While the risks and benefits of AI in government are taking center stage at the White House and on Capitol Hill , another tech industry has been working behind the scenes to help make the government work better: crypto.

Numerous scandals have tainted the reputation of the crypto industry, but some lawmakers still see the potential for blockchain technology to improve the provision of government services. Lawmakers who are interested in modernizing government and reducing the size of the administrative state should not ignore blockchain and should push the passage of simple pieces of legislation promoting the deployment of blockchain technologies in government.

In the simplest terms, a blockchain is a decentralized digital ledger that records information across many computers in a way that ensures the data cannot be retroactively altered. Blockchains are best known for underpinning cryptocurrencies such as bitcoin, but its applications are far more extensive. The decentralized and cryptographic nature of a blockchain makes it highly secure and transparent, as altering any single record would require the alteration of all subsequent blocks and the consensus of the network majority.

One area primed for blockchain-enabled improvements is federal disbursement. In 2022, the federal government made approximately $247 billion in improper payments, bringing the total amount of improper payments to $2.4 trillion over the last 20 years. Blockchain technologies have the potential to reduce the amount of wasted federal dollars in two ways.

First, on the disbursement side of the equation, smart contracts and other tools could be used to build regulations into code reducing the likelihood of human error. No matter how good the disbursement systems are, some funds will always be improperly distributed. The harder part of this equation is identifying and clawing back improperly distributed funds. Blockchain could help with this. After payments have been made, records of transactions kept on transparent and immutable blockchains could streamline auditing and recovery by giving enforcement officers a clearer view of the entire disbursement process.

Second, the potential benefits of blockchain are not limited to finance. Digital identification, certification validation, supply chain and procurement management, and even voting are all areas that could be improved or simplified through blockchain-based technologies. While blockchains are not always the best choice, any aspect of the government that involves the storage and validation of information should be reviewed to determine whether a distributed ledger could improve the effectiveness, transparency, and security of government operations.

A new piece of legislation from Reps. Larry Bucshon (R-IN) and Lisa Blunt Rochester (D-DE) would make a significant step in harnessing the potential of blockchain tech. The Deploying American Blockchains Act of 2023 mandates the secretary of commerce to champion the use and application of blockchain technology, reflecting a strategic move to place the United States at the forefront of this digital revolution. Notably, the legislation underscores the importance of blockchain and distributed ledger technology in a variety of sectors, ranging from cybersecurity to healthcare, highlighting its versatility and transformative potential.

The bill's provisions are wide-reaching and forward-thinking. They encompass establishing best practices, developing policies to mitigate risks, and promoting the technology's stability and security with an eye toward ensuring that the U.S. remains a key player in the evolution of technology. With regard to the public sector, the bill would require the Department of Commerce to lead the rest of the government in reviewing processes and deploying blockchain technologies.

Recognizing the importance of this bill, the House Energy and Commerce Committee reported it out to the full House of Representatives unanimously.

The ultimate goal of implementing emerging technologies such as blockchain into government is to radically modernize the way citizens interact with the state, reducing the size and cost of government. There are already places in the world where citizen’s interactions with the government are almost entirely digital, streamlining administration and enabling the government to serve its citizens more efficiently than under a bloated analog bureaucracy.

Many conservatives in government have already taken the first step toward this future by thinking about the ways in which technology can improve government. Now it’s time to take action, pass legislation such as the Deploying American Blockchains Act, and begin the transformation.

Luke Hogg is the director of outreach at the Foundation for American Innovation, where his work focuses on the intersection of emerging technologies and public policy. You can follow him on X at @LEHogg.