Executive Summary

The emergence of blockchain holds promise for the federal government to foster trust and greater transparency about certain data activities; but the technology is not a panacea. Blockchain must be used responsibly and under the right circumstances. Some conditions are well-established for when blockchain technology might improve trust, but program administrators must weigh other relevant points about how and when to consider applying the approach.

Bringing Blockchain Into Government: A Path Forward for Creating Effective Federal Blockchain Initiatives considers seven blockchain projects underway in government in 2018-2019, including the project goals and the role blockchain plays. The examples clearly illustrate a range of potential use cases for blockchain technology in government, from health care to procurement actions.

Based on the lessons from the existing projects, the report concludes with five key considerations program administrators should weigh when determining whether projects should be pursued:

1. Does the blockchain offer a real benefit for information security, trust, or transparency?

2. Can blockchain be practically and efficiently applied?

3. What blockchain design is most appropriate?

4. Is the cost of applying blockchain merited relative to information gains?

5. Does the application satisfy applicable data sharing and confidentiality laws?

Policymakers can consider key opportunities – legislatively or through the federal data strategy – to encourage further exploration and adoption of blockchain when appropriate and useful. Other opportunities may arise to encourage more collaborative interagency efforts or consortia that seek to address common challenges facing government agencies, for example, related to procurement or human resources.

More specifically, emerging opportunities to develop strategies for productive blockchain uses could occur with actions under the Federal Data Strategy [1] in coming years. Congress could also take steps to identify and target resources for blockchain adoption.

Whether blockchain will ultimately prove a success in government is yet to be seen. But for now, the prospects are a welcome development.

Contents

• Introduction

• Identifying Federal Blockchain Projects

• Policy Implications and Next Steps

• Appendix I: Identified Federal Blockchain Projects

Introduction

Blockchain is touted for its potential to improve the trust and transparency of data- based transactions between individuals and organizations. Popularized through currency exchanges like Bitcoin, Litecoin, and Peercoin, the technology offers promise when strategically applied in the right contexts. But what are the conditions under which blockchain makes sense and how might the technology be useful when applied in government? Traditionally, organizations operating their own, individual IT systems seeking to collaborate must reckon with challenges including reconciliation of information, identifying a single source of truth, and facilitating accountability. Blockchain technology addresses these challenges by providing a technical foundation that supports the execution of shared business processes in a way that no single entity controls the entire system. Government has an inherent need to build, sustain, and protect public trust in information and systems. In some situations, blockchain may help enhance this trust.

As the name connotes, blockchain is a chain of blocks. Each block represents a record or set of data, that is linked to others with cryptography. Each block contains some accessible information to provide public knowledge about the action, time, or some other feature of the record, creating a public transcript of how the information develops, known as a “ledger.” As transactions enter a blockchain system, a consensus model is employed to determine which next set of valid transactions, or block, should be appended to the ledger. Because consensus is established over a distributed network for nodes, there is no central authority that governs the validation and inclusion of new transaction data. As most blockchain software is open source, the rules that adjudicate the blocks and included transaction data are available for review. For public blockchain systems, the data itself is available for direct observation by anyone who cares to access it. This makes open blockchain datasets perceived of as more reliable to a greater number of users.

Because blockchain users produce data with transparent approaches that enable accountability and information is rapidly available to users, sometimes including the public, blockchain can promote a culture that fosters information sharing. This may even achieve economic efficiencies relative to other approaches. That can mean vast improvements in data production, sharing, and use, with all the societal benefits that go with open data.

In practice, blockchain has been most widely adopted in society for cryptocurrencies because the markets rely on transaction-level knowledge and decentralized governance, since the currencies are not recognized by existing national governance structures. Countless other characteristics likely affect society’s ability to adopt the approach in other domains.

In 2017, blockchain projects were included as part of the federal government’s “Emerging Technologies Atlas.” [3] A federal working group also launched to study how blockchain could be applied in government. [4] But past attempts to deploy blockchain in government operations have met mixed results, including some outright failures. [5] This suggests the conditions in government agencies must enable the use of the technology, along with agency specific factors that contribute to success.

