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GAO-23-106051 1 (2023-07-11)

handle is hein.gao/gaooxe0001 and id is 1 raw text is: Why This Matters Key Takeaways What is 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 Page 1 GAO-23-106051 SBA Potential Use of Blockchain

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