In 2019, there was good news for Germany as a blockchain site. The federal government at the time had released its blockchain strategy, in which it highlighted the importance and promotion of the technology. About three years later, with the exception of the securities tokenization, things look pretty meager.
Nothing came of the blockchain pilots envisioned in administration and, more specifically, in data protection and digital identities. The fast-forgotten blockchain strategy of 2019 brings to mind many people’s New Year’s resolutions to exercise more and eat healthy. Experience has shown that initial motivation does not last long.
New government, new opportunity for blockchain?
One could argue that the new federal government wants to implement its own new approach to promoting blockchain technology. In the case of the Ministry of Finance, this may even be partly true. For example, Finance Minister Christian Linder created the Digital Finance Forum to establish a closer exchange, especially with the crypto industry. The future financing law, drawn up by the BMF and the BMJ, is also progressing in terms of digital titles. Apart from these exceptions, however, exactly the opposite impression emerges. Apparently, the federal government wants nothing more to do with blockchain technology.
The federal government’s digital strategy
In its digital strategy published at the end of August, the federal government announced the importance it attaches to which technologies. While artificial intelligence (AI) or the Internet of Things (IoT) can be appreciated as key technologies, blockchain technology is practically non-existent. On the contrary, it only takes place on the fringes by tackling the problems associated with it, such as the lack of sustainability and tax evasion. In this context, reference is made to the importance of common European supervision.
The responsibility is therefore increasingly transferred to Brussels. Strict regulation yes, funding no. Blockchain technology is therefore the shady child among technologies. You really don’t want anything to do with her. As a result, they were expelled from the Key Tech Club without further ado.
No key technology, no money
The term key technology is not just an empty meaningless word. The key technology rating indicates which technologies are considered particularly eligible for funding from the perspective of the German state. So, while an entrepreneur can hope for funding for their AI start-up and the university can also count on research grants in the field of AI, the blockchain sector does not get much party nothing. As second-class technology, it now has to queue in Germany and can only hope for a few crumbs at best.
Federal government start-up strategy
The same sad picture can also be found in the federal government’s start-up strategy, which was also recently published: blockchain is non-existent. While politicians have repeatedly emphasized the importance of the blockchain startup sector in the past, nothing seems to have stuck with the startup strategy. Even outside of the funding aspect, this is a problematic signal. This suggests that blockchain entrepreneurs in Germany are tolerated at best. In any case, that’s not how you build a place of innovation.
Blockchain is not popular
The cause of blockchain technology and politics shows how important it is to have a broad and strong lobby. Blockchain technology is largely represented by voluntary actors and small start-ups. In view of the many current topics and challenges, the federal government therefore seems to be sacrificing the promotion of blockchain technology. After all, no significant resistance is to be expected.
Whether a technology gets attention and money seems to depend more on the political and ideological preferences of individual parties and their electorate than on its impact on Germany as an economic location. MPs from the SPD and the Greens have repeatedly positioned themselves as opponents of crypto and pointed out how bad blockchains are for the climate and are mainly used for money laundering anyway. Despite the pedagogical efforts of the blockchain sector, these prejudices persist to this day.
High government quota: Germany must make a decision
It is a legitimate business model if the state stays out of the active development of industry and business. In this case, however, one can expect a government quota well below 50% in order to keep the burden on the economy low.
Instead, being the world champion in income taxation and inflating the state quota for years is not appropriate in Germany’s case. If you think you should get so actively involved in the economy, please do so less ideologically and more according to fundamental benchmarks, which are also popular in the private sector. Otherwise, there is a risk that budget funds will be misallocated, which will not lead to the desired economic growth.
Cabinet retreat at Meseburg Castle speaks volumes
How much Germany needs a blockchain strategy worthy of the name was shown during the press conference of the Council of Ministers on August 31 (click here for the video recording). Finance Minister Christian Linder was asked by a journalist (minute 33:19) whether it was really not possible to transfer one-off payments to citizens as a result of the energy crisis.
His response (from minute 34) speaks volumes. He admits – with some irony – that our financial and administrative infrastructure is so outdated that the federal government is technically unable to process several million transfers at the same time. According to the authorities, simply collecting all the IBAN account numbers and merging them with the tax number takes about 18 months.
If one had a modern digital financial and administrative infrastructure, such projects could be implemented more or less at the push of a button. However, if you still rely on analog, non-programmable infrastructures based on the same technical standards as 30 years ago, you shouldn’t be surprised at such problems.
The fact that we now have technology that would be useful in those specific areas has apparently not yet caught on within the federal government. Attentive readers know what technology we are talking about here.
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