This white paper explores successful ongoing projects to begin identifying how program administrators might promote effective adoption and use of the technology, as well as improving understanding the conditions under which it should be considered for practical use.

When to Use Blockchain

Established levels of consistency or constant business processes, and lower levels of agility make for ideal circumstances where blockchain can be applied. Since blockchain systems are decentralized, some level of initial consistency is necessary to avoid redesigns that affect every node in the system as response to changes made within blockchains. If processes change rapidly, blockchain applications may be too burdensome to satisfy operational needs for agility, since accumulated information may not be easily migrated into a new business process.  

The design of blockchains is especially relevant for certain conditions that affect public data sharing in established business processes, including:

1. Establishing trust when individuals or entities may otherwise lack confidence in data accuracy

2. Maintaining quality when threats of tampering or adjustments to information may affect data reliability

3. Facilitating transparency when individual actors lack trust in a central entity or repository, or when transparency is needed for other accountability purposes

When these conditions are necessary or important, consideration must then be given to whether blockchain achieves the goals in the particular context. If trust has already been established in the system of contributors, if all information is provided by a single user, or if the volume of data shared is high, traditional approaches may satisfy needs more efficiently than blockchain.

The blockchain data architecture can also be a vehicle for bringing a wide circle of actors into projects that collect data in a standardized, open formats and make information widely available. Blockchain can expand the community that may participate in an open data project.

The smallest data-sharing circle is entirely within the organization. The next larger circle exists when there has been a formal standard setting process and a community is persuaded to use the standard. That process is positive, but costly in terms of time and effort to develop the standards, promote the usage of it, and then ensure there is a consistent and reliable flow out of the originating organization.

With the blockchain data structure, an industry leader or government agency can set up a blockchain and define the terms of contribution and how to enforce those terms. The resulting data comes from many organizations and is every participant’s (and possibly the public’s) to use. This is an attractive model and closely resembles the model employed by Wikipedia. It builds data capital for the whole community without benefiting any one actor.

Accessible and open data is the direction society is moving, and this should also include government data. Blockchain may help take it there.

Blockchain and Open Data

The time-ordering imposed by the blockchain data structure and the openness of the data can draw a large community of users together into a joint effort. Blockchain uses its unique data structure, software-based parameters, and open accessibility to draw people with common interests together, channeling their efforts into a data collection project that is reliable because it is reviewable. Given open source software design, people can check for themselves that the data accepted by a blockchain fits known parameters.

Organizations exploring private blockchain networks may consider pinning the state of their network to a public network, which enables stronger capabilities for identifying potential malicious activity. Such an application can restrict participation for a “permissioned” blockchain project to parties that they are willing to trust while also including a mechanism for stronger accountability. The trade-off is clear and sensible: they accept a little risk in the form of trust extended to specifically selected and approved partners, and this allows them to dispense with the cost and complexity of a more crypto-secured system.

Participating in a blockchain project gives every participant access to some data. In economic terms, the access is non-rivalrous, where no participant is uniquely advantaged (or disadvantaged) by others’ participation. This creates a sharing culture and a system of positive incentives. For a variety of reasons from reputational opportunity to pure altruism, people will contribute time and effort—and data—to projects that benefit their communities and the public.

While blockchain promotes different forms of transparency, information and transaction, its applications may not be appropriate for highly sensitive or confidential information. When applications rely on sensitive data, systems define use cases that articulate the role for transparency in regards to actions across the system, rather than making the data widely available.

Identifying Federal Blockchain Projects

There are few operational blockchain projects in the U.S. federal government today and even fewer met the selection criteria for this study. Blockchain projects considered for inclusion were those (1) operating at proof-of-concept phase, (2) with publicly available summary information (i.e., unclassified), and (3) with staff or stakeholders able to participate in interviews. Through document searches, dialogue with experts, and other exploratory research, the Data Foundation sought to identify every federal blockchain project that met these criteria, excluding law enforcement and national security projects.

The Data Foundation’s research identified eleven federal blockchain projects that met the first two selection criteria. Each operates within a different context and employs different capabilities for blockchain. The Data Foundation requested interviews with experts related to each of the identified blockchain projects. Semi-structured interviews were conducted with experts on seven projects from November 2018 to February 2019 to provide background, describe key enabling features, and identify challenges experienced for each.

