Is Elon Musk plotting the mother of all blockchains?

Elon Musk, the world’s richest person, is said to believe blockchain technology can boost government efficiency. Last week, he reportedly met with representatives of public blockchains to explore the use of distributed digital ledgers in his new Department of Government Efficiency (DOGE), Bloomberg claims, though nothing has been announced publicly. 

Still, if Musk does successfully apply blockchain technology to some part of the US government — whether DOGE or some other agency — what would it mean for the global blockchain industry? 

Would it inspire other governments to follow suit? Might the sheer scale of it become a game changer, a watershed moment for the global blockchain movement?

There are good reasons to believe that public, tamper-free digital ledgers could help track government spending, secure data and perhaps even make payments. But technical, political and educational obstacles surely remain.

Cointelegraph sought to unpack some of the questions raised by these recent reports.

Would it even make a difference?

Assuming one were to put the accounts of one or several US agencies or departments on publicly accessible, immutable digital ledgers, would that even make a difference in terms of government efficiency?

Boris Bohrer-Bilowitzki, CEO of layer-1 blockchain Concordium, told Cointelegraph:

“The right chain could certainly help streamline internal networks, revolutionize the government contracting process, and open a pathway to improved international payments and trade finance without going down the route of a central bank digital currency.” 

He added that the efficiency gains could be significant because new processes and structures could be built upon the technology, “allowing for new savings down the line that aren’t really possible with current databases.”

“Blockchain technology exists that could allow government agencies to record their spending on an immutable digital ledger. It’s more than feasible,” John Deaton, managing partner at the Deaton Law Firm, told Cointelegraph. He said it should not only save money but would “reduce rumors, speculation, conspiracy theories and untruths while restoring public confidence and reducing corruption.”

Musk’s recent blockchain discussions were wide-ranging, according to Bloomberg, envisioning multiple use cases for the technology, including:

• Tracking federal spending

• Securing data

• Making payments

• Managing buildings

The report also acknowledged that applying blockchain to an enterprise as vast as the federal government was “an untested concept.”

Where might be a few good places to begin? Deaton pointed to the US Department of Defense, which has numerous departments within it that he says could benefit from blockchain technology, particularly for supply chain tracking, which would help prevent fraud and misuse.

The Internal Revenue Service could utilize it for tax collection, he added. Medicare and Medicaid spending would benefit too, along with other entitlement disbursements such as welfare, Social Security, military retirement payments, federal pensions, disability payments, etc.

Moreover, automated payments via smart contracts could be implemented, “reducing human error and improving efficiency,” Deaton continued, adding: 

“Imagine real-time tracking of foreign aid by utilizing smart contracts for automatic release of funds when certain conditions have been met.”

Ernst & Young (EY), a multinational professional services partnership, has been working to bring blockchain technology to the public space for several years now. It even built a product specifically for that purpose called Public Finance Manager (PFM).

“The idea is to be able to track the flow of funding and verify the outputs of public investment,” Paul Brody, principal and global blockchain leader at EY, told Cointelegraph. PFM has been implemented by a number of global agencies, as well as the city of Toronto.

Related: Can the law keep up with Musk and DOGE?

A blockchain can provide proof and verification at each step in the funding and spending process, bringing “a higher level of accountability into the procurement process — literally tracking every single dollar — and making it easier to link spend to results,” said Brody. 

“I think the biggest ROI [return on investment] long-term solution comes from government procurement,” though implementing blockchain for some other uses, like document notarization, may be easier to do. “We already have a really compelling use case for smart contracts in private sector procurement.”

Working with clients like Microsoft, EY was able to cut the cost of contract administration by as much as 40%, Brody noted. “They [blockchains] automatically enforce key business terms like discounts and rebates.”

The reality, he stressed, is that government spending dwarfs everything else, and so “the impact and social benefit of automation, rigorous enforcement, efficiency and accountability are multiplied many times over at scale,” continued Brody.

But surely there are impediments that will need to be surmounted?

“It’s not the technology that’ll hold back the idea,” commented Deaton, who was the Republican Party candidate for the US Senate from Massachusetts in 2024, ultimately losing to Elizabeth Warren. Deaton added: 

“Career politicians will likely fight this tooth and nail. They don’t want the public to be able to see how every penny of taxpayer money is being spent.”

More education will probably be needed before blockchain can actually improve transparency, efficiency and trust in US government operations, Naseem Naqvi, founder and president of the British Blockchain Association, told Cointelegraph. Citing the US Congressional Blockchain Caucus (2023), he claimed that fewer than 20% of Congress members engage in blockchain-related policymaking.

“For the USA, the first challenge — and opportunity — lies in informed education of policymakers on blockchain’s transformative impact,” Naqvi added.

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The stakes could be enormous. “The lack of transparency in public spending results in an estimated 2%–5% of the world’s GDP — approximately $1.5 trillion to $2.6 trillion — being lost annually,” the British Blockchain Association leader said.

The US, in fact, has been a relative latecomer in exploring the benefits of blockchains in a government setting.

More than a dozen countries — including the UK, China, India, Estonia, the United Arab Emirates and Germany — have already put forward national blockchain roadmaps, Naqvi continued. “The UAE’s Smart Dubai project is saving the government $3 billion annually, eliminating 25 million man-hours and 411 million kilometers of travel processing every year.”

Meanwhile, Estonia has built its entire government infrastructure on blockchain, Naqvi recounted:

“Over the past decade, it [Estonia] has issued more than 400 million digital signatures, saving 1,400 years of working time and 2% of its annual GDP.” 

From healthcare to property registries, digital courts, taxation, e-voting and even e-Residency applications, “Estonia is setting a global standard,” Naqvi asserted.

Supercharging the blockchain sector

Still, the whole world seems to be closely watching each move the latest Trump administration is making. Estonia’s efforts are commendable, but they simply don’t command the global spotlight.

A project like the one Musk may be exploring, by comparison, has the potential to “supercharge the industry” while encouraging “more brilliant minds to focus on blockchain solutions,” said Concordium’s Bohrer-Bilowitzki. “It’s a non-partisan space with incredible potential to bring people on both sides of the aisle together to push the tech forward.”

“If the US government were to do this, it would be a powerful message that would spark similar actions around the world,” EY’s Brody predicted.

“There’s no doubt in my mind that eventually, almost all government spending will be on an immutable distributed ledger technology,” added Deaton. But will it happen in 10 years or 50 years? Only the timing is in doubt in his mind.

“If the US truly wants to lead the global economic race, blockchain must be at its core — not just for financial systems, but for the entire socioeconomic fabric,” concluded Naqvi.

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