Curious About Trump’s Tax Returns? Blockchain Might Provide the Answer

Curious About Trump’s Tax Returns? Blockchain Might Provide the Answer
Tired of hearing the latest uproar surrounding President Donald Trump’s tax returns? Every president since Jimmy Carter has provided this information, but Trump has consistently refused to do so since claiming he was waiting for the results of an IRS “audit.”
Even as the mystery surrounding his financial dealings threatens his plans for tax reform and has both Democrats and Republicans demanding the White House speak to the President’s potential conflicts of interest, Trump has refused to give in.
Now, imagine if we had a system that recorded real estate transactions and made the information both publicly available and immutable. Such a system could very well spare all of us the controversy surrounding Trump’s staunch refusal to clarify his complex real estate holdings and release his tax returns, answering burning questions about his financial interests and dealings.
The President has repeatedly resisted requests for these returns, both before and after the election, making it far easier for critics to speculate about Trump taking part in questionable business dealings.
Such speculation would not be necessary in a world where a secure, distributed ledger system recorded real estate transactions. It just so happens that the blockchain, a burgeoning technology which does exactly that, is quickly making inroads with global financial institutions.
Late last year, ABN Amro and IBM started developing a project that would allow buyers, sellers, tenants and other parties to record and share real estate information. Shortly before that, a group of lenders including Bank of China and HSBC began developing a system that would use blockchain technology to share information on property valuations.
Better yet, with blockchain, the flow of money between the Trump Organization and third parties – foreign or domestic – could have been easily verified. Currently, the vast majority of international payments take place in a ‘black box’ environment underpinned by the SWIFT messaging system. Designed in the 1970s, SWIFT makes little information about cross border payments available to outside parties – and precious little is made available to institutions actually using the system.
Blockchain technology, on the other hand, uses a completely different approach that could make all transactions publicly available and offer a level of transparency currently impossible with SWIFT.
Indeed, if global financial institutions adopted distributed ledger technology for international payments, a permanent record of all transactions would be available – to institutions connected to the system, regulators and even the public.
But putting politics aside, there are countless reasons why the time for a more widespread adoption of blockchain is overdue.
When initiated via SWIFT, payments generally take between 1 to 3 working days to reach their destination, where they must be processed by hand. Thus, outside variables such as simple time differences between the sender and recipient and holiday schedules can cause this time to increase. Where SWIFT payment take days to instruct, clear and settle, the blockchain can accomplish all of these tasks in a matter of minutes: 24 hours a day, seven days a week.
Not only that, but SWIFT has been scrutinized for high expenses. The international payments space can be quite pricey, as individuals and small businesses can end up paying staggering surcharges (as high as 15%), while larger members, which frequently have significant transactional volume, can potentially negotiate far lower surcharge rates (between 1% and 2% of a payment).
SWIFT’s expenses include joining fees, annual support charges and also charges for individual messages. While annual support fees are based on member class, the charges that members pay for individual messages are determined by the transaction volume of the specific member, as well as message type and length.
Additionally, when processing transactions through SWIFT, individual institutions may add fees, which can result in expenses that are both significant and also opaque. Blockchain works by harnessing peer-to-peer transactions that eliminate both intermediaries and also the overhead costs associated with exchanging assets – and don’t treat small businesses any different than large ones.
And then there’s the question of security – or lack thereof. The SWIFT platform has been the target of multiple hacks, and a string of attacks uncovered the organization’s inability to credibly respond. In early 2016, fraudsters stole more than $100 million from Bangladesh’s central bank by obtaining SWIFT codes and convincing the Federal Reserve to send money to their bank accounts.
After committing this crime, the thieves eliminated evidence of their wrongdoing by tampering with the software of both banks. While this might seem troubling enough, it may have simply been the tip of the iceberg. Three months later, SWIFT officials revealed that robbers used the same approach in an attempt to steal more than $1 million from a Vietnamese bank.
SWIFT officials then proceeded to inform the public that the company was looking into “multiple” cases of attempted theft involving the use of access codes and efforts to eliminate digital fingerprints.
In August 2016, a Reuters exclusive report revealed just how widespread the knowledge of SWIFT’s security vulnerabilities really was. More than a dozen of the organization’s high-ranking officials claimed that while SWIFT suspected there were weak points in the way that smaller banks used its messaging terminals, the organizations did nothing about it.
“The board took their eye off the ball,” said Leonard Schrank, who served as CEO of SWIFT from 1992 to 2007. “They were focusing on other things, and not about the fundamental, sacred role of SWIFT, which is the security and reliability of the system.”
Regardless of whether SWIFT gets its act together, we need to encourage the spread of  blockchain technology within financial institutions. We’ll have a faster, fairer, more transparent and less costly system for international payments. And if that doesn’t seem impressive, then just imagine: we may gain better insight into Trump’s financial dealings, without having to accept whatever set of “alternative” facts he provides.

 

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