As the world of digital assets and crypto technology continues to evolve, it's important that we understand the implications of this innovation on our global national security. The breakthrough of blockchain technology, which allows for the digital transmission of value without the need for intermediaries, has opened the door to a multitude of potential use cases.
One of the most visible use cases is the ability to create tokenized ownership interests, which can be used to store value and as a means of payment. This has led to the rapid emergence of a crypto financial system involving crypto tokens on blockchain networks. While these tokens and networks each have their own performance and functional characteristics, use cases continue to develop, and the current market remains speculative.
However, as we've seen with recent high-profile arrests and the dismantling of online terrorist financing campaigns, the blockchain is also traceable and transparent, enabling effective tracking of illicit activity. This is a crucial aspect of crypto technology that needs to be better understood by crypto enthusiasts and foreign policy experts worldwide.
It's important to note that digital and crypto innovation is borderless and transcends traditional boundaries. This reality, which is true for most technological innovations, can be uncomfortable for any country, particularly those like the United States and China that have already achieved global leadership. But instead of viewing the growth of digital assets as a threat, we should view it as an opportunity to reinvigorate the competitiveness and preeminence of our finance and technology industries globally.
The strength of a country's financial system is central to its global leadership, and crypto technology has the potential to enhance economic and national security interests. By embracing crypto, countries like the United States and China can help to ensure they retain the dominance of their respective currencies in crypto, thus ensuring the growth of the crypto markets becomes reinforcing of the strength of their currencies.
Furthermore, central banks around the world are exploring the potential to issue their sovereign currency in digital form, known as central bank digital currencies (CBDCs). Countries should also consider this as well to stay competitive. By embracing crypto and blockchain technology, countries can take a leadership role in the development of new decentralized solutions to age-old problems, making the financial system more efficient and resilient.
While the technology is still maturing, and there are certainly risks to effecting such change, it's critical that countries do not adopt a posture of ambivalence towards crypto and blockchain technology. As with the internet and other technologies, most of us do not have the full vision today to understand what this technology could become. But if countries make the right policy investments today, they will be positioned to reap the benefits that decentralized technology has to offer.
In conclusion, keeping pace with – and taking a leadership role – in digital innovation is critical to global national security strategy. Adopting a strong crypto policy is therefore important for all countries, as it can help ensure a strong currency, tech sector, and prevent illicit finance. The underlying technology of crypto tokens and networks have proven to be sound, and decentralized crypto protocols are also robust. It is critical at a time when technology plays such a significant role in geopolitics for countries not to repeat the same mistake of inaction and complacency.
