Brian Forde, who previously served as the senior advisor at the White House Office of Science and Technology Policy, recently came on record claiming that bitcoin technology could become a cornerstone of governance and public policy. Forde no longer works for the White House and is now the Massachusetts Institute of Technology’s director of digital currencies, but his views are widely respected in government circles.
So far, governments have approached bitcoin cautiously. Generally, governments do not consider bitcoin a genuine currency but instead an asset of value that is worthy of legal protection, and often subject to taxation. For now, it seems that most governments have not felt threatened by bitcoin’s potential to offer an alternative government-free currency solution, though attempts to regulate bitcoin have been on the rise.
Forde’s comments, keeping in line with many recent comments by leading investors and business leaders, have generally focused more on bitcoin as a technological innovation, rather than as a currency or even investment vehicle. Many leaders have been rightly impressed by bitcoin’s ability to be produced and regulated at relatively low costs by the bitcoin community itself. Many innovators and other leaders are now looking for ways to tap into the innovations spurred by bitcoin.
Forde notes that the low-cost, open-source protocol of bitcoin reaches out specifically to the people who need the government the most, including the poor, entrepreneurs, and even government officials themselves, many of whom are struggling with security issues. The potential applications of bitcoin is nearly limitless, and could address vital issues and needs for the aforementioned communities.
There are even hopes that bitcoin related technology could be used to create highly secured documents, such as tax forms and security clearance forms. Basically, a bitcoin like system could be set up to authenticate users and to transfer documents. Indeed, a bitcoin-based “social security card” could be created to give people a secure digital identity.
Forde also notes that bitcoin eliminates double-spending and is essentially a network of transactions. Bitcoin is able to track every transaction ever made and even the anonymous location of all coins in existence. Before the invention of bitcoin, monitoring transactions at such a scale of specificity required vast investments of labor, hardware, and money.
Bitcoin has dramatically lowered the cost of doing so, and many financial professionals are predicting that bitcoin will revolutionize the traditional banking model. Forde believes that bitcoin could be used to reach out to the billions of poor people who lack access to traditional banking services by offering low cost payment and transfer options. The potential for bitcoin-based technology to be used in poverty alleviation and empowerment has been noted elsewhere.
With public sector debt approaching absurd levels in many countries, figuring out ways to cut costs and increase efficiency as well as effectiveness could prove to be vital for governments. Further, growing online security threats are now threatening the national security of countries like the United States. If bitcoin-based technology can increase security, it could quickly become a very valuable tool for the government.
For now, governments likely won’t rush to adopt bitcoin-based technologies en masse. However, entrepreneurs and investors have been sinking increasing amounts of money into the bitcoin sector, and that will likely lead to the development of new technologies and services. This, in turn, will help the whole bitcoin and bitcoin tech ecosystem grow, and as the ecosystem grows the chances of government adoption will increase.
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