Over the last year, I have had the privilege to lead the California Blockchain Working Group, which delivered its report to the Legislature in early July. Established by AB 2658, the 20-member Working Group comprised experts with backgrounds in computer science, cybersecurity, information technology, law, and policy. We were charged with drafting a working definition of blockchain, providing advice to State offices and agencies considering implementation of blockchain platforms, and offering guidance to policymakers to foster an open and equitable regulatory environment for the technology in California.
What did we learn? Enough to make a few outright recommendations as well as identify areas where further research is warranted.
A few guiding principles: Refine the application of blockchain systems first on things, not people. This could mean implementations of blockchain for tracing food from farms to stores to reduce the economic and human harm of food-borne illnesses; reducing paperwork and increasing reliability of tracing vehicles and parts from manufacturing floor to consumer to future owners or dismantlers; improving workflows for digitizing, cataloging and storing the reams of documents held in the State Archives.
Similarly, blockchain solutions could be implemented for public vital records, such as birth, death and marriage certificates or real estate titles without risk of compromising private information. Greater caution should be taken in applications that affect public service delivery to populations in precarious circumstances, such as the homeless or unemployed. Overarching problems to address, especially for sensitive records, include the need for reliable, persistent digital identification and the evolving requirements for cybersecurity.
These are all worthy goals, but even after a year of leading a group of professionals devoted to studying and implementing such technology, I still wonder at the luster blockchain holds in the public imagination. Is the potential impact of blockchain equivalent to that of the internet itself? Or is it a significant but passing fad, to be superseded by the next innovative database architecture?
Blockchain has gained notoriety as the technology underpinning Bitcoin and other cryptocurrencies, payment systems used not only for illicit trafficking of drugs and weapons but also for aid to refugees or startup investments. Beyond its high-profile applications in the field of fintech, blockchain – and Distributed Ledger Technology (DLT) more broadly – offer potential benefits to individual consumers, patients and learners.
Part of blockchain’s attraction is the ethos of personal control over data that enhances privacy and reduces the power of traditional institutions. Such platforms may provide fine-grained control over the data I share—my age, when needed to buy alcohol, but not my height or home address; proving completion of relevant coursework to demonstrate certain job skills without turning over my entire academic record. And with this control, such platforms reduce reliance on intermediaries—educational institutions, banks—and the attendant fees that frequently accompany their services.
As the fifth-largest economy in the world, the most populous state in the U.S. and home to the most innovative and influential technology companies, California is well suited to take a reasoned position on blockchain across a wide range of potential applications. States like Wyoming, New York and Illinois have forged ahead with their own task forces and working groups related to blockchain regulations, with varying levels of recommended openness or strict scrutiny regarding potential regulation. California’s leaders deserve credit for taking a thoughtful, evidence-based approach to creating new frameworks for implementing an emerging technology with potentially wide-ranging impact.
The Working Group’s final report, Blockchain in California: A Roadmap, avoids the magical thinking or technological solutionism that sometimes attends shiny new tech ideas. Blockchain won’t cure Covid-19, fix systemic racism, or reverse alarming unemployment trends. But if implemented conscientiously on a case-by-case basis, it could make a dent in improving health outcomes, increasing autonomy for property owners and consumers, and alleviating some bureaucratic practices that may be a drag on the economy. And those are contributions we can all welcome.