An official from the U.S. Treasury has written an optimistic article on the blockchain, calling for more relevant use cases, proofs of concepts and pilot projects with the technology.
Craig Fischer, who serves as program manager for the Office of Financial Innovation and Transformation (FIT) within the Treasury’s Bureau of the Fiscal Service, wrote an article in the Journal of Government Financial Management [PDF].
In his article Fischer writes about the potential that the blockchain can deliver, its ability to eliminate the ‘middle man’ and how it effectively reduces the amount of time and money it takes to process electronic transactions.
The magic primarily resides in the technology’s innovative way of validating transactions and achieving network consensus.
He adds that the technology is gaining a lot of interest because it can help to reduce fraud and error while enhancing security at the same time.
As the financial management community begins to peel back the layers of this technology and understand its applicability and uses, we have an opportunity to tackle some of our most pressing challenges.
- reduce fraud and documentation errors that contribute to improper payments;
- provide for a more robust and real-time audit trail;
- combat cyber crime;
- better manage and track both physical and digital assets, such as equipment and software licenses;
- address the challenges faced related to intragovernmental differences; and
- safeguard digital identities to better serve the public.
Fischer also states that the financial management community should take note of the promise that the distributed ledger holds for improving efficiency, transparency and security, adding that:
We must start developing relevant use cases, proofs of concepts and pilot projects. But testing is only the start of the solution.
At the beginning of October, the U.S. Treasury’s FIT office announced a pilot program to track physical assets such as computers and smartphones on a blockchain.
John Hill, the assistant commissioner of FIT stated:
There are many exciting innovations coming out of the commercial sector that can be applied to federal financial management. I hope that these two pilot projects identify the opportunities where the innovations will have the most impact on efficiency, accountability and customer service.
FIT’s blockchain project will enlist the help of ‘a contractor to develop a prototype using blockchain, or distributed ledger technology, to track and manage physical assets (for example, computers, cell phones, and the like.)’
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