Connecticut Government Embraces Bitcoin Technology In Spite of Ambivalence toward Digital Currency


Executive Brief

Anyone who avidly follows digital currency news had to be both surprised and pleased to see the recent announcement from Tierion regarding its data collection partnership with the State Government in Connecticut. Most observers know by now that Connecticut has been anything but welcoming to Bitcoin, so the announcement that officials were going to utilize the services of a company that relies on Bitcoin blockchain technology was the last thing anyone expected.

The planned partnership calls for Tierion to collect data from a technology company survey and store it using the company’s blockchain database. It is hoped that the utilization of this secure and transparent database structure will assist the State in alleviating any future concerns about the integrity of the survey data it collects for policy-making purposes.

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For anyone familiar with the way in which State government in Connecticut has reacted to the rise of Bitcoin, some surprising news arrived this week when it was announced that State officials would be relying on Bitcoin technology to manage new survey information. The plan calls for government survey data to be recorded and stored using Bitcoin’s blockchain database structure. This is to be accomplished in concert with Tierion, a company that specializes in collecting and storing data using Bitcoin blockchain.

On August 17, 2015, Tierion announced that it has been contracted by the Connecticut government to aid officials in surveying 200 of the top technology firms in the state. The company’s job is to gather responses to survey questions and then create the blockchain receipts that are needed for timestamp and content verification of each respondent’s answers. The reasoning behind the use of this technology is simple: it will help the state avoid potential disputes over the data.

Connecticut officials see this technology as a way to resolve one of the most controversial issues involved in any government survey at any level – namely, the fact that various special interests are always eager to dispute survey findings when those findings conflict with certain political agendas. This type of dispute often occurs when survey data is used in support of various spending proposals, for example. In the past, the absence of any real verification mechanisms has made those debates more difficult to resolve.

By using blockchain technology, however, the government in Connecticut is wagering that it can create a data set that may just be impervious to such political wrangling. Since Tierion’s system will create a blockchain receipt to catalogue and verify every single survey response, it will be possible for virtually anyone to provide verification of the survey results. That can help to eliminate the need for so-called non-partisan third party verification by outside experts who almost invariably end up being accused of partisanship anyway. With blockchain, the data speaks for itself.

The reason this came as such a shock to so many of the people who pay close attention to news about digital currency had more to do with the state involved with the project than with the proposed details of the plan. After all, the planned use of this blockchain technology makes perfect sense. Bitcoin has already proven the efficiency and transparency of this database paradigm, so it was only a matter of time before some government somewhere realized its benefits as well.

The shock is that it was Connecticut that would be one of the first to see the value of the system. After all, this is the same Connecticut that has seemed on more than one occasion to be somewhat resistant to the digital currency concept. At best, the state has seemed perplexed by the rise of Bitcoin, and has not clearly enunciated any coherent policy for dealing with its existence. Instead, it passed legislation that deals only with the process involved in licensing, leaving all outstanding questions on the subject for the state Banking Commissioner to decide.

There is good cause for digital currency proponents to view that law and the discretion granted to the Commissioner, with more than a little skepticism. After all, the legislation allows the Commissioner to determine which Bitcoin businesses need a license, what bonding requirements they need to meet, and empowers him to set forth any conditions he wishes to impose on those companies before he grants them the licenses they need. Critics have noted that all of those discretionary powers granted to the Commissioner stand in stark contrast to how traditional money transmitters are dealt with when seeking licenses in the state. For those traditional companies, the rules are actually defined in the state’s statutory scheme.

This is a state that has seemed to demonstrate little affection for digital currency, and that has actually gone out of its way to treat Bitcoin very differently than it treats similar businesses. And yet, there is no denying that Connecticut has at least seemed to grasp the potential upside to the technology that Bitcoin uses. That should be heartening for digital currency supporters who can perhaps see some glimmer of hope that the state legislature in Hartford may learn enough from this experience to eventually revisit those licensing laws.

The views expressed by the authors on this site do not necessarily represent the views of DCEBrief or the management team.

Author: Ken Chase

Freelance writer whose interests include topics ranging from technology and finance to politics, fitness, and all things canine. Aspiring polymath, semi-professional skeptic, and passionate advocate for the judicious use of the Oxford comma.

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