California Legislator Backs Blockchain To Combat Fraud.


TL;DR Breakdown

  • California Member of Assembly proposes the use of blockchain technology as a solution to fraud cases on employment status.
  • Unemployment benefit fraud is a serious problem in the United States.
  • Application of blockchain in governance.

A member of the California State Assembly has put forward a bill that suggests the use of blockchain technology to deal with the fraud crises in the employment sector. Assemblyman Jordan Cunningham, a member of the Republican Party representing the 35th District in California, suggested the bill titled “AB 2781” which will mandate the “Office of Digital Innovation” to explore the ways blockchain can be used to tackle the prevailing cases of unemployment benefits fraud in the state.

Unemployment benefit, a part of the Unemployment Insurance Program, is a sum of money distributed by the United States Department of Labor to persons who are out of work due to circumstances beyond their control. There are also other requirements that citizens must complete in order to be eligible for this program.

California, like many other states in the United States, has been the victim of countless bogus cases of unemployment benefits. In most of these situations, fraudsters impersonate individuals in order to steal payments intended for them. There have also been reports of persons who are ineligible for these benefits being given these payments. This includes self-employed people, jail inmates, and so on.

According to a news post by the Los Angeles Times, as of Oct 2021, California had lost at least $20 billion as a result of this mayhem. That number accounted for 11% of the total money paid out for unemployment benefits since the start of the 2020 COVID-19 pandemic. Mr. Cunningham believes blockchain can be a very useful tool in tackling this issue. 

California will be joining other governments which have adopted blockchain into governance.

Over the last few years, blockchain technology has witnessed rapid acceptance worldwide due to its impeccable ability to prevent the manipulation or loss of data. The California Assemblyman proposes the technology be applied to verify the identity of individuals before funds are disbursed. Currently, the bill is been reviewed by the legislature’s Privacy and Consumer Protection Committee which is in charge of issues pertaining to the technology sector.

In addition, the California government won’t be the first to consider applying blockchain in governance. In 2017, the Estonian government set up an E-resident system based on the Ethereum blockchain. In the same year, the Republic of Georgia started using a blockchain land register system. The innovation was reported to be highly effective as it reduced costs by 90% and corruption significantly decreased. Also, some countries have begun the issuance of a Central Bank Digital Currency(CBDC), which are fiat currencies built on blockchain. It is expected as the novel technology continues to gain ground in the world, more and more governments will be adopting its usage in various capacities.

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