Author of the Opinion: Angie Darrow, Chief Marketing Officer and Chief Ecosystem Officer of the Web3 Foundation
When temporary data cloud disruptions can disrupt the global financial system—as demonstrated by the AWS Tokyo outage in April—the infrastructure supporting today’s data economy shows signs of trouble.
In the early hours of April 12, Amazon Web Services (AWS) experienced "connectivity issues" at its Tokyo data center. The disruption lasted only 36 minutes, but the ripple effects were immediate. When AWS faltered, the global economic framework was also compromised. The risks extend beyond just our assets or money.
The same vulnerabilities are now knocking on the door of the U.S. government, more specifically the Internal Revenue Service (IRS), through an experimental initiative run by the Department of Government Efficiency (DOGE) aimed at building a "super API" to centralize taxpayer data access through a single cloud-based platform.
Let’s think about this. The personal financial information of every American could now be managed through a unified interface. It could be breached by malicious actors. All of this is done under the banner of "efficiency."
We have already seen how dangerous this centralization can be. The AWS Tokyo outage is not just a cautionary tale for global finance; it is also a real-time warning for public institutions considering a full commitment to cloud integration without adequate democratic safeguards and decentralized technological barriers. This new reality serves as an important wake-up call for institutions entrusted by the public.
Consider what would happen if the IRS super API went down during tax season. Or if it were misconfigured. Or if it were hacked. There are better ways.
Decentralized technology offers a fundamentally different architecture. Decentralized systems do not consolidate power into a single API or cloud service; instead, they distribute it across many nodes. Access is controlled through cryptographic proofs. Actions are verified on-chain, and privacy is protected through zero-knowledge protocols.
If data privacy is not maintained, and the government and financial institutions control some of the most sensitive data, a quick policy change could mean someone no longer qualifies for certain services.
True data privacy maintains individual autonomy and equal treatment for all, ensuring that governments and institutions are held to the highest standards of accountability.
The swift resolution of AWS should not give us comfort. We should be vigilant about the entire data plane of critical services—whether financial, governmental, or otherwise—potentially halting due to a centralized point of failure. If the DOGE super API is built on the same model, it could quickly lead to financial turmoil for American households.
In a blockchain-based IRS data system, you do not need to grant a central cloud provider access to raw taxpayer data. Instead, smart contracts can verify credit eligibility or tax rule compliance without revealing potential personal information.
Such a system is not only theoretically more secure but also structurally more democratic. Data stored on the blockchain is immutable, creating a tamper-proof system that resists editing attempts.
Combined with this resistant quality, smart contract systems mean user data remains private and secure, with minimal need for human interaction with sensitive information.
This is why countries like Estonia and regions in the European Union are already exploring decentralized public infrastructure for digital identity and services.
There is another deeper concern: political power. When access to citizen data is centralized, the ability to weaponize it is also centralized. Today, it is Palantir engineers and DOGE operators. Tomorrow, it could be politically appointed individuals with personal grudges. Malicious actors could change your tax filings, employment history, and family data with a single login.
The DOGE experiment is not just an IT modernization plan. It is a reimagining of how citizens interact with the government and how much power the government (and its contractors) should have over our data. If we allow these changes to proceed hastily under the guise of "efficiency," we risk trading the chaotic pluralism of public governance for the fragile speed of centralized technology.
The AWS outage is a clear signal: cloud platforms are not infallible. When they fail, the consequences can cascade. We must not make the same mistake with government agencies like the IRS.
Decentralized technology is not perfect, but in an era where trust is eroding and data is currency, it offers a vision of governance that is safer, fairer, and more resilient. We cannot ignore this vision of Web3, especially as our institutions race in the completely opposite direction.
Author of the Opinion: Angie Darrow, Chief Marketing Officer and Chief Ecosystem Officer of the Web3 Foundation
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Original article: Opinion: Cloud Service Outages and Centralization Threats Expose Data Privacy Crisis
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