Paycheck Protection Program (PPP) an Inflection Point for Blockchain Adoption

At BitOoda, a hot topic that we continually discuss internally is identifying threshold crossing events. Specifically, we believe this pandemic and our governments response to it will serve as a catalyst to fundamentally change the society we live in by demonstrating the urgent need for the modernization of public services using blockchain technology and the broader adoption of digital assets.

When there are underlying socioeconomic conditions that support the need for significant change, an often-unforeseen triggering event can be the tipping point that spurs needed reform. As Malcom Gladwell defines it “the moment of critical mass, the threshold, the boiling point”. For example, the triggering event that kicked off the Arab Spring — a series of uprisings across the Middle East and North Africa that brought down several oppressive regimes — was the self-immolation of a Tunisian fruit vendor. This was simply the catalyst that led to wider action in response to simmering underlying societal conditions such as economic hardship, societal inequality, and political corruption and repression.

We view the execution of the Paycheck Protection Program (PPP) as potentially one of these threshold crossing events that could trigger a push for broader reform of the way the government functions and serves the U.S. populace. The PPP, designed to help small businesses retain their employees during the pandemic, is starting to reveal the flaws in our current systems and infrastructure. According to some early estimates pulled from public filings, over $300mm from the PPP has flowed to publicly traded companies. Today it was revealed that the LA Lakers, a sports franchise valued at $4.4bn, received $4.6mm in funding. Meanwhile, there have been 26.5 million initial jobless claims filed over the last five weeks.

There is growing awareness throughout the country of the government’s missteps in executing this program, and this discontent could serve as a tipping point for the realization that there needs to be a better way. From our perspective, it is incredibly clear that blockchain technology provides superior infrastructure to the existing delivery of public services and economic management. The advantages of blockchain are increasingly well-known across the public and private sectors; specifically regarding the PPP, the use of DLT could have helped in several ways:

· Transparency & Accountability: If funds were disbursed through DLT technology, it would bring transparency to the recipients on the timing and amount of the loans. This transparency is a significant factor in maintaining accountability in distribution.

· Speed: The speed of stimulus payments to U.S. households has also been criticized. Efficiency in distribution through the adoption of a Digital Dollar is a topic we have touched on previously, and we believe the Digital Dollar is critical to modernizing the country’s infrastructure for getting funds to individuals who need it in a time of crisis.

· Cost: The issuance of paper checks is not only slower, but more expensive and an inefficient use of public funds that would be better spent on direct relief efforts.

· Enforceability: Blockchain-based contracts and distribution systems could have better ensured that PPP applicants and recipients adhered to the government’s rules and eligibility requirements for the program.

· Wide Applicability: Lastly, we point out that blockchain applications can be utilized for more than just government disbursements and can help with a range of financial transactions, supply chain management (e.g., to track PPE and other COVID response efforts), and other critical functions the government has been performing during this crisis.

We believe this pandemic and the US response is a threshold-crossing event. It has just begun triggering a reaction of demanding more accountability for relief efforts such as the PPP, and we believe this road will lead to a phased transition where we begin a more comprehensive transformation into a blockchain-based society. The introduction of a Digital Dollar — along with other global CBDCs — could not only improve the delivery of public services and the functioning of the government in general, but also could lead to the gradual widespread societal adoption of digital assets. In that scenario, we will see the critical importance of a well-developed and mature digital asset infrastructure based around the use of regulated firms that will enable the functioning of orderly market activity and compliance-based integration with the evolving digital economy.


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A boutique digital asset investment bank focused on providing innovative and compliant capital markets solutions for institutional clients.