Why blockchain is bad for government?


Jul 6, 2022

Reading Time: 3 Min

On the surface, blockchain sounds like a great idea for government. A secure, decentralized ledger that can track anything of value – from money to votes – with complete transparency. But when you look a little closer, it’s clear that blockchain is not a panacea for government ills. In fact, there are some very real dangers that come with using blockchain technology in the public sector.

Here are four reasons why blockchain is bad for government:

1. It’s Not Truly Decentralized

Despite the hype, blockchain is not a completely decentralized technology. Sure, it’s decentralized in the sense that it’s not controlled by any single entity, but there are still a handful of powerful actors in the space.

For example, the Bitcoin network is primarily controlled by a handful of mining pools, which are groups of miners that pool their resources together to increase their chances of winning block rewards. These mining pools control a significant amount of hashing power on the network, and they have the ability to coordinate attacks and forks.

Similarly, Ethereum is controlled by a small group of developers and organizations that control the direction of the project. This includes the Ethereum Foundation, which controls a large percentage of the ETH supply, as well as major corporations like Microsoft and ConsenSys, which have a significant amount of influence over the network.

2. It’s Not Immutable

Another often-touted benefit of blockchain is that it’s immutable, meaning that once something is written to the blockchain, it can’t be changed. This is true, to a certain extent. However, it’s important to note that blockchain is only as immutable as the consensus protocol that it’s built on.

For example, Bitcoin’s consensus protocol is based on Proof-of-Work, which is a system that makes it very difficult to change the contents of the blockchain. However, there have been a number of instances where the Bitcoin blockchain has been “reorganized,” or changed, due to a 51% attack.

In a 51% attack, a group of miners that control more than 50% of the network’s hashing power can coordinate to double-spend coins, or reverse transactions. This has happened on a number of occasions, and it’s a clear demonstration that even Bitcoin’s blockchain is not immune to changes.

3. It’s Not Private

Another common misconception about blockchain is that it’s private. This is not the case. In fact, blockchain is one of the most public technologies in existence.

All transactions that are written to a blockchain are visible to everyone on the network. This means that if you’re using a blockchain to store sensitive data, like medical records or financial information, that data is available for anyone to see.


Other related questions:

Q: How does Bitcoin affect the government?

A: Bitcoin does not directly affect the government, but it could have indirect effects. For example, if more people use Bitcoin instead of traditional currency, then the government would receive less tax revenue.

Q: Can the government use blockchain?

A: Yes, the government can use blockchain.

Q: Will blockchain disrupt government corruption?

A: There is no doubt that blockchain technology has the potential to disrupt many industries, including the government. The decentralized and transparent nature of blockchain could help to reduce corruption and improve the efficiency of government operations.

Q: Why don t governments like cryptocurrency?

A: There are a few reasons why governments may not be fond of cryptocurrency. First, cryptocurrency is often associated with criminal activity, due to its anonymous and decentralized nature. This makes it difficult for governments to track and tax. Second, cryptocurrency is a potential threat to the existing financial system, which is heavily regulated by governments. Cryptocurrency could upend the current system and give rise to a new, unregulated one. Finally, cryptocurrency is a volatile asset, which makes it a risky investment.


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