Blockchain technology development firms and infrastructure providers along with Bitcoin mining firms are starting to be funded by federal agencies in the US such as the Department of Homeland Security (DHS).

According to sources including Nextgov, various Blockchain companies including BlockCypher received Small Business Innovation Research grants from DHS to demonstrate the potential of Blockchain in record keeping, identity protection and the creation of immutable ledgers for data storage.

Building ecosystems

More to that, the General Services Administration (GSA) is also actively investigating the potential of Blockchain and smart contracts technology in automating existing processes and operations that require significant amounts of manual labor and approval.

Specifically, many government agencies across the world in regions including South America and Asia are utilizing Blockchain technology to automate the real estate industry, by establishing an immutable ledger based on the Blockchain which sellers, brokers and buyers can access transparently.

At the moment, GSA is leading initiatives that could lead to increased development activity around Blockchain technology and its industry. Earlier this week, GSA's Emerging Citizen Technology Office lead Justin Herman stated at a conference that by creating Blockchain-themed communities and ecosystems for developers, enthusiasts, companies and investors, the organization aims to test the applicability of Blockchain in a wide range of scenarios and existing platforms.

Facilitation of transactions

Some of the many applications GSA and its researchers are looking into is Blockchain’s ability to automate data-reliant processes such as the facilitation of federal funds and transactions, as well as passport issuance and visa verifications.

At the conference leading Blockchain organizations, consortia and government officials including Coin Center and 100 federal managers that have presented over 100 different applications of Blockchain technology in government participated. There Coin Center research director Peter Van Valkenburgh stated, "If you're not doing something that involves accumulating and sharing and disseminating data that everyone needs to agree on, you don't need this at all," emphasizing that Blockchain technology can only be efficiently and securely implemented if strong security measures are maintained.

Thus, in consideration of Blockchain technology’s early phase in development and the lack of commercial success, GSA representatives told Nextgov in an interview, that it is not yet ready to endorse or advocate for the technology yet.

However, as Coin Center’s Valkenburgh stated, the vast majority of companies within the Blockchain sector and the multi-billion dollar companies that have invested in Blockchain service providers and Blockchain consortia, have struggled to understand the Blockchain as a technology and the necessity of certain core infrastructures that are required to set up Blockchain platforms efficiently.

Still, federal agencies including the GSA, DHS and Health and Human Services Department will continue to actively investigate into the potential of Blockchain by hosting conferences, hackathons and providing grants to innovative startups.