CZ & Elon Musk Advocate Blockchain Transparency in Government Spending
Key Takeaways:
- CZ & Musk came out with a suggestion for using blockchain to monitor all transactions made by the government in the name of controlling the state budget.
- Blockchain-based transparency solutions have gained interest due to growing global debt and inflation.
- Skeptics argue that blockchain for government spending could face corruption risks or implementation challenges.
The Rising Chorus for Blockchain Transparency in Government Spending
Rising global government debt, now exceeding $102 trillion according to the IMF, has become a critical issue worldwide. Public concerns about fiscal irresponsibility and unchecked money supply growth have fueled demands for greater transparency in government spending. Moreover, proposals for greater transparency have emerged, and governments appear to be considering blockchain as a potential solution. In this regard, one avenue reported by the news is on governments’ proposal to put all the public sector expenditure on a public blockchain.
Share of Global Debt by Country. Source: IMF
CZ Playing a Role in On-Chain Transparency
Changpeng Zhao (CZ) recently emphasized the importance of blockchain transparency in public spending during a major industry event. In giving his recent opinion, he said, “Unpopular opinion: All governments should track all their spending on the blockchain — an immutable public ledger. It’s called ‘public spending’ for a reason.” CZ advocates blockchain transparency, believing it can reduce corruption and mismanagement of taxpayer funds.
U.S. Federal Government Spending & Tax Revenue (Nov 2014 – Nov 2024). Source: Charlie Bilello
Immutable Boundaries of Blockchain Technology
One of the major reasons why using a blockchain is so attractive is that it is a system characterized by its unchangeability. Once you have written the transactions, the system will not allow you to modify or erase them. The embedded function of the blockchain technology guarantees that all the spending done by the government is perpetuated and available for public checkup. Just think, what if every government expense right from the awarded projects to the administrative expenditures were visible on a public ledger? At the same time, such a move toward transparency would significantly cut expenses and force the government to be truly responsive to its citizens. This could be a move toward ensuring that “public spending” truly lives up to its name.
Elon Musk and the Department of Government Efficiency (DOGE)
Despite his cautious nature, Elon Musk is also involved in the blockchain technology subject and is eager to find ways of its implementation through the Department of Government Efficiency (DOGE) in the USA. Musk’s division is rumored to be giving serious thought to using blockchain for keeping track of government spending, securing data, managing payments, and maybe more responsibilities like building management.
Aiming to Slash Trillions from Government Spending
Musk is known to have been very direct about this budget cut that he was aiming for, with his budget targets in the initial phase being a wide array of budgets which reached from the level of the deficit of around one trillion dollars annually to a decline of up to 6.5 trillion dollars each year. The more general objective of the DOGE initiative connects with Musk’s interest in pushing for more transparency in the government to ensure high standards of accountability. Musk’s method of making data more visible to those on the spending side by use of the blockchain concept is aimed at the core of the issue, that of the government being more inefficient.
DOGE’s Early Moves and a Memecoin Connection
Surprisingly, the Department of Government Efficiency has agreed to use ‘DOGE,’ coincidentally sharing the ticker symbol of the popular meme coin, Dogecoin. It is definitely a controversial practice, yet one that surely has added a sense of interestingness regarding the initiative. The value of Dogecoin jumped up by about 11% following the launching of DOGE’s home page. This association has piqued interest whether it was by design or coincidentally.
Historical Context: Fiscal Policy, Monetary Policy, and the Debt Crisis
This sudden struggle for blockchain transparency has also come on the heels of growing concerns about fiscal and monetary policies all over the world.
The End of the Gold Standard
In the year of 1971, ex-US president Richard Nixon declared the end of the gold standard by decoupling the US dollar from the gold standard. Initially, it was framed as a temporary solution to the problem of the dollar’s instability. As a result, there was no cap on the value of the euro. This amendment was the catalyst for imprudent financial decisions which have been the primary reason for the accumulation of debt by the US government estimating it to be well beyond $36 trillion.
Inflation and Dilution of Currency Value
When a government is given the freedom to spend in a manner it deems fit, there is hardly any doubt that it may resort to deficit spending that is financed through money printing. Rapid expansion of money supply caused by this phenomena results in a decrease in the value of the US dollar which means that it has less buying power. Currently, there is a heated debate, sparking interest in financial infrastructures and digital currencies. The supporter of the idea of a fixed-supply asset in the form of Bitcoin is convinced that it will solve this problem.
The Looming Treasury Crisis
In May 2023, a report issued by the US Congressional Budget Office warned that the US Treasury was on the path of budget shortfalls that could lead to exhaustion of funds and annual deficits would double in the coming decade. Even the dark side of the economy, such as alternative ways of money management through blockchain technologies, can be seen as an opportunity by others.
Other Voices in Favor of Blockchain Spending Transparency
Consider how influential these individuals are, even as others join them in advocating this issue to the government. Blockchain and some other major financial figures are on their part, seeking to explore other alternative means to control the money power.
Robert F. Kennedy Jr.’s Proposal
In April 2024, formerly a candidate for the top political office in the country, Robert F. Kennedy Jr. argued in favor of a transparent financial system. To be precise, he suggested that the Federal Budget be implemented through Blockchain by saying: “Every American can look at every budget item in the entire budget, anytime they want, 24 hours a day. We are going to have 300 million eyeballs on our budget. If somebody is spending $16,000 for a toilet seat, everybody will know about it.” Needless to say, budget transparency under public scrutiny would ensure greater accountability. The ones who share the view of the people who think the current government is spending more than enough of our money will obviously like the idea of an open financial system among other public systems. They will want to see the actual spending data from the government as it will be out of their own tax.
Fixed-Supply Assets as a Hedge
Inflation crisis victims usually find Bitcoin as the best alternative since it is a non-inflationary asset with a definite quantity. Trump once proclaimed the thought of remedying the national debt by paying it with Bitcoin. VanEck, the asset manager, has debated that by holding a Bitcoin strategic reserve, one could cut the national debt by 35% in 25 years. These perceptions still lie somewhere in the future and are not widespread. However, what they do is to acknowledge the potentiality of the blockchain technology as a solution to the debt crisis.
US government spending was out of control. Source: US Debt Clock
More News: Bitcoin Reserve Odds Surge
The Skeptics and Potential Pitfalls
However, even with many supporters, there are some that criticize the idea of blockchain for government use.
Issues Related to Corruption
It is evident that U.S. Senator Elizabeth Warren is strongly opposed to Dogecoin being manipulated by Musk, so she accuses him of allowing it to be a venue for corruption. She has offered to cut costs through other options, such as $2 trillion over a decade without affecting the programs that are essential. The problems are not fictitious, since the introduction of new technology is quite challenging in the implementation process, and corruption can always bug the most honest systems.
Practical Implementation
The use of blockchain technology for government spending brings a whole lot of challenges. Firstly, a suitable blockchain has to be chosen, then it has to be made compatible with the existing government systems, and of course, it has to be ensured that it is user-friendly, and the public has no problems accessing it. These problems push the idea of blockchain scale to their limits and real-world application for large scale government tracking. There are no current governments that have successfully implemented a fully operational system like this.