Review of Seven Blockchain Projects

Of the projects reviewed by the Data Foundation, each has a shared goal for applying blockchain technology to practical, real issues. In many cases, the blockchain application solves some problem that otherwise presented a barrier to sharing or analyzing information. Because of that, each of the projects holds potential to both solve government challenges and to familiarize leaders in the sponsoring agencies with potential benefits to blockchain use.

1. FDA Health Data Exchange

The Food and Drug Administration’s (FDA) Oncology Center of Excellence operates a program called the Information Exchange and Data Transformation (INFORMED) project. INFORMED is described by the FDA as “an incubator for collaborative oncology regulatory science research focused on supporting innovations that enhance FDA’s mission of promotion and protection of the public health.” [6]

In order to understand and study cancer, researchers need access to sensitive information about cancer patients. If the research is successful in the near-term, participants in research may personally realize the benefits of the research, even during the course of their treatment course. The benefits are clear. But cancer patients may also want to participate directly in how their data are used, including realizing monetary rewards, philanthropic benefits, or simply protecting the purposes for which the data can be used.

ROLE OF BLOCKCHAIN 

INFORMED’s blockchain health data exchange allows participants to access certain health data through the internet, subject to restrictions on data uses. But the data can be offered for sale or trade by the data providers if they choose to make the information available in this way.

INFORMED’s blockchain project is being built with IBM on a platform called Hyperledger. The data controls and exchanges will be executed through smart contracts posted to the blockchain. Smart contracts are a computer protocol that validates and enforces transactions. Pilots of the system have been conducted with simulated data, but few technical details are currently available, including the likely rough terms of the smart contracts.

DISCUSSION 

INFORMED is the most ambitious blockchain project in the federal government assessed by the Data Foundation in terms of its goals and breadth. It would enable patients to directly control data about their health conditions and treatments, using that control to give or sell their data to researchers—or to refrain from doing so.

Some aspects of the INFORMED blockchain project were, however, also less clear for making an assessment of the initiative. Noted above, information about the smart contracts were largely unavailable. In addition, some technical aspects suggest limits in the scalability of the system.

For example, specified nodes would approve participants’ ability to publish to the blockchain which can enhance data quality but introduces additional volume to the system that can be difficult to manage.

If the INFORMED blockchain framework is fully developed, the backing of the FDA could produce a viable, secure blockchain for health data exchange. This is information that could be shared in a more traditional setting without blockchain, though likely at great cost and burden. Though the application of blockchain enables greater and more rapid control of the personal data by data owners.

2. GrantSolutions Grants Blockchain

GrantSolutions is a shared service for grant administration run by the Administration for Children and Families in the U.S. Department of Health and Human Services. [7] It supports other federal agencies manage the full lifecycle of grants, including planning for awards, receiving applications, granting awards, and concluding projects. [8] GrantSolutions serves ten different agencies and roughly half of all federal grant programs. The model allows customer agencies to use and pay for the particular software-based services that best meet their particular grant-making needs.

The world of federal grants is vast and complex. There are 26 major grant-making agencies that issue more than $750 billion in grants to thousands of recipients across the private and public sectors, including states, localities, and other governmental entities. [9] Many grant-makers have limited or no access to information about related grants made by other related agencies. Grant recipients do not always know what other grants are received by units within the same jurisdiction or agency. As a result, both the grant recipients and the grant-makers may have inadequate records of grant allocations and uses.

ROLE OF BLOCKCHAIN

GrantSolutions’ blockchain effort captures standardized grant information so that both grant-making entities and grant recipients have access to information. In effect, the blockchain enables access that is not otherwise available. Grants have a number of commonalities that comprise a core set of data fields. A blockchain capturing the 50 to 75 data elements at the heart of each grant, particularly the “notice of award,” can act as a publication of broader information about grants to potential data users.

The application of blockchain by GrantSolutions is meant to reduce the application and reporting burden on grantees and to reduce overall data management and technology costs borne by government agencies.

The improvements in effectiveness and efficiency are garnered by recognizing the grant process operates like a business supply chain, where individuals can contribute at different stages to improve the available information and use the data as a shared resource.

