Blockchain will transform government services, and this is just the beginning
Governments are responsible for providing fair and efficient services to the public. Unfortunately, ensuring transparency and accountability often leads to reduced efficiency and effectiveness or vice versa. Governments are usually forced to choose to improve one at the expense of the other. On rare occasions, technology enables governments to improve equity and Efficiency.
The shift from paper-based record keeping to computerized databases was one such technology. The Internet was another. The blockchain is next. Like the internet before it, blockchain will not only improve how the public interacts with government services, but it will have broad economic and social implications.
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How the government can use blockchain
Blockchain will have a wide and varied impact on government services. Here we explore some promising examples.
Identity is 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 nations enjoy the benefits of strong national identification, many developing countries struggle to provide strong identification. The World Bank estimates approximately 1 billion people do not have official proof of identity. Second, current identity systems are insecure. For example, India’s biometric authentication number system, known as Aadhaar, East vulnerable to a wide range of fraud, including those involving land transfers, obtaining passports, obtaining loans, voting and more.
Blockchain’s strengths line up remarkably well to mitigate the weaknesses mentioned above. The decentralized design of Blockchain makes its deployment and coordination much less expensive than centralized designs. His trustless nature makes him safer.
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Public markets counted for 29% of general government expenditure in OECD countries in 2013. Inequity and lack of transparency in the procurement cycle open the door to corruption. The OECD estimates that up to a third of investment in publicly funded construction projects could be lost to corruption.
Blockchain-based solutions have the potential to affect almost every aspect of the procurement cycle, such as major reforms in transparency and stakeholder engagement. This pilot project concluded that despite the challenges, “blockchain-based e-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, voting by paper ballot remains the dominant voting method. This is understandable, given the importance of elections for the democratic process. Yet paper-based systems suffer from cost, time, and integrity issues. The replacement for paper-based voting, known as direct-recording (DRE) electronic voting machines, has met with mixed success. Brazil introduced DRE in 1996, but security issues persist. DRE in America started in 2001; however, progress and adoption has slowed as incidents with DRE machines continue to occur.
As an even newer technology, blockchain is not yet ready to replace current voting systems, but it is already empowering current systems. For example, our company, in collaboration with the University of Indonesia, has established an independent blockchain-based verification system for secured April 2019 election results on paper in Indonesia. The project was able to bring in 25 million votes within hours of the polls closing. On the other hand, the official results were made public only after weeks.
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Beyond government services
Governments experimenting with blockchain are beginning to view it as critical infrastructure. They are beginning to understand that having a blockchain infrastructure is important for unleashing economic activity. Governments are eager to have a say in the development of standards that will eventually be adopted globally. China and the European Union are two such leaders and both are developing blockchain initiatives.
Chinese leaders have been extremely proactive in supporting blockchain initiatives. In December 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 governments conducting pilot projects using the technology for applications ranging from smart city initiatives to environmental protection. In October 2019, China tested its National Blockchain Service Network (BSN), described as the “internet of blockchains”, which it officially launched in April 2020.
The BSN, due to the scale and power of its backers, is on its way to becoming the largest blockchain ecosystem in the world. In China, the BSN is likely to form the basis for better coordination between business and the public sector. Even internationally, the appeal of the BSN is likely to be significant. There are concerns that the BSN is potentially controlled and monitored by the Chinese government, but these concerns can be overlooked by organizations seeking closer access and integration with Chinese companies. On the other hand, the profit motive may be overtaken by fears of Chinese influence, particularly if a viable alternative global blockchain infrastructure is available.
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Efforts within the European Union to support blockchain initiatives have been similarly proactive to those in China, albeit on a smaller scale and at a slower pace. The EU Blockchain Observatory and Forum was established in February 2018, leading to the formation of the European Blockchain Partnership (EBP). In 2019, the EPB created the European Blockchain Services Infrastructure (EBSI), a network of distributed nodes across Europe. The EBSI has seven specific use cases for development government services. In order to promote public-private cooperation, the International Association for Trusted Blockchain Applications (INATBA) was established. It brings together vendors and users of blockchain solutions with representatives from government organizations and standards bodies around the world.
While Europe’s approach to supporting and encouraging blockchain adoption is on a smaller scale and earlier stage of progress than China’s BSN, its commitment to openness, transparency and inclusiveness means that international organizations may feel more willing to adopt the frameworks developed.
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Blockchain technologies are now taking their place as fundamental infrastructure for forward-thinking governments. The technology has reached the highest levels of national strategic importance, as evidenced by China’s and Europe’s efforts to build blockchain infrastructure. While it is impossible to predict exactly what form the global blockchain infrastructure will take, what is certain is that the technology is booming.
The views, thoughts 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 is co-founder and CEO of SettleMint – a low-code platform for enterprise blockchain development – and Databroker – a decentralized marketplace for data. He holds a BA with honors from the University of Western Ontario in Canada and an international MBA from Vlerick Business School in Belgium. Matthew has worked in fintech innovation since 2006.