The world of audit and accounting
is about to witness a sea of changes in the coming years. Well, I might be late
in writing but Blockchain and Bitcoin are now part of the U.S. government policy
framework and parking facility. Yes, there is dramatic change happening in the world
of Bitcoin where a significant policy framework is getting into play. The idea
of putting all U.S. government spending on a blockchain is definitely bold and
would revolutionize transparency, accountability, and efficiency. If
implemented correctly, it could reduce fraud, streamline audits, and increase
public trust in government spending. However, there are also
challenges—scalability, privacy concerns, and resistance from entrenched
interests who benefit from the current system.
In a world increasingly driven by
technological innovation, government transparency remains one of the most
pressing challenges. Recent proposals by Elon Musk and Coinbase CEO Brian
Armstrong to place all U.S. government spending on blockchain could be a
game-changer. With the U.S. government spending an estimated $6.9 trillion
annually, moving these transactions to a decentralized ledger could provide
unparalleled security, transparency, and efficiency. While resistance is
expected from those who benefit from the current inefficiencies, implementing
blockchain technology could eliminate waste, reduce fraud, and help rein in
deficit spending.
1. Enhanced Security and Fraud
Prevention
Currently, U.S. government
spending records exist in an append-only format that makes it difficult to
track and verify individual expenditures. Blockchain technology would enable
automatic tracking of transactions and real-time fraud detection. For instance,
a recent investigation uncovered 62 contracts worth $182 million dedicated
solely to "administrative expenses," including $168,000 for an
Anthony Fauci exhibit at the NIH Museum. With blockchain, such expenditures
would be easily flagged and reviewed.
2. Greater Transparency and
Public Accountability
Government spending databases are
notoriously difficult to navigate, making it nearly impossible for taxpayers to
scrutinize spending. Blockchain technology would allow instant searches and
tracking of expenditures, giving the public a clearer picture of where their
tax dollars are going. In a time when government trust is at an all-time low,
blockchain adoption could restore faith in public institutions.
3. Reducing "Ghost
Beneficiaries" and Fraudulent Payments
One of the biggest financial
inefficiencies in government spending is improper payments to ineligible
recipients. In 2022 alone, improper Social Security payments amounted to $13.6
billion. Blockchain could eliminate these "ghost beneficiaries" by
ensuring that aid programs, pensions, and Social Security payments are only
made to verified and eligible individuals. Smart contracts could automate
verification processes, significantly reducing fraud and administrative costs.
4. Cutting Unnecessary
Spending and Deficit Reduction
If the U.S. government wants to
eliminate deficit spending, it must cut $5 billion in spending per day.
Currently, the government spends 44% of GDP per year—the same levels seen
during World War II. By bringing inefficiencies to light, blockchain could help
policymakers make better decisions on spending cuts. A recent analysis found
that $322 billion of taxpayer money has gone to various 501(c)(3)
organizations, with a total of $724 billion in government contributions.
Greater transparency would allow taxpayers to question these expenditures and
demand accountability.
5. Automated Audits and Cost Savings
Blockchain technology could
streamline financial audits by automating tracking and verification processes.
Currently, audits require extensive manual labour and are often conducted long
after the spending has occurred. With blockchain, audits could happen in real-time, preventing waste before it happens. Many large banks and corporations
have already implemented blockchain solutions for cross-border transactions,
with 56% of businesses integrating blockchain into their operations as of 2024.
The U.S. government could benefit from the same efficiencies.
Conclusion
At the same time, one will find resistance, particularly
from those who enjoyed inefficiencies The proposal to place all U.S. government
spending on blockchain could transform the way taxpayer money is tracked and
managed. By ensuring security, transparency, and efficiency, blockchain
technology has the potential to reduce waste, eliminate fraud, and help curb
deficit spending. While resistance from entrenched interests is inevitable, the
long-term benefits far outweigh the challenges. As technology continues to
disrupt traditional governance, those who embrace change—both policymakers and
investors—stand to benefit the most.
Very soon other countries will adopt and at the same time many countries and many government departments and employees of the U.S. will feel the hit of such transparency and audit mechanism. By 2030, Deutsche Bank estimates there will be over 250 MILLION blockchain wallet users.
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