GrantSolutions’ blockchain is built on the Hyperledger Fabric platform. Currently, each grant award occupies its own block, an anticipated 70,000 awards and blocks per year. GrantSolutions, which maintains the blockchain, allocates permissions for the blockchain, which limits who has authority to contribute to the system. It is anticipated that other agencies and organizations will be added as nodes in the GrantSolutions blockchain as they begin to participate in the project.

DISCUSSION 

When grant information is published in a standard format on an open blockchain, numerous communities, including grant-makers, grant recipients, oversight bodies, journalists, and the public will have access to more and better information about grants made by the U.S. government.

The GrantSolutions approach specifically highlights how blockchain can contribute to the creation and provision of open data.

As a lightweight, permissioned blockchain, the GrantSolutions approach limits the volume of information and the number of contributors, enabling a more controlled scalable approach. Given the need to only include permissions for those directly involved in federal grant administration or grant recipients, the constructed system could reasonably and rapidly be designed to cover the breadth of informational needs.

3. Treasury Department, Bureau of the Fiscal Service, Mobile Device Tracking

The U.S. Treasury Department owns thousands of IT devices (e.g., mobile phones, computers). Manually tracking each physical piece of equipment can be inefficient and expensive. To improve understanding and familiarity with blockchain technology, the Office of Financial Innovation and Transformation in the Treasury Department’s Bureau of the Fiscal Service is automating its mobile phone inventory.

ROLE OF BLOCKCHAIN 

In this project, each device is programmed to automatically record an event on the blockchain each time an employee uses an assigned cell phone. The devices are linked to owners by login IDs, so the pings tend to confirm that the devices are within the control of the Bureau’s employees. No longer do Fiscal Service Bureau staff have to manually locate equipment to ensure that it remains within the physical control of a Bureau employee.

If a piece of equipment does not report to the system for a given period of time, the state of the device is automatically updated to “inactive” on the blockchain. This provides the Bureau with a real time inventory of unused assets. Smart contract code also manages the transfer of devices from employee to employee. Peer-to-peer transfers are permanently recorded on the blockchain, eliminating the need for a third party to validate asset transfers and ownership.

This equipment-tracking blockchain runs on permissioned Ethereum, with blocks created about every five seconds. There are currently three nodes publishing blocks in round-robin fashion, all within the control of Bureau, running on an Amazon Web Service.

DISCUSSION

Given the Bureau’s aims to track devices at a relatively inexpensive cost and familiarize itself with blockchain, this project is highly focused. It is a permissioned, lightweight blockchain, with a limited universe of data publishers given it is currently only applied for devices owned by the Bureau.

The Bureau’s device tracking system could also handle a database system that does not use blockchain, but the added costs of using lightweight blockchain are minimal.

Thus, the efficiency benefits are clear, individuals are no longer individually tracking and monitoring each device manually for central reporting processes; the blockchain enables efficient, rapid feedback to protect government property and improve asset management.

4. FDA RAPID Program

The Real-Time Application for Portable Interactive Devices (RAPID), a blockchain project at the Center for Drug Evaluation and Research (CDER) and Food and Drug Administration (FDA), seeks to provide a technical solution to handle FDA’s requirements for real-time prospective adverse event reporting, data analysis, and information sharing for therapeutic drug interventions employed during public health emergencies. By vastly accelerating the capture, integration, and analysis of such data, drug safety surveillance at FDA can be conducted in an active ongoing manner that facilitates quick responsiveness by regulatory authorities and augments regulatory decision making. In this example, blockchain technology facilitates real-time safety and efficacy data exchange from outside organizations and agencies supporting the sharing of protected sensitive data from hospitals and other medical providers. Ultimately, it enhances the agency’s capability for bidirectional communication.

ROLE OF BLOCKCHAIN 

An example of a clinical setting envisioned for the project centers on a critically-ill patients arriving at hospitals with serious or life-threatening influenza virus infections during a pandemic. Clinical and laboratory data related to possible unintended harmful effects of antiviral drug treatments are compiled and submitted to the FDA. The clinical details of the manifestations and complications of the severe respiratory infections and the effectiveness and tolerability of the drug therapy are captured; however, the health information systems employed at different hospitals vary making data exchange difficult. A blockchain can be used to facilitate data sharing among hospitals, the public health surveillance community, and the FDA without requiring the data to go through any central-processing bottleneck and inform health offices and regulatory officials of important clinical problems caused by medical products.

