Save Billions by Using the Blockchain to Distribute Federal Disaster Relief Money

Adelle Nazarian of the American Blockchain PAC and Alex Allaire of the American Blockchain Initiative recently provided, in The National Interest’s Techland section, 10 substantive legislative proposals for the responsible development of digital assets.

The fourth of these, keeping in mind that fraud and the misappropriation of federal disaster relief funds are all too common, states that we would benefit greatly from creating a proof-of-stake blockchain platform to distribute federal disaster relief funds.

Todd White is the founder of, and Ralph Benko senior counselor to, the American Blockchain PAC.

How much would the blockchain save us taxpayers? “Billions and billions!” (H/t, Carl Sagan.)

The Washington Post has reported the U.S. Justice Department estimates more than $8 billion in alleged fraud just in the federal government’s coronavirus relief programs, bolstering companies that did not actually exist or wholesale identity theft by transnational crime syndicates to file for fraudulent unemployment benefits.

The problem is almost certainly worse. The Washington Post, again, reported the $6 trillion in loans, grants, checks and emergency assistance created “a unique and lasting strain” on ensuring the funds had been put to good use. And that “the money remains hard to track.”

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The real culprit? The federal government’s archaic financial infrastructure.

Most of us by now know that many roads and bridges, much of the electric grid, water and wastewater systems are dilapidated. Less well known? Many of our public financial systems are antiquated, too.

Blockchain-based enterprise platforms can be programmed to restrict disbursements to legitimate purposes, producing a tamperproof, easily audited record. Why hasn’t this been already adopted? Consider Sir Arthur C. Clarke’s Law: “Any sufficiently advanced technology is indistinguishable from magic.”

One of us worked in the U.S. Department of Energy back in the mid-1980s and observed the procurement of the agency’s first desktop computers. It felt somewhat like the scene in the 1951 movie, “The Day The Earth Stood Still” that depicted the trepidation of the Earthling civilians and soldiers surrounding the flying saucer that landed on the National Mall in Washington, D.C. Klaatu barada nikto!

Back during tech’s Cretaceous Period, a speechwriter to President Ronald Reagan told the story of when the president’s staff rolled an early PC into the Oval Office primed to send the first presidential email. The White House had put red (fittingly!) tape around the Enter button to show the president where to press Send.

Reagan turned to them and said presidential predecessor “Jimmy Carter told me not to push any red buttons!” Reagan, understandably, declined to press.

The pace of the federal government is reminiscent of that old “Speed Bump” cartoon of a wrinkled old snail telling a group of astonished young snails: “Then suddenly… whoosh! The glacier came out of nowhere and overtook all but the speediest of your ancestors ...!”

Hilarious. But the joke’s on us.

Our financial infrastructure is not designed to distribute billions, even trillions, of dollars of relief funds both fast and well. There is evidence that substantial bleed-out occurs for all federal emergency disbursements. It’s reportedly worse for foreign aid.

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Disbursements are right in the blockchain’s sweet spot. While it would not yet be a simple “off-the-shelf” purchase, a fraction of the lost $8 billion (or much more) devoted to R&D by such agencies as DARPA, NSF, NIST, the National Labs, NASA and other teched-up agencies and procurements at scale by the Department of Defense, General Services Administration and others would surely conjure the magic of the free market to produce a great, scalable blockchain platform.

The return on investment for the taxpayers and America? Immense.

That’s what happened with computer chips. NASA’s big purchases of semiconductor chips drove the industry’s costs dramatically down. Chips became so cheap they replaced vacuum tubes and printed circuits in everything from radios and TVs to computers, automobiles, airplanes and, well, just about everything.

How immense? Consider that today’s iPhone would have cost over $101 million to build in the year 1991. Now, there’s a supercomputer in every pocket.

Hope Reese, author of ”The Code: Silicon Valley and the Remaking of America,” interviewed at OneZero, pointed out how “the military spending and space program spending that started under [President Dwight] Eisenhower was the launching pad for Silicon Valley's rocket.”

The federal government as a market leader? Flunks the Libertarian Purity Test.

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And yet, Congress? Consider the massive savings to the taxpayer! Consider keeping America dominant on the commanding heights of one of the preeminent emerging technologies.

How? Put federal disaster relief distribution on the blockchain.