Pushing the Envelopes: New US Postal Service Report Assesses Possible Blockchain Applications

"Vibrant US Air Mail Stamp", Image by Nicolas Raymond

“Vibrant US Air Mail Stamp”, Image by Nicolas Raymond

Way before the advent of email, when people exclusively wrote letters on paper and mailed them to each other (yes, this really did happen once upon a time), there was a long-running scam known as the “chain letter“. Recipients who received such a letter were asked, often through manipulative language, to copy it and send it on to as many other people as possible. In effect, these were structured as fraudulent pyramid schemes that ultimately would collapse in on themselves.

Sometimes chain letters involved illegal financial dealings and other hoaxes, also producing unwanted emotional effects on who mistakenly fell for them. Variations of the chain letter still survive today online and operate using email, texting and social media.

However, an emerging new form of virtual chain, in conjunction with the mail service, might soon appear – – namely using the blockchain – – within the U.S. Postal Service (USPS). However, this combination could potentially produce four very positive improvements in services. These exciting prospects were the subject of a most interesting new post on Quartz.com on May 24, 2016 entitled Even the US Postal Service Wants to Start Using Blockchain Tech, by Ian Kar. I recommend reading this article in its entirety. I will summarize and annotate it, and pose some questions of my own (but without any additional postage due).

While blockchain technology has been getting a great deal of press coverage recently involving innovative new development initiatives in, among other fields, finance, law, government and the arts, this story illustrates how it also might affect something as routine and mundane as mail service with possibly dramatic results. Such changes could produce significant economic and logistical advances that would affect just about anyone who checks their real world mailbox every day.

(These six Subway Fold posts cover just a small sampling of blochchain projects.)

Better Letters

Image from Pixabay

Image from Pixabay

Traditionally, the USPS has never really distinguished itself as a leader in innovation. Rather, it has a long reputation for its inefficient operations. This could possibly be significantly changed by this series of a series of blockchain proposals. Because this technology is decentralized, widely accessible, and secured by encryption, it is highly resistant to tampering.

On May 23, 2016, the USPS Office of the Inspector General and a consulting firm called Swiss Economics, published a new report entitled Blockchain Technology: Possibilities for the U.S. Postal Service. It analyzed the following four possible future implementations:

1.  Financial Services:  US post offices currently offers a limited number of financial services such as international money transfers. The IOG report speculated that the USPS “could benefit from developing its own bitcoin-like digital currency”.  Perhaps it could be called “Postcoin”. This would permit the expansion into other financial services such as a “global payment service” for people without traditional bank accounts.

2.  Identity:  An individual’s identity could be verified for the USPS using a blockchain. Essentially, they already do this when they deliver your mail to you each day. By using a blockchain for this, the USPS could provide you with assistance to help you manage both your online and offline identities “by storing it on an immutable ledger”.

3.  Logistics Support:  Applying the blochchain to support the Internet of Things (IoT) could enhance the USPS logistics management operations. The IGO report imagine a system where “vehicles and sorting equipment could manage their own tracking, monitoring, and maintenance”. This could include items such as autonomously, efficiently and economically monitoring brake pad performance including:

  • Assessing when one will need to be replaced
  • Determining whether its warranty is still in effect
  • Creating a smart contract with a vendor to replace it
  • Paying for the part and its installation

4.  Mail Tracking:  On a daily basis, the USPS delivers 509 million pieces of mail. As stated in the OIG report, the blockchain can be deployed to uniquely identify each piece of it. This could be done with “a small sensor” on each piece in order to use the blockchain to “manage the chain of custody between different USPS partners, like UPS and Fedex”. As well, the blockchain could be put to the additional uses of:

  • Expediting customs clearance
  • Integrating payments
  • Shipping upon one unified platform

[All of these components form the very convenient anagram FILM, thus making it easier to, well, picture.]

For now, the USPS intends to keep studying blockchain technology. The OIG report states that the agency “could benefit from experimenting” with it on new financial products and then eventually progress on toward “more complex uses”.

"Stamped Mail to be Posted", Image by Steven Depolo

“Stamped Mail to be Posted”, Image by Steven Depolo

My Questions

  • Would these blochchain apps have a negative impact on USPS revenues as this massive government agency has been running at a budget deficit for many years? If so, would this have unintended negative consequences for consumers and/or the USPS?
  • Conversely, can the USPS use blockchain innovations to create new sources of revenue and employment? What new sorts of job descriptions and titles might emerge?
  • Would the blockchain do away with the traditional services of certified, registered, priority and insured mail? If so, what forms of proof of delivery or non-delivery could be provided to consumers?
  • Would any of these proposed new apps possibly create new privacy issues for consumers and policy concerns for the US government?
  • What type of opportunities might arise for entrepreneurs to create new mail apps built on the blockchain?

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