Page 1 GAO-23-106051 SBA Potential Use of Blockchain
Blockchain is an emerging technology that aims to provide a trusted, tamper-
resistant record of transactions by multiple parties. Although widely known for its
use in digital assets like Bitcoin, blockchain also has a wide range of nonfinancial
applications. Some federal agencies are exploring ways to use blockchain in their
own operations. Recently, Congress has expressed interest in encouraging more
federal agencies to explore blockchain’s potential benefits, which could include
improving efficiency and reducing costs.
We were asked to examine blockchain’s potential to address challenges faced by
the Small Business Administration (SBA). In recent years, GAO and SBA’s Office
of Inspector General (OIG) have identified deficiencies in SBA programs,
including delays in program reporting, fraud, and the lack of a monitoring system
to track small businesses’ performance in a contracting program. This report
describes what blockchain is, examples of how selected federal agencies have
used or considered using it, factors that entities including SBA could consider in
assessing blockchain’s potential use, and blockchain’s potential uses and
limitations in addressing selected SBA program challenges.
• Multiple federal agencies have explored blockchain’s potential to enhance
their operations. Most of these efforts have not progressed beyond initial pilot
phases.
• The need for a distributed ledger with full transaction history, and
transparency among multiple parties are among the factors entities including
SBA might consider in assessing their potential use of blockchain.
• Experts described some potential uses and limitations of blockchain that may
be applicable for SBA, but emphasized the importance of analyzing
programs’ processes, workflows, and underlying challenges before exploring
the technology.
At its basic level, a blockchain enables a community of users to record
transactions in a ledger shared within that community. Once a transaction is
published, any changes are easily detectable.
Unlike traditional databases, blockchain ledgers do not require a central
authority, such as a bank or government. This decentralization is possible
because blockchain is an immutable ledger (i.e., a ledger that is challenging to
alter undetected) due to (1) cryptographic techniques to verify transactions and
(2) many computers, or peers, sharing copies of the transaction. When a new
block is added to the blockchain, it includes a number known as the hash digest,
which the blockchain mathematically derives from the data in the previous block.
This has the effect of cryptographically “chaining” the blocks together and can be
U.S. Government Accountability Office
Small Business Administration
:
Potential Use of Blockchain
-23-106051
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