authentication theater. Your government-issued identity, for example, starts out in a database of a government agency. It’s then printed out in the form of a social security card, driver’s license, birth certificate or passport…. $24 billion in identity theft occurs annually because corporations treat your social security number as a user name and a password.

He see bitcoin technology as a way of mitigating some of those risks. Its structure inherently allows for uniqueness between blockchains, and its built-in authentication could obviate the need for security IDS from central government databases. 

A user’s bitcoin-like ID could function like a social security card, and it would be globally recognizable and interoperable between all sorts of government services. 

Governments Are Interested, But Not Committing

Similar to CEOs of large companies and non-profits, I’ve found officials in governments around the world interested in learning about the technology and how they can apply it to address the social issues affecting people in their communities.

“Interest” is a vague word, but use of such non-committal terms is no surprise. Senior government officials are often mum about real intentions around anything considered experimental. 

So there’s no telling whether we may see bitcoin technology stripping away layers of government bureaucracy any time soon. If it’s in the works (and that’s a huge “if”), it would take years to see the light of day. 

However, entrepreneurs should note that some of the reasons governments are examining bitcoin could apply to their operations as well—including security, expediency, a way of reaching out to people who would rather not use a bank account—or don’t have one to rely on—and other reasons. 

Plus, if the White House eventually pursues bitcoin in a meaningful way, entrepreneurs who have already started claiming their stake in this uncharted territory could find themselves in a good position. They might even help pave the way for the government to improve its services—which benefits everybody. 

For more stories like this, subscribe to the Ferenstein Wire newsletter here.

Photos by Antana and by btckeychain 

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Gregory Ferenstein
Staff Writer

Former Staff Writer for ReadWrite. I started my career as a freelance writer in 2009 covering business innovation, did peer-reviewed research on Silicon Valley,(2016), architected bills in Congress (2017), and ran economic field experiments (2019).

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