How Can Congress Support Blockchain Innovation?

TL;DR

Congress can support blockchain innovation by focusing on concrete public benefits, educating lawmakers before controversies arise, and creating a legal environment that does not unintentionally block new applications. The technology could improve transaction costs, records, identity control, government transparency, savings, and services for underserved populations, but policymakers must understand that blockchain extends far beyond cryptocurrency.

Transcript

Hi, everyone. Welcome to the A16Z podcast. This episode continues our podcast road trip to Washington, DC, which took place earlier this month in conjunction with our annual Tech Policy Summit. Today's topic is all about the blockchain in Congress, moderated by A16Z policy team partner Matthew Colford. We're recording from Capitol Hill. I'm here wi... Read More

Key Insights

• Congressional understanding of blockchain is limited because many lawmakers recognize Bitcoin or online currencies but remain unfamiliar with the broader technology. Members with engineering or computer science backgrounds and younger congressional staff are more likely to understand its concepts and help communicate them internally.
• Benefit-focused communication is more effective than technical instruction for explaining blockchain to policymakers. Detailed descriptions of nodes, timestamps, matching, and permission levels can lose an audience quickly, while specific examples show why the technology matters without requiring lawmakers to understand every underlying mechanism.
• Blockchain is broader than cryptocurrency because distributed ledgers can support records, identity systems, value transfers, savings tools, and public services. Treating the technology only as a platform for Bitcoin can prevent policymakers from recognizing applications that address costs, transparency, fraud, and individual control of information.
• The Congressional Blockchain Caucus is a formal group that gives lawmakers a forum for education and collaboration. Its recognized status allows members to organize briefings and reserve Capitol rooms while giving blockchain-related proposals more institutional weight when they are presented to committees or government agencies.
• Tamper-evident scheduling is one proposed government use for blockchain. A distributed ledger could timestamp changes to Veterans Affairs schedules and identify who altered a record, addressing situations in which people secretly changed schedules and making the history of modifications easier to examine.
• Lower transaction costs could enable small-value financial activity that existing systems make impractical. The discussion highlights cheaper debit-card clearing and allowing gig or piece workers to set aside 25 cents after completing a drive or project, potentially making incremental retirement saving more feasible.
• Consumer-controlled identity could change the relationship between citizens and institutions. Individuals might own their information, grant government limited access, keep government-held records or university transcripts accessible through one portal, and review timestamps showing when agencies or other authorized parties examined their data.
• A deliberate legal ecosystem is necessary because blockchain applications may conflict with laws created for older systems. The technology affects privacy, taxation, regulation, identity ownership, and government access to information, so policymakers must consider new frameworks rather than merely applying existing rules without examining their consequences.

Questions & Answers

Q: What does Congress understand about blockchain and cryptocurrency?

Many members of Congress have some awareness of Bitcoin, cryptocurrency, or online currencies, but fewer understand blockchain as a broader technology. Members with engineering or computer science backgrounds are more likely to grasp it. Congressional staff members, particularly younger staff who have lived through recent technological change, can also help explain the subject to representatives and senators.

Q: How should blockchain advocates explain the technology to lawmakers?

Blockchain advocates should begin with concrete benefits and recognizable applications instead of lengthy technical explanations. Describing how nodes communicate, how records are stamped, or how permission levels work can quickly lose a congressional audience. Examples involving fraud prevention, lower transaction costs, savings, identity control, and public records make the technology relevant without requiring detailed engineering knowledge.

Q: What is the Congressional Blockchain Caucus?

The Congressional Blockchain Caucus is a formalized group through which members of Congress can educate colleagues about blockchain. Its recognized status allows participants to reserve rooms and organize briefings in the Capitol. It also provides a forum for developing ideas and gives blockchain-based proposals additional credibility when members present them to committees or government agencies.

Q: Why does Congress need blockchain education before a crisis occurs?

Early education helps lawmakers understand blockchain before a positive or negative event demands an immediate response. If members already know the technology's broader uses, they have less reason to fear it and can place individual incidents in perspective. They can also recognize alternative policy options instead of encountering blockchain for the first time during a controversy.

Q: How could blockchain help prevent changes to government records?

A distributed ledger could create timestamps showing who touched a record and when the change occurred. The discussion uses Veterans Affairs scheduling as an example, noting concerns about people secretly changing schedules. A blockchain-based record could preserve a traceable modification history, making unauthorized activity more visible and providing committees or agencies with a concrete anti-fraud application.

Q: How could blockchain reduce financial transaction costs?

A blockchain-based encrypted network could potentially lower the cost of transmitting and clearing value, including transactions initiated when a customer swipes a debit card at a retailer. Lower costs could also support very small transfers, such as allowing an Uber driver or piece worker to save 25 cents after completing each drive or project for future retirement.

Q: How could blockchain give people more control over personal data?

Blockchain could support a model in which citizens own their information and grant government limited access to examine it. A person might access government-held records or university transcripts through a single portal and see a timestamp when someone viewed the information. Such a system would raise significant questions about privacy, government use, and the broader social contract.

Q: Why might existing laws obstruct blockchain innovation?

Blockchain applications can intersect with current rules governing taxation, privacy, identity, financial activity, and government access to information. Innovative projects may unintentionally violate laws designed for earlier technologies if policymakers do not create an appropriate legal ecosystem. Deliberate policy work is therefore needed to permit useful experimentation while addressing consumer protection, institutional responsibilities, and legitimate regulatory concerns.

Summary & Key Takeaways

• Many members of Congress have limited familiarity with blockchain and often associate it primarily with Bitcoin or cryptocurrency. Technical explanations of nodes, permissions, and distributed ledgers can quickly lose policymakers. Advocates therefore find it more effective to demonstrate practical benefits through concrete applications that lawmakers, staff members, agencies, and constituents can readily understand.

• The Congressional Blockchain Caucus provides a formal forum where members can organize briefings, reserve rooms, educate colleagues, and present policy ideas with greater institutional credibility. Its bipartisan leaders want Congress to understand blockchain before a positive or negative event forces action, reducing fear and helping lawmakers place future developments in a broader context.

• Potential applications include tamper-evident scheduling records, cheaper value transfers, small retirement contributions, identity confirmation, consumer-controlled information, centralized access to government-held records, and visibility into who accesses personal data. These possibilities intersect with privacy, taxation, regulation, and existing law, making deliberate policy work necessary if experimentation is to proceed without accidental legal conflicts.