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Blockchain and the Next Pandemic

Tech can’t solve all our problems. But with some, there’s huge benefits to be reaped.

Tevi Troy, Jeremy Epstein

It is no secret that the United States and the world were unprepared for the coronavirus pandemic. The U.S. approach—hoping we could track and trace the virus—fell short in the face of asymptomatic human-to-human spread. Our belief that we would have the right countermeasure in our strategic national stockpile at the right time was wishful thinking.

But these problems may not have been failures of technology so much as a failure of imagination about the right ways to use technology to cope with the devastating health, economic, and political effects of a deadly pathogen. Before the next pandemic, which will surely come, we should examine the failures of 2020 so as to prepare ourselves for a better response next time.     What we see is that the failed approach relied on government solutions. Moreover, it is apparent that one technology—blockchain—is well-positioned to fill the gaps that 2020 exposed.

Blockchain is the technology that enables Bitcoin and other crypto assets to operate. It works by using computer technology to “distribute trust.” No one person, organization, agency, or government controls the information involved. Instead, blockchain creates a “distributed ledger,” protocols for membership, and a consensus on those protocols. Because millions of people are involved in protecting and verifying this information, blockchain is unrivaled in the security it provides.

Blockchain could make a difference at nearly every stage of a pandemic. First, blockchain could help identify the extent to which a virus has spread. In the early days, the United States was handcuffed by the lack of a reliable test to determine who had the virus and who might be immune from it. The federal government insisted on developing its own test. Some laboratories were already working to develop new tests, but the federal government discouraged them from continuing that work.

The testing problem is still with us. Despite protocols requiring that everyone who approaches the President get a negative test beforehand, the President and some in his entourage—including, most recently, his chief of staff—came down with the virus. This likely means that either some of the tests did not work or that some of those who claimed to have been tested had in fact not been tested.

In either case, the problem was a lack of certification. A properly certified test would not have produced the false positives that enabled infected people to approach the President, and a better testing certification regimen would have ensured that anyone approaching the President had indeed taken the test. In both circumstances, the immutable characteristics of blockchain technology could have provided incontrovertible evidence of the efficacy of the test and the verifiability of an individual’s claim that he or she had taken the test and passed it.

The persistent testing failures have contributed to continuing challenges in preventing the spread of the disease. The two main ways to prevent spread are social distancing and a not-yet-ready vaccine. Blockchain can help in both of these areas. For instance, the rationale for social distancing is that we generally need to stay away from others because we do not know who might be infected. But if we knew which individuals had reliably tested negative, we could feel comfortable interacting with them at work, in a house of worship, or in a bar.

Blockchain-enabled certification could provide that certainty. By removing the need to “take someone’s word for it,” a blockchain-derived proof of test completion would negate the concerns of groups that an individual might be noncompliant while precluding a “guilty-until-proven-innocent” scenario among friends, colleagues, and co-religionists. And once a vaccine is deployed, people could feel similar comfort if they knew that someone was certified to have received an effective vaccine. Once again, blockchain-enabled certification is the best way to ensure that the right vaccine was indeed administered to the right person.

The novel coronavirus was not just a health scare, of course. It caused other systemic problems as well, including food and supply shortages. Everyone read about the dearth of eggs, toilet paper, and PPE in the early days. The reasons for the shortages involved poor planning, insufficient preparation, and the human tendency to hoard; but technology played a role as well.

Over the past forty years, retailers, especially grocery and big box stores, have transitioned to Just in Time Production (JITP). This important innovation has reduced wasteful and inefficient storage costs and generally increased profits while keeping products available to consumers. But in a crisis, “just enough” product becomes “not enough” product.

Blockchain can maintain both the efficiencies of JITP and the supply levels needed in case of emergencies. Blockchain-based supply chains could provide trusted evidence of resource availability, allowing JITP algorithms to update quickly to reflect new supply chain realities and more accurately forecast availability, controlling costs and keeping customers informed—thus reducing panic buying. Furthermore, manufacturers could know with 100 percent confidence that the masks or paper pulp would be out there. Similarly, consumers would know that the masks were manufactured in the United States, not by a China-based facility looking to make a quick buck.

