How Governments are Using Blockchain
Blockchain has come a long way from being an obscure technology to one of the promising innovations today. Industry players both in the private sector and government agencies are now piloting and testing blockchain applications for secure data sharing, supply chain, payments, and identity management, among others.
For governments, in particular, there are three compelling benefits that blockchain can deliver.
Potential Benefits of Blockchain for Government Use
• Building trust with citizens
Trust here means holding a positive perception about the action of the government, and is the foundation upon which political systems build legitimacy and sustainability. Unfortunately, most citizens do not trust the government. According to the Pew Research Center, only 17 per cent of Americans can trust their government to do the right thing. Part of the reason is that citizens cannot believe what they cannot see.
Luckily, with blockchain technology, there is potential to restore that trust. Since blockchain is a decentralised technology, its solutions are transparent. These solutions allow all the participating parties to see and take part in the verification of data.
Blockchain services can, for example, allow for independent verifications of government claims. Examples of governments who are using blockchain solutions to help build trust with their citizens include Estonia, Sweden, and Georgia.
• Protecting sensitive data
In today’s digital world, breaches of personal data have become a common occurrence. For example, in 2015, over 22 million records of government employees were stolen from databases managed by the Office of Personnel Management. Two years later, the Equifax data breach led to the exposure of the personal data of 143 million Americans. The personal data included full names, birthdates, diverse license numbers, social security numbers, and addresses.
Governments are a significant target for hackers since they are the ones who keep records for society. Attacks from hackers can, however, be avoided or mitigated by responsibly deploying data structures through the blockchain. Blockchain data structures improve network security by reducing single-point-of-failure risk.
Government agencies such as the department of homeland security are already seeking ways to use blockchain applications in cybersecurity. The department of homeland security now funds blockchain startups to research, develop, and explore new approaches to cybersecurity.
• Reducing costs and improving efficiency
Governments have to make use of scarce resources to fulfil their responsibilities. Blockchain applications, when used correctly, can go a long way in streamlining processes, reducing redundancy, increasing security, decreasing audit burden, and ensuring data integrity, therefore cutting costs and enhancing efficiency.
A great example of how blockchain can cut costs while at the same time, increase efficiency is the GSA FASTLane process. GSA uses the system to manage incoming vendor proposals. Currently, it takes about 40 days to process incoming projects. With blockchain, however, GSA hopes to cut that time to ten days. Using blockchain will also help lower the direct cost of analysing proposals by 80%.
Now that we know how blockchain technology can be useful let’s look at some governments already using this technology to their advantage.
How Governments are Using Blockchain
The Estonian government invested in IT long before the internet became available to the masses. No wonder the country is famous as “the most advanced digital society in the world.”
Before the implementation of blockchain in 2012, Estonia was already initiating and using services such as e-tax, digital ID, and i-voting. Such projects needed high-security measures, and that is what prompted Estonia to consider blockchain technology.
Currently, the government of Estonia provides such services as health, education, revenue, and residence using blockchain-based solutions.
Another country that has achieved a high degree of blockchain implementation is Dubai. The country has a project named Smart Dubai that aims at making Dubai the first city that is fully powered by blockchain by 2020.
Although Estonia and Dubai are the most vivid examples of how governments can and are using blockchain technology, there are still other countries that are making commendable strides in this space, more in the subsequent section.
Since April 2016, Georgia’s national agency of public registry has been implementing blockchain in the land title registry. The project is meant to supplement the nation's land registry protocol with blockchain and hence, enhance public confidence in property records.
When an individual initiates a title registration request with a notary, the system records the title on the Exonum blockchain. The citizen requesting a title receives a cryptographically encrypted digital asset certificate.
This service is currently available for the registration, sale, or purchase of both existing and new land titles. The Exonum protocol has a capacity of 5000 transactions per second. So far, it has registered over 100,000 land titles. Note that the Exonum is a private blockchain with its hash anchored on the public Bitcoin blockchain.
Some of the benefits that the Exonum protocol has brought about include:
- The time needed for the registration of land reduced from three days to just a few minutes.
- The overall land registry costs were cut by 90%.
- The process of registering land is now more transparent and reliable.
The ministry of education and employment in Malta has adopted the Blockcerts platform to help in the management of the nation’s academic records. The blockchain framework allows for the creation, viewing, verification, and issuance of the academic credentials of the people of Malta.
Maltese citizens use the Blockcerts app to list their academic institutions as an issuer of certificates. The institution uses its own private key and the citizen's public key to create a certificate. Since the creation of the certificate involves a public key, it automatically saves in the Blockcert's wallet belonging to the citizen.
The issuer also hashes the used certificate onto the blockchain. Once issued, the citizen can provide any required party with the digital certificate or Blockcerts URL.
This project drastically reduces the risks of academic falsification. It also enhances the means of sharing and storing educational information and also gives the citizen the power to share their academic credentials.
Since November 2017, the government of Switzerland has been issuing decentralised IDs known as uPort to the people of the city of Zug. The digital IDs were initially restricted to residential proof, but they can now be used for other municipal services such as voting.
Holders of the IDs use the uPort app to interact with the system. The protocol has two smart contracts, one for identity and the other for control. The smart contracts are used for protection in case one loses the mobile device containing the uPort app and also to ensure that the identity is valid.
The controller smart-contract is like an overseer of the identity contract. It can assign or revoke the authorisation of sign statements. It is also used to appoint a new public key to the identity contract when the host device is changed.
Since the identity contract consists of the individual's primary and stable data, they can use it to interact with other uPort identities and smart contracts.
Choosing to embrace technology is not just a technology question. It’s a decision that can go a long way in transforming the government processes for the better.
While this is not an exhaustive list, the examples mentioned herein are sure proof that with the right impetus, blockchain can be put to astonishing use.
Governments can leverage blockchain technology for process optimisation, enhance cybersecurity, as well as integrate hyperconnected services while bolstering trust and accountability.
About the author:
Jay Jackson is a blockchain enthusiast and a freelance writer at topcryptowriter.com. He works closely with brands (people, businesses and startups) in the crypto sphere. He currently writes Blog posts, Guides, Press releases, ICO reviews, eBooks & Whitepapers. You can find him on LinkedIn.
The above references an opinion and is for informational purposes only. Do not take this as personalised financial advice or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.
Last updated: 25/08/2019