Blockchain technology’s role in this data sharing system is to establish a shared infrastructure and establish common business processes across the consortium. In this case the rules that govern data access, so primary data goes on the blockchain. Rather, the transaction data contains the actions of each participant including the sharing, requesting, or granting access to data that has been contributed to the system, including high-level descriptors of data sets. This allows qualified data users to specify the data and level of detail they seek from the data holders. Permissions to access data are controlled by smart contract code integrated with off-chain components, facilitating the transfer of data directly among the consenting parties. This approach ensures all network-wide data-related actions are transparently visible to all participants of the system, a highly desired property during pandemic events where health care providers and the FDA are all seeking to understand how best to respond.

The project runs on an Ethereum-style blockchain employing a Proof of Authority based consensus model suited for private blockchain networks that require greater throughputs and immediate transaction finality.

It is well within the blockchain ethos to disintermediate a centralized institution. In this project, CDER and FDA may recognize that the better role is to oversee networked data exchange rather than to act as a warehouse and distribution center, particularly when doing so can facilitate the control of rapidly-outbreaking disease.

The shared infrastructure approach of this system, which is built on collaboration and transparency between entities that have a common public health goal.

DISCUSSION 

With the sensitive nature of data being exchanged, the system was fundamentally designed to ensure data privacy so that only authorized participants are able to view restricted data, but any participant can request access to data they do not have access to. By using smart contracts to model multi-level permissioned document sharing together with a purpose-built set of off-chain components, the system facilitates direct exchange of more sensitive data elements.

It is unclear whether the blockchain would or should be open to public inspection. Data flows about disease are surely interesting to communities beyond disease investigators, but there may be a number of risks from making fully open data of information about disease data exchanges. The FDA should investigate taking advantage of the large circle of collaborators that can be brought together to monitor disease outbreaks with this blockchain project.

5. HHS Accelerate

The Department of Health and Human Services (HHS) Accelerate project is a federal government acquisition system that applies a “distributed ledger,” as well as other cutting edge technological applications to improve timeliness of information about pricing, terms, and conditions for HHS contracts. [10] HHS has more than $20 billion in contracts each year, so efforts to improve efficiency could result in reduced procurement costs to the department.

The HHS Accelerate blockchain program is meant to accomplish three core goals. First, it aims to unify HHS purchasing power. The department’s vast number of vendors who receive billions in federal funds are currently coordinated through a variety of procurement processes. Bringing multiple acquisition processes together will position HHS to identify efficiencies and strategies for grouping contracts to achieve lower cost services for the agency. In other words, the system enables price- match guarantees similar to systems already in use in the private sector.

Second, the system aims to reduce vendor costs by eliminating certain administrative tasks. Each vendor working with multiple HHS operating divisions must file multiple reports and forms to satisfy the requirements of the contracts. The program will increase the efficiency of these filings, reducing vendor reporting burden. Finally, the program seeks to improve records about vendor behaviors. The project will create an unchangeable record of HHS’s transactions, likely improving compliance and monitoring of activities.

ROLE OF BLOCKCHAIN 

Blockchain provides the core infrastructure for HHS accelerate across five different contracting systems. HHS is able to use historical contract information and link to new vendor engagements to identify price variations. So, for example, if a contract identified a lower cost vendor in real-time for the same service or product the lower cost vendor is selected. Individual consumers are able to do this while shopping in stores and searching online for lower, competitive wages. The blockchain approach enables HHS to do the same for contracts.

Using a blockchain ledger, HHS acquisition staff can view how vendors interact with HHS, including financial records that are time-stamped, as well as other information provided for past contracts, such as reference checks and responses to Requests for Information. HHS Accelerate applies Hyperledger Fabric blockchain. [11]

DISCUSSION 

The overall result of HHS Accelerate is to generate efficiencies for the department. If successful, it will reduce data costs, improve procurement efficiency, and ultimately lower contract spending.