A blockchain solution is far superior to the standard approach of government-imposed purchase limits or anti-price-gouging rules. We know that the market is the best mechanism for distributing goods across a complex and variegated economy, even—nay, especially—in times of crisis. Those who say “never let a crisis go to waste” tend to use these situations to increase government power. But those tactics don’t work to solve the problem and usually lead to bigger, more intrusive government. In contrast, a blockchain-driven marketplace like OpenBazaar would allow for the free exchange of goods at the market-clearing price, reflecting increased demand and reduced supply while ensuring that every citizen has the right to a minimum quantity of goods. This strategy could both solve the supply problem and avoid the common side effect of national crises: a permanently larger, more bureaucratic government.

This year’s election raised many concerns about the vulnerabilities of our voting system. Even though we appear to have been spared a long period of uncertainty a la Florida in 2000, the four-day waiting period for a decision did reveal multiple ways things could go wrong. Mail-in ballots can he hoarded or forged, voting machines can be hacked, and long lines at the polls can both spread the virus and deter citizens from voting. As the world’s flagship democracy, the United States has an obligation to ensure that its voting system is beyond reproach, Covid-19 or no Covid-19.

In contrast to some of our other suggestions, the blockchain-enabled way to solve this problem is not aspirational but is already available and successfully deployed. In one country, a government-deployed blockchain known as “X-road” ensures that all eligible citizens can vote securely, with full knowledge that their votes have been received and counted. As one friend described it, “We can vote from our phone in seven seconds from the back of the bus or the other side of the world in the time it takes Americans to figure out how to request a paper ballot.” The author William Gibson has said, “The future is already here, it’s just unevenly distributed.” He’s right: The future of voting is here. It’s just that it’s in Estonia.

One final systemic problem likely to persist after the election and the pandemic relates to our currency. The pandemic has revealed the discomfort felt by many people, not just committed germaphobes, with widely handled currency. Currency is handled on average fifty-five times a year. Consequently, paper money is dirtier than a public toilet, and may be able to retain and transmit a live virus for as long as seventeen days. Coins are even worse. With people wary of filthy currency and commerce down in any event, the United States has experienced a severe coin shortage.

Here is where blockchain’s original purpose, as the technology enabling Bitcoin, comes in especially handy. The pandemic could accelerate the move from handheld to electronic currency. The credibility hit taken by governments around the world for their poor handling of the pandemic could make it more likely that an electronic currency that emerges is a private cryptocurrency rather than a legacy government currency.

Over the past ten years, the value of each bitcoin has increased from $0 to over $15,000. With a guaranteed limit of twenty-one million bitcoins, that value is likely to increase as fiat currencies inflate their value away. And it’s not just Bitcoin. Zcash, perhaps the most privacy-protecting currency in the world, offers fully anonymous transactions. Decred offers faster transaction times. Dai, a so-called stablecoin pegged to the U.S. dollar, is backed by the cryptocurrency ether. Hundreds of other alternatives are emerging, each vying for its niche in the fully decentralized economy of the future.

In many ways the story of the pandemic has been one of dated technologies and government failures. But those very challenges and failures could point the way to more advanced private-sector technologies that can do the job better in the near-certain next pandemic. We could not only get better results in the future, but we could also break out of the unfortunate pattern in which crises lead to bigger government. Maybe we will even get to a place at which crises open the door to less government involvement.

Tevi Troy is a presidential historian and former White House aide. His latest book is Fight House: Rivalries in the White House from Truman to Trump. Jeremy Epstein is a twenty-five-year veteran of the tech industry, the author of three books on blockchain technology, and the co-Chief Investment Officer of the Crypto Futura Fund.