Jack Solowey, a policy analyst at the Cato Institute's Center for Monetary and Financial Alternatives, recently highlighted the potential of blockchain technology in strengthening U.S. national security. Speaking to Federal Newswire, Solowey stated that blockchain technology can serve various purposes beyond its known payments-related functions. He emphasized that blockchains can protect sensitive information from authoritarian regimes, including recordings of pro-democracy statements from Hong Kong and testimonies of Holocaust survivors.
"The open and auditable nature of major public blockchain ledgers provides opportunities for forensic investigation and pattern analysis to help identify activity by threat actors," said Solowey. "In addition, blockchains can help facilitate fast and secure cross-border payments to U.S. allies during times of crisis when traditional institutions are under duress. For example, Ukraine received support in cryptocurrency when its traditional banking system was under stress following Russia's invasion. Lastly, in addition to payments, blockchain technology can be used to secure important information in a censorship resistant format."
According to PWC, blockchain is a technology that records transactions across a peer-to-peer network. While cryptocurrencies like bitcoin are electronically stored on blockchain ledgers, the applications of this technology extend beyond cryptocurrency. Potential uses include voting systems where constituents could use a code to cast their ballot for immediate verification and healthcare where providers could share encrypted information without privacy breach concerns.
In recent times, blockchain technology has played a pivotal role in supporting humanitarian efforts in Ukraine. Following Russia's invasion of Ukraine, many Ukrainians found themselves unable to access their banks, as per a YouTube video posted by Binance, the world's largest crypto exchange. Alexander Bornyakov, Ukraine's Deputy Minister of Digital Transformation, said in the video that on the first day of the war, "the banking system completely shut down." To combat this issue, Binance Charity partnered with international NGOs to launch a crypto-to-cash assistance program. This initiative enabled displaced refugees to spend money received through donations without having to pay bank transfer fees or navigate bank shutdowns. A volunteer mentioned in the video that while traditional banks processed donations slowly, "technical superiority" is one advantage of blockchain-powered crypto donations which allows faster processing and distribution.
A 2023 report from Nasdaq underscored speed and accountability as reasons more philanthropic organizations are adopting blockchain technology and cryptocurrency to enhance their efficiency. The report noted that crypto's "revolutionary features," powered by blockchain technology, enable donors to trace their donations thus increasing accountability and allowing "smoother operations" across different regions. The report concluded, "For philanthropic organizations, it is no longer a question of if they’ll start accepting crypto donations, but when."
The U.S. Department of Homeland Security (DHS) acknowledges the diverse applications of blockchain technology across multiple sectors of the economy on its website. DHS stated that using blockchains could potentially enhance transparency in public service operations and increase visibility in supply chains. Furthermore, DHS suggested that blockchains could be used to tackle forgery and counterfeiting of documents and verify the authenticity of photos or videos.
Solowey's research at the Cato Institute primarily revolves around financial technology, decentralized finance, and artificial intelligence, as per the institute's website. Before joining the Cato Institute, Solowey served as an attorney in Hunton Andrews Kurth LLP's cybersecurity group. His insights have been featured in several outlets including Barron’s, CoinDesk, Cointelegraph, and Law360.
