William Mougayar is the author of "The Business Blockchain" and a board advisor to the Ethereum Foundation, the non-profit that oversees the development of one of two blockchains seeking to popularize the distributed computing platform.
In this opinion piece, Mougayar offers his thoughts on why global governments should be – and increasingly are – embracing blockchain.
As government services are one of the most obvious and immediate application areas for the blockchain, it's no surprise progressive governments are already working on initiatives.
In the first half of 2016, cities, municipalities and governments have been vocal in their plans for the technology.
Indeed, a quick overview of the projects in development shows how far the idea that blockchain could change government services has spread around the globe:
In Delaware, the state where a majority of new companies will likely incorporate, Governor Jack Markell announced two blockchain initiatives in May at CoinDesk's Consensus 2016 event.
As detailed by the governor, the first effort is focused on moving state archival records to an open distributed ledger, and the second allows any private company that incorporates in that state to keep track of equity and shareholder rights on the blockchain.
At the time, Markell declared Delaware is "open for blockchain business", and hopefully, 2016 will see continued progress made in delivering on this promise.
On the other side of the world in Singapore, the government has turned to blockchain for different reasons.
There, the city-state is seeking to prevent traders from defrauding banks, driven by an incident where Standard Chartered lost nearly $200m from a fraud in China’s Qingdao port two years ago.
Here, fraudulent companies used duplicate invoices for the same goods to get hundreds of millions of dollars from banks, so the Singapore government developed a system with the local banks focused on preventing invoice fraud by using the blockchain to create a unique cryptographic hash (a unique fingerprint) of every invoice.
The banks share this unique key, rather than the raw data. If another bank tries to register an invoice with the same details, the system will be alerted.
Long one of the more progressive digital governments, Estonia has established an e-residency program where anyone in the world can apply to become an e-resident of Estonia.
In return, residents receive a digital ID card with a cryptographic key to securely sign digital documents, eliminating the need for ink signatures on official paperwork.
An e-resident can also open bank accounts using Estonia's e-banking system, set up an Estonian company using the country's online system and use their e-services. With the blockchain, Estonia is bringing worldwide residents to them virtually, and gaining new revenue streams accordingly.
Estonia also has a healthcare initiative where medical records are tracked, and as a patient, you know who looked at your record and when. This puts you in control of your own data, and you have transparency about the medical care you are getting.
Georgia, Ghana and Sweden
Another emerging area of focus is in government land registries.
The Republic of Georgia, for example, is developing a blockchain project focused on this goal and spearheaded by their National Agency of Public Registry. They want to show that Georgia is corruption free, modern and transparent government.
Another land registry application is taking shape in Ghana, West Africa, where they are implementing it in 28 communities to enable tamper-resistant property ownerships.
Again, the driving element was to make a statement against the perception that the country had corrupt practices, and this initiative is used as a signal to attract foreign investors.
Sweden is planning to place real estate transactions on the blockchain so that all parties involved in the transactions – banks, government, brokers, buyers and sellers – would be able to track the progress of the agreement once it is completed. This will enable instantaneous confirmation of valid transactions with the utmost levels of security and integrity.
The UK is exploring the use of a blockchain to manage the distribution of grants. Monitoring and controlling the use of grants is incredibly complex, and subject to potential fraud or abuse.
A blockchain, accessible to all the parties involved, is a better way of solving that problem.
If your government, county, municipality, town, city or jurisdiction is not thinking about the blockchain, they should be.
There is plenty of room for innovation, especially in small cities and municipalities, as they are a perfect starting point.
Given the early stage of blockchain technology, it is a lot easier to implement solutions at smaller scales first, in jurisdictions that have between five to 300,000 citizens, instead of larger cities of more than a million inhabitants.
As a government entity, what can you do with the blockchain? Generically, there are four categories of activity:
- Verification. Licenses, proofs of records, transactions, processes or events. Did this event take place? Was this service performed on this piece of equipment? Does this person have the right permit?
- Movement of assets. Transferring money from one person/entity to another. Enabling direct payments, once a work condition has been performed.
- Ownerships. Land registries, property titles, and any type of real estate ownership. The blockchain is a perfect keeper of the chain of custody for any physical asset.
- Identities. Government, cities should issue blockchain e-identities to its citizens, enabling them to securely use services like voting. An e-identity could become similar to a passport, allowing its holder access to a variety of services and rights.
But, how do we get there? And what actions can the government take?
Government leaders should:
- Get up to speed on the blockchain by understanding it first, and committing to exploring its potential.
- Put people in charge of developing a blockchain strategy. Maybe there are employees that have been exploring it already, and they need to spread their wings and gain legitimacy with new projects.
- Start experimenting with blockchain technology via proofs of concept, sandboxes and small projects that do no harm.
- Develop new and more progressive ideas that are increasingly ambitious, and touch the lives of the citizens they are serving.
- Make a difference. Commit to introducing innovative blockchain-based solutions that cut costs and provide better or faster services to citizens.
Let’s hope the public sector around the world starts putting the blockchain on their agenda. Maybe then, we can see a significant difference in how government services are delivered.
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