Governments adopting blockchain has been discussed countless times over the years. The narrative promises transformation each time, but concrete actions rarely go past the point of experiments. Indeed, it is nowhere close to the scale being talked up. In 2017, Denmark considered using blockchain to distribute foreign aid. On paper, it made sense: eliminating intermediaries, increasing transparency and ensuring the money arrived faster and exactly where it was meant to go. Seemingly, everyone wins—the donors, the recipients and the agencies in between. But the theory never made it into practice.
Why not? In short, there was a mix of factors: the financial ecosystem wasn’t ready, blockchain regulation wasn’t precisely clear-cut, and the intermediaries weren’t in favor of being disrupted either. So, the project ended up as just another “what could’ve been.”
We’re once again at a potential turning point. President Trump’s administration recently announced the desire to reshape USAID into a new entity—the U.S. International Humanitarian Assistance (IHA). There are strong implications that blockchain will be used in its operations. This is not for aid distribution this time but for procurement. Unpacking what that means will help determine whether we are looking at a true government use case or if it’s destined to become yet another “not quite there.”
The Case That Worked
Before diving into the IHA case, it is worthwhile to acknowledge a place where blockchain did deliver on the promise of boosting humanitarian aid. Specifically, the World Food Programme’s (WFP) Building Blocks project. Launched in 2017, Building Blocks used the Ethereum network to distribute food vouchers to refugees in Pakistan. Later, the project was scaled to cover other regions, like Bangladesh and Jordan, reaching hundreds of thousands of recipients. The result? Over $325 million worth of aid was distributed securely and efficiently, and over $3.5 million was saved in transaction fees.
The impressive thing is that Building Block stepped well beyond the experimental stage and achieved full-blown operational success. The blockchain integration achieved tangible results and improved the efficiency of delivering real aid to people. Can USAID repeat this success? For now, it’s hard to say. Building Blocks was designed for direct aid delivery, but from what we know of the USAID/IHA plan, it isn’t about aid distribution. It’s about internal procurement, which is a whole other beast.
A Look at the IHA Case
The idea isn’t exactly new. Use blockchain to make procurement processes more transparent, efficient and tamper-proof. The market has seen similar things already. Take Amazon (AMZN)’s Quantum Ledger Database (QLDB), a cryptographically verifiable, immutable and transparent ledger that records every change to the data. QLDB is ideal for tracking modifications in procurement systems since companies can access tamper-proof information and a permanent trail for every action, keeping all participants honest. If IHA’s blockchain integration looks like that, it could provide real accountability: track every step of a purchase order, who signed what, who changed what—and when. And for a government agency, the advantages of such clarity are not to be underestimated.
If nothing else, it would massively help avoid overbilling scandals. Data shows that in the fiscal year 2023, the U.S. government made almost $240 billion in improper payments due to errors, inaccurate bookkeeping and other similar reasons. Adopting blockchain would alleviate this pressure with its real-time tracking and immutable audit trails.
A Breakthrough or Bureaucratic Rebranding?
As promising as all that sounds, even if USAID accomplishes this transition, it won’t be revolutionary. Enterprises and governments have been slowly moving toward this goal for years—only this time, they will have succeeded. Yes, it would be interesting if IHA became the first major U.S. government agency to use blockchain for procurement. But for it to be a real breakthrough, it will have to last and change how the whole system—and the people in it—behaves.
But first, there will be some serious hurdles to clear. The very first of these is going to be cost. Transitioning an entire agency to an on-chain system will not be cheap. Between staff training, vendor onboarding and long-term maintenance, there are a lot of factors to consider, and the end bill will be pretty steep.
Regarding vendors, it is essential to remember that procurement is extensive: it involves local partners, foreign governments, countless vendors and compliance frameworks to cover all of them. So, to make such an integration, you’d need all these parties to agree on operational standards and protocols. Blockchain can document everything perfectly, but it doesn’t make bureaucracy disappear—especially not on this scale.
There is also going to be public pushback. Spending millions in taxpayer money on this kind of upgrade will be a hard sell, particularly when, for an average person, the term “blockchain” itself remains a nebulous concept. Most people won’t know how this will work or how it will help them. So, efforts will have to be made by the government to explain the benefits of such a transition to the general public.
The ambition might be genuine—and even accomplishable—but the execution will be long, expensive, and controversial.
Is It Realistic? Not Yet. But the Promise Is There
Despite the current U.S. administration’s tech-forward stance, the idea of fully blockchain-based procurement is still aspirational. The IHA initiative will be a pilot project, perhaps, but not a game-changer soon. Technology isn’t the problem—the ecosystem is. That said, efforts in this direction still matter. Governments don’t change overnight, but tracking its progress will be valuable if IHA follows this path. If there is tangible proof that they can pull it off, this success could become a blueprint for other organizations to follow.