The application of blockchain for procurement mirrors systems in place in the private sector and enables more rapid insights that would likely not be otherwise accessible in the near-term.

6. Joint Chiefs of Staff 3D Print File Security

Additive manufacturing, or 3D printing, has the potential to streamline processes for supplying provisions and resources to deployed military units in the field. Rather than transporting individual military equipment parts that might be needed to be repaired or maintained, units could maintain 3D printers and raw material so that needed parts can be produced on site, on demand. As legacy weapon systems struggle with obsolescence parts, additive manufacturing can help these systems operate for longer periods of time.

Trust in the quality of the products from 3D printers will be essential for widespread applications. Units must trust parts are the same as those otherwise pulled off the shelf, and leaders must ensure parts satisfy needs for military readiness and safety of service members. At the same time, producers of military equipment will be interested in adequate compensation for their intellectual property related to the design of products.

ROLE OF BLOCKCHAIN 

3D-printed parts could allow manufacturers to reduce the tooling and warehouse space used to maintain weapon systems and shift the responsibility to the Department of Defense (DoD) for maintaining a secure digital library of parts. The Joint Chiefs of Staff J4 Logistics Directorate, along with military services, is working to apply blockchain to establish the provenance and security of 3D print files and to record file usage. The project envisions a direct, off-blockchain download of the files for printing parts, with provenance shown by on-blockchain transmission of file hashes that establish non-corruption.

The use of hashing to establish non-corruption creates a secure system, ensuring files maintain integrity when deployed to printers in remote locations.

Because of this structure, the blockchain channel is difficult to corrupt or overwrite. Thus, corrupting both the downloaded 3D print-file and the blockchain channel is nearly impossible. Meanwhile, access to the blockchain source can signal the use of a file so that vendors can be properly compensated for their designs. In sum, the blockchain facilitates both the sharing of the secure files with units on the ground, as well as knowledge about when a part is produced so government can appropriately pay manufacturers for their intellectual property.

The project uses a blockchain application, Veripart, designed by Moog. The blockchain protocols, GuardTime Federal and a private instance of Ethereum, were designed by GuardTime Federal. As a critical aspect of military readiness, access to write and view the blockchain is restricted by the DoD and limited to approved users for specified purposes.

DISCUSSION 

If successful in application, the project will enable not just improved readiness of military operations but could drastically reduce the costs of transporting and delivering military parts around the world. The application of blockchain is a critical aspect of ensuring vendors are appropriately compensated while fulfilling security objectives. Much information about this project will likely not be made publicly available, though the approach could conceivably be applied more broadly to other federal agencies with distributed operational needs like the National Park Service. The example suggests benefits can be extended to knowledge sharing about the blockchain use and value proposition based on the military experience.

7. General Services Administration – Multiple Award Schedules Distributed Ledger Technology Pilot

The federal government spends about $100 billion on IT systems per year, including more than $60 billion in contracts. To streamline purchasing, the General Services Administration (GSA) maintains pre- competed, government-wide acquisition relationships through a procurement program called the Multiple Award Schedules (MAS). MAS includes about $25 billion in contracts, a quarter of total IT spending. MAS is a contract vehicle covering 4,000 service providers, including original equipment manufacturers, service integrators, and value-added resellers.

For federal agencies, using MAS satisfies procurement rules, streamlines the establishment of terms and conditions, and helps agencies avoid potential bid protests, which can delay service delivery for government and the American public. In other words, using MAS speeds up acquisition, creates consistency, and lowers the prices paid by government purchasers.

ROLE OF BLOCKCHAIN 

GSA is piloting a blockchain-based system aimed at improving the MAS program by automating many of the manual processes associated with the proposal review and increasing access to information about master contracts for users and the public.

The basic unit of content stored in each block is a JSON data structure that includes contract data such as terms and conditions, metadata, and liabilities. Because vendors are registered through other systems, references to vendors on the blockchain include identity information. At the present time, the program contains only master contract information. In future iterations, it may include specific transactions under each contract.

DISCUSSION 

GSA’s blockchain application promotes transparency in two specific ways.

