Opinion: Angie Darrow, Chief Marketing Officer and Chief Ecosystem Communications Officer, Web3 Foundation
If a temporary data cloud outage could disrupt the global financial system, as demonstrated in April of the AWS Tokyo outage, then something has arisen with the infrastructure supporting today’s data economy.
Earlier on April 12th, Amazon Web Services (AWS) experienced a “connection problem” at the Tokyo Data Center. The stop lasted only 36 minutes, but the ripple effect was immediate. As AWS weakens, the architecture of the global economy will also collapse. It’s not just our assets and risky money.
That same vulnerability knocks the door of the US government, and more specifically, the Internal Revenue Service, through an experimental initiative implemented by DOGE to build a “Mega API” to centralize taxpayer data access through a single cloud-based platform.
Personal financial information for all Americans can now be managed through a unified interface. He probably violated a bad actor. Everything is under the banner of “efficiency.”
We have seen how dangerous such centralization is. The suspension of AWS Tokyo is more than just a warning substance for global finances. This is a real-time warning for public agencies looking to all-in cloud integration without adequate democratic safeguards or decentralized technology guardrails. This new reality presents an important awakening call for publicly driven institutions.
Proof of danger
Consider whether the IRS Mega API will go down during tax season. Or if that’s misunderstood. Or if it’s hacked. There is a better way.
Distributed technologies offer fundamentally different architectures. Rather than consolidating the power supply into a single API or cloud service, a distributed system distributes it to many nodes. Access is controlled through encrypted proofs. Actions are verified and privacy is preserved by the Zero Knowledge Protocol.
A rapid policy change is needed that means that data privacy is not supported and that no financial control over some of the government’s most sensitive data means that certain services are not entitled.
True data privacy supports the individual autonomy and equal treatment of all people, ensuring that governments and institutions are kept to the highest standards of accountability.
AWS’s quick solution should not reassure us. It should be noted that the entire data plane for critical services (financial, government, or whatever) can be stopped due to a centralized point of failure. If the Doge Mega API is built on this same model, it could quickly lead to economic upheavals for American households.
Enter decentralization
Blockchain-based IRS data systems do not require central cloud providers to have access to raw taxpayer data. Instead, smart contracts can verify credit or compliance eligibility for tax regulations without revealing underlying personal information.
Such systems are theoretically safer and structurally less democratic. Data stored on the blockchain is not possible and creates a tamper-proof system that can withstand editing attempts.
In conjunction with this resistant nature, smart contact systems mean that user data remains private and secure, and there is little need for human contact with sensitive information.
Related: The IRS appoints Trish Turner, who will lead the Crypto Division in his resignation
So countries like Estonia and the European Union regions are already investigating distributed public infrastructure for digital identities and services.
The real risk is political abuse
Here is another deeper concern: political power. So does the ability to weaponize when access to citizen data is centralized. Today it is a Palantir engineer and a Doge operative. Tomorrow, it could be a political appointee with a grind x. Bad actors may change their tax returns, employment history and family data in one login.
The Doge experiment is more than just a modern IT programme. It’s about rethinking how citizens interact with governments and how much power the government (and its contractors) should have over our data. If you allow these changes to be rushed, you risk trading the messy pluralism of public governance due to the brittle speed of concentrated technology under the cover of “efficiency.”
Stopping AWS is a clear signal. There’s no doubt about the cloud platform. If they fail, the results are cascaded. Don’t make the same mistakes as government agencies like the IRS.
Decentralized technology is not perfect, but in an age where trust is worn out and data is currency, it offers a safer, more fairer, and more resilient governance vision. We can’t afford to ignore that vision of Web3, especially when our institutions compete against the exact opposite.
Opinion: Angie Darrow, Chief Marketing Officer and Chief Ecosystem Communications Officer, Web3 Foundation.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
