What has happened?
The US Bureau of the Fiscal Service (BFS) has published five takeaways on blockchain.
What does this mean?
The BFS, an agency within the Department of the Treasury, explained on its website that it had worked on a proof of concept exploring blockchain technology, which helped it understand what blockchain technology can and cannot do.
The list is based on the lessons learnt during the proof of concept, which lasted for five months from October last year.
The first tip is to ask whether blockchain is the right tool for the project, which implies understanding the problem that needs resolving.
The BFS recommends asking the following questions:
- Do you need a structured central repository of information?
- Is more than one entity reading or writing transactions to a database?
- Is there less than total trust between parties/entities in the ecosystem? (for example, one user will not accept the “truth” as reported by another user)
- Are central gatekeepers introducing costs and /or “friction” when verifying transactions (for example, manual verification)?
- Are there routine or logical interactions that occur that could be programmed to self-execute (for example, smart contracts)?
If the answer to several of these questions is "yes", then "a blockchain solution may be worth considering".
The second tip is to interview a group of stakeholders to uncover pain and good points, which may otherwise have gone unnoticed.
The BFS also recommends documenting these pain and good points, to spot weaknesses and opportunities.
The third tip is to map businesses processes thoroughly, including questioning why things are being done, whether there are policy reasons behind certain steps, or whether certain system functionalities are being overlooked.
Asking these questions may help identify solutions without the need for any new solution (ie blockchain).
Next comes building a diverse project team, which should include representatives from across programme offices and IT, as well as blockchain fans and skeptics.
"Include both blockchain skeptics and non-technical people. A team comprised of only pro-blockchain people can be blinded by the hype and force a square peg into a round hole. Putting blockchain technology through a gauntlet to see if it reaches the other side is the best thing we can do to understand its usefulness," the BFS recommends.
The last piece of advice is to consider agency governance.
"There is no way to sugar coat it – agency governance processes can be time consuming. But preparing for and presenting your project in front of your investment review and technical review boards can bring to light perspectives or issues you haven’t considered.
"Building enough time into your project plan to present and explain blockchain technology in clear, easy-to-understand terms will help you plan for, and move through the process swiftly."
If you want to take advantage of blockchain's huge potential and disruptive impact, while avoiding falling foul of ever-developing regulatory and legal requirements, visit our Hogan Lovells Engage Blockchain Toolkit.