First, it ensures that the vendor and purchaser communities have the most recent contract information available. Contracts of this type are dynamic and iterative. Putting contracts on a blockchain provides vendors access to a reliable source for the latest MAS contracts and past terms or conditions for reference. Second, the blockchain application offers the public and officials conducting oversight access to the contracts to provide

Policy Implications and Next Steps

The seven blockchain projects described in this report each have different motivations, benefits, and, while not discussed, costs for application. The examples clearly illustrate a range of potential use cases for blockchain technology in government.

A few projects are well-formed, using the natural strengths of blockchain to bring a wider circle of actors into an open-data project. Others are modest efforts that will familiarize agencies with blockchain technology, informing future efforts that may use blockchain more extensively. Still yet others have grand ambitions that have not yet been fully realized given the early stages of the projects.

As policymakers and program administrators consider potential uses of blockchain in the future, five key considerations should weigh on whether projects are pursued:

1. Does the blockchain offer a real benefit for information security, trust, or transparency?
   The consideration of whether blockchain should be used can be well-justified when conceptually some information or data security gains are achieved, or alternately when improved transparency is needed about shared data because of gaps in existing trust. The application of a ledger enabling knowledge about data availability offers great potential for certain transparency gains that enable users to build and maintain trust in information.
   
   

2. Can blockchain be practically and efficiently applied?
   Existing data systems, motivation from public administrators, and appropriate legal authorities must be present to support the application to a system. Even with appropriate enablers, government’s vast IT systems may not always enable cost-effective application of the technology relative to other approaches, such as access-secured databases. Blockchain applications may be most efficient when scalability has been carefully considered, given that many public blockchain networks operate relatively slow timeframes (10s of transactions per second). The efficiency of scaling may limit whether networks are private or public, but in either case offer some trade-offs in security and transaction finality.
   
   

3. What blockchain design is most appropriate?
   Because one goal of a blockchain application can be to enhance and maintain data quality, officials must carefully consider the level of access to provide, which affects the blockchain design and its level of open-ness. In numerous applications for sensitive government topics, users may reasonably need to be approved for certain limited purposes while in other approaches the design could be public and open.
   
   

4. Is the cost of applying blockchain merited relative to information gains?
   Based on the reasons and the likely benefits of a blockchain application, officials should consider whether the cost justifies the benefit. While developing blockchain applications can be a low-cost endeavor in pilots and in well-developed IT infrastructure, for programs that currently lack inter- operability, existing data standards, or low trust, there will be real and practical costs of garnering support for the system among stakeholders as well as in developing and applying the blockchain.
   
   

5. Does the application satisfy applicable data sharing and confidentiality laws?
   Finally, government officials must take care to ensure applications of blockchain comply with existing data and privacy laws. Because of certain legal protections and guarantees of confidentiality, some blockchain uses may be inappropriate or merit additional restrictions on users and access.

As the federal government moves forward in developing a federal data strategy, consideration can be given to how blockchain might enable better recognizing data as a strategic asset for government. A blockchain can bring a wider circle of participants into a project that produces open data for public use.

That is a natural product of its traditional peer-to-peer configuration and the blockchain data structure. But care must be taken to ensure these uses are indeed responsible, and satisfy basic ethical, legal, and cost criteria.

Congress has also started to weigh in on potential strategies for promoting blockchain while ensuring responsible, appropriate application. [12] While the prospects of several pieces of legislation are unclear in the current Congress, a bipartisan dialogue continues about how to most productively move forward. The current projects underway in government provide some valuable insights about the opportunities.

Fundamentally, the blockchain data structure is a new avenue to open data that could lead to more, high-quality information available about some government policies and programs than ever before.

In practice, the federal blockchain efforts to-date across a wide range of policy domains show more modest use of the blockchain data structure, but one that can still produce important public benefits.

Encouraging greater use could be as simple as nudges from Congress or the Executive Branch’s Federal Data Strategy. Other uses could be spurred through more collaborative interagency efforts or consortia that seek to address common challenges facing government agencies, for example, related to procurement or human resources. Whether blockchain will ultimately prove a success in government is yet to be seen. But for now, applying blockchain for government programs and operations should be a welcome development when possible.

Appendix I: Identified Federal Blockchain Projects