Governments are mandated to provide fair and efficient services to the public. Unfortunately, providing transparency and accountability often reduces efficiency and effectiveness or vice versa. Governments are often forced to choose to improve one over the other. In rare cases comes technology that enables governments to improve justice And efficacy.
The transition from paper-based record keeping to computer databases was one such technique. Internet was another. Blockchain is next. Like the Internet before, blockchain will not only improve how the public interacts with government services, but will have wide-ranging economic and social implications.
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How the government can use the blockchain
Blockchain will have a broad and diverse impact on government services. Here we explore some promising examples.
Identity forms the cornerstone of interaction with government services, but current systems are flawed in many ways. Let’s look at two. First, identity requires extensive and expensive infrastructure. While developed countries enjoy the benefits of a strong national identity, many developing countries struggle to provide a strong identity. The World Bank estimates that nearly 1 billion people do not have official proof of identity. Second, current identity systems are not secure. For example, India’s biometric authentication number system, known as Aadhaar, is vulnerable to a wide range of frauds, including those involving land transfers, buying passports, getting loans, casting votes and more.
Blockchain’s strengths fit remarkably well to mitigate the aforementioned weaknesses. Blockchain’s decentralized design makes its deployment and coordination much less expensive than centralized designs. Its unreliable nature makes it more secure.
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Public procurement accounted for 29% of public government spending in OECD countries in 2013. The inequity and lack of transparency in the procurement cycle has opened the door to corruption. The Organization for Economic Co-operation and Development estimates that up to a third of investment in publicly funded construction projects may be lost to corruption.
Blockchain-based solutions have the potential to impact nearly every aspect of the procurement cycle, such as major reforms related to transparency and stakeholder engagement. This pilot project concluded that despite the challenges, blockchain-based electronic procurement systems offer unique advantages related to procedural transparency, permanent record keeping, and honest disclosure.
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Despite the advent of the digital age, paper voting is still the dominant method of voting. This is understandable given the importance of elections in the democratic process. However, paper-based systems have problems with costs, time, and integrity. Replacing paper ballots, known as direct-record electronic (DRE) voting machines, has met with mixed success. Brazil introduced the DRE in 1996, but security concerns remain. DRE started in America in 2001; However, progress and adoption have slowed as accidents continue to occur with DRE machines.
As a newer technology, blockchain is not yet ready to replace existing voting systems, but it does support existing ones. For example, our company, in cooperation with the University of Indonesia, set up a blockchain-based independent verification system to secure the results of Indonesia’s paper elections in April 2019. The project was able to record 25 million votes within hours after polling stations closed. By contrast, official results were not announced until weeks later.
Related: Voting Evolution: Blockchain Technology Outperforms Paper Ballots and Electronic Voting
Beyond government services
Governments experimenting with blockchain are starting to consider it an essential infrastructure. They are beginning to understand that having a blockchain infrastructure is important to unleashing economic activity. Governments are eager to have a say in developing standards that will eventually be adopted globally. China and the European Union are two of these leaders and both are working to develop blockchain initiatives.
The Chinese leadership has been very proactive in supporting blockchain initiatives. In December of 2016, blockchain was mentioned in the country’s 13th Five-Year Plan as a technology of strategic importance on par with artificial intelligence. This was followed by dozens of local administrations implementing pilot projects using technology for applications ranging from smart city initiatives to environmental protection. In October 2019, China tested a nationwide Blockchain Services Network (BSN), billed as the “Internet of Blockchain,” which it officially launched in April 2020.
BSN, given the size and strength of its supporters, is poised to become the largest blockchain ecosystem in the world. Within China, BSN is likely to form the basis for better coordination between companies and the public sector. Even internationally, the draw towards BSN is likely to be significant. There are concerns that BSN will be controlled and monitored by the Chinese government, but these concerns may be overlooked by organizations seeking close access to and integration with Chinese businesses. On the other hand, the profit motive may be bypassed by fears of Chinese influence, particularly if a viable alternative global blockchain infrastructure becomes available.
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Efforts within the European Union to support blockchain initiatives have been proactive in ways similar to those in China, although on a smaller scale and progressing at a slower rate. The EU Blockchain Observatory and Forum was formed in February 2018, leading to the formation of the European Blockchain Partnership (EBP). In 2019, EPB created the European Blockchain Services Infrastructure (EBSI), a network of nodes distributed across Europe. EBSI has seven specific use cases for developing government services. To promote cooperation between the public and private sectors, the International Association of Trusted Blockchain Applications (INATBA) was formed. It brings together suppliers and users of blockchain solutions with representatives of government organizations and standard-setting bodies from around the world.
While Europe’s approach to supporting and encouraging blockchain adoption on a smaller scale and at an early stage of progress from China’s BSN, its commitment to openness, transparency and inclusion means that international organizations may feel more ready to embrace the frameworks that have been developed.
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Blockchain technologies are now taking their place as an essential infrastructure for forward-thinking governments. The technology has reached the highest levels of national strategic importance, as evidenced by the efforts of China and Europe to build blockchain infrastructure. While it is impossible to predict exactly what shape the global infrastructure of blockchain technology will take, one thing is certain, the technology is on the rise.
The opinions, ideas and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Matthew van Niekerk He is the co-founder and CEO of SettleMint – a low-code platform for enterprise blockchain development – and Databroker – a decentralized data marketplace. He holds a BA with honors from the University of Western Ontario in Canada and also holds an MBA in International Business from Fleereck Business School in Belgium. Matthew has been working in FinTech innovations since 2006.