Regardless of the side you sit on in the undeniable political divide, 2020 is set to be a significant year for American politics. These are turbulent times, and there remains a lot of uncertainty as to what shape US leadership will take. There’s certainly a dearth of trust, and election years are often a time when it’s useful to look at our political system a little more closely.
Over the last few elections, technology has played a role in proceedings from queries to the accuracy and validity of computer polling to the interference from foreign hackers. Since the last election, cryptocurrency has found greater footing in our economic spaces, and as money plays a vital role in any election, it behoves us to examine what kind of impact crypto and associated technologies such as blockchain can have.
As we move rapidly towards November, it’s time to examine the key areas in which cryptocurrency and its associated technologies could have influence. What kind of advantages can these technologies represent, and where do the dangers lie?
Donor Limits
The U.S electoral system certainly has its problems, and one of the perennial examples surrounds donations. Millions of dollars of campaign funding come into candidates each election cycle, providing the candidates with vital resources to present their case to the nation. This means that those with the deepest pockets have the potential to wield greater influence over the electorate; which makes the question of where this money comes from incredibly important.
One way the FEC (Federal Election Commission) tries to curb any single organization from having undue influence in an election is by placing limits on contributions who can donate and how much they can provide. For example, individual corporations cannot donate directly, but they can be part of a PAC (political action committee) to do so. Hypothetically, this works the same for cryptocurrencies, with some candidates accepting them as direct cash donations. There are loopholes to these limits, however, which are often exploited by so-called Super PACs. Independent of an official party, Super PACs can spend unlimited funds in support of their preferred candidate. Cryptocurrencies also have the potential of becoming the tools these loopholes.
One such method comes in defining whether cryptocurrencies are considered money or in-kind goods or services. This is an important distinction because in-kind contributions are valued at their cost at the time of donation. The value of cryptocurrencies can fluctuate significantly, which means that PACs could be developed with this strategy specifically in mind, donating wallets early with some level of confidence that the candidate will eventually have a far more valuable resource to use. There is also scope for outright fraud involved with cryptocurrency; the anonymity of cryptocurrencies means that, while they are traceable, coin owners cannot be identified. Therefore, there is the potential for a single donor to set up several pseudonymous accounts, each donating to the individual limit.
Security
One significant issue in recent years has been electoral security, from ensuring that electronic voting cannot be hacked to how deeply foreigners may have influenced results. The culture surrounding cryptocurrency has a part to play in this conversation.
From a strict monetary perspective, cryptocurrency could offer solutions; it is a secure tool in trading currency. Crypto is trackable from start to finish, which means that both patrons and candidates can generally be confident that donation transactions reach their destination. This trackability also allows the FEC to review the locations contributions originate from, and whether this breaches legislation. This was put into action in 2018 when Republican senate candidate Austin Petersen was forced to return a $150,000 Bitcoin contribution that was later found to have originated in Hong Kong.
The technology behind much of cryptocurrency’s trackability blockchain has the potential to bolster security in other areas of the election process too. Blockchain is a ledger system, which creates a chain of records (blocks) from the beginning to the end of transactions in such a way that a block cannot be accessed or altered without changing every block that preceded it. This can be useful in ensuring that electronic voting is not illicitly accessed or altered. Companies are currently working on introducing blockchain security systems into voting booth technology, in addition to utilizing a token voting system which works in a similar way to the cryptocurrency wallet, ensuring an unbreakable, unalterable chain between the voter, their vote, and the election result.
Democratization of Currency
Our political system is, at its best, an expression of our deep-rooted belief in democracy. Elections are our opportunity to express our support for candidates who reflect the values we hold dear. Cryptocurrency in American politics has the potential to exemplify this freedom of choice.
This is best understood when we examine precisely what cryptocurrency is. It is often oversimplified as a virtual currency for online purchases. The facts run much deeper. It’s a decentralized currency, unsupported and unrestricted by any one government, and not dependent upon institutions such as banks for its storage and distribution. This means that it is not gaining interest for parties who would use it to fund issues we don’t support. This also means that records aren’t kept on our accounts by officials, maintaining our privacy. It largely means that we can use it without restriction or the requirement to document its use. It’s no surprise then that this currency has historically been accepted for donations by politicians whose parties place a premium upon that kind of autonomy.
Regardless of this, is it the way forward for the funding and direction of political campaigns? This may well depend on how thoroughly the average donor and campaign director begin to utilize it in everyday life. With a seemingly intangible currency, it can be difficult for people to trust that there’s any real value in it, not to mention crypto’s role in cybercrimes. We also have to consider whether the use of cryptocurrency reflects political ideologies. Both Democrats and Republicans have expressed significant skepticism and concern about the legitimacy of crypto and its lack of regulation. It may be that cryptocurrencies will remain a minority funding choice until the public and candidates understand its uses on a wider scale.
Conclusion
American politics is often a difficult landscape to navigate, and this general election period is no different. While cryptocurrencies certainly have a potential role to play in voter security and donations, there remains some concerns. In embracing the positives of crypto, we must also bear in mind its ability to enable fraud and unduly influence an election.