U.S. Postal Service fleet. Shutterstock photo
The blockchain has a new endorser and it’s the U.S. Postal Service (USPS). At its core, blockchain technology offers a way to transfer and permanently store information in a tamper-proof, cost-efficient, fast, cryptographically secure yet transparent manner. The blockchain technology underlying bitcoins is gaining a lot of traction with rising interest from companies, banks, private and government establishments, and now we have the USPS looking into the possibilities of embracing and benefiting from this technology.
A recent 26-page report issued by the USPS Office of Inspector General (OIG) titled “Blockchain Technology: Possibilities for the U.S. Postal Service” identifies areas of potential interest, four of which are:
The postal service currently offers some basic financial services like international electronic money transfers. The report proposes the use of a digital format for providing these services could make them possible in a cheaper and more efficient way. It recommends the creation of a “Postcoin” platform, based on the blockchain protocol by using an existing public blockchain or by creating a brand new one.
While the U.S. Postal Service has a reasonably steady money transfer business, there are multiple restrictions in terms of its reach and payout in cash. Postcoin could change the dynamics and allow these services to be extended anywhere in the world.
It could further benefit the organization and is customers by trimming costs and boost the expansion of the financial services arm. The report suggests some services which the U.S. Postal Service could potentially offer going forward, such as blockchain-based escrow services which would boost peer-to-peer commerce and even currency exchange services.
Back in 2014, a report by the U.S. Postal Service suggested that millions of people in the U.S. do not have a bank account or are unable to unable to afford the services like check cashing exchanges or payday loans. It was pointed out that, “The Postal Service is well positioned to provide non-bank financial services to those whose needs are not being met by the traditional financial sector. It could accomplish this largely by partnering with banks, who also could lend expertise as the Postal Service structures new offerings.”
The adoption of blockchain would boost such efforts and make them easier to implement. Going by numbers, “The entire underserved population comprises more than a quarter of all U.S. households - some 68 million adults.”
The second potential application termed as ‘device management’ integrates the idea of blockchain technology with the agency's Internet of Things (IoT). The report says, “Imagine if postal vehicles and sorting equipment could manage their own tracking, monitoring, and maintenance.”
The OIG believes that usage of blockchain technology is a viable option “to build and manage an Internet of Postal Things at a lower cost than traditional, centralized methods.” The Internet of Postal Things would include its every object of its ecosystem like delivery trucks, mail boxes, terminals, and more.
The report further says that, “With blockchain technology, peer networks of devices would be able to “negotiate” directly with internal and external stakeholders or even other connected devices to, for example, share power resources or contract for maintenance services and part replacement. This could help reduce the infrastructure and maintenance costs of managing the whole system and increase its efficiency.”
The issue of privacy vs security is debatable; the report suggests that while privacy in transactions has benefits, it raises security concerns and risk for fraud. Thus it recommends that the virtual identity be linked to a real-world identity.
According to it, the USPS could offer ‘identity verification services’ which would enable safer and more transparent financial transactions across the blockchain – postal or non-postal. By doing so, “Customers could use these verified identities to login to secure websites, notarize documents, or participate in smart contracts.”
The OIG believes that, “Identity services are one of the biggest areas of opportunity in the blockchain community, and the Postal Service, as a highly trusted government agency, would be well-suited for a role in identity verification.”
Supply Chain Management
The final application identified in the report is the use in supply chain management. The USPS works with multiple partners, millions of customers, trucking drivers, mailers and many more entities. The blockchain technology could smooth out the interaction between the participating entities and speed up deliveries, especially international ones.
The USPS delivers to more than 154 million addresses in the U.S., and manages a total mail volume of 155.4 billion. It has around 245,000 delivery routes and more than 210,000 delivery vehicles.
The USPS reported a revenue of approximately $69 billion in 2015, 1.6% more than that in 2014 but the organization has been running losses since 2007. The successful adoption of the blockchain technology can help the organization cut its expenses on monitoring, tracking, identification and litigation, among other areas.
Of the four applications, the report suggests the possibility to benefit from blockchain based solutions for financial services in the short term while the remaining three would play an important role in the long-term as the technology continues to be experimented with and understood, so that it can be applied in meaningful ways.