The Use of Blockchain in Government
- Blockchain, Government, Security
Building trust can be difficult. This is not exclusive to relationships between individuals but also between individuals and organizations, merchants, and even government entities. The latter struggle more than ever to win citizens’ trust.
According to a Pew Research Center study, less than one-quarter of Americans say they can trust the Government (24%), and this number is even higher for younger generations, such as Gen Z and Millenials. One reason for the growing distrust is a lack of transparency in how personal data is handled, as digital transformation progresses. Government entities can address this challenge by Integrating Blockchain technologies into their tech stack and processes… but what exactly is Blockchain and how can it serve the public sector?
What is Blockchain, exactly?
At its core, a Blockchain is a digital ledger of all transactions that have ever been executed. It constantly grows as “completed” blocks are added to it, consisting of new transactions. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.
The Benefits of Blockchain
Blockchain has numerous advantages. However, only the most important are discussed here:
- Blockchain enables trustless data economies. This is increasingly important in our globalized world where people from all over the globe share and exchange sensitive data (Financial, Health, Legal, etc.)
- Blockchain’s decentralized character eliminates the reliance on middlemen and assures that no single entity is solely responsible for data exchange
- As all data is stored in a public database, anyone with an internet connection can access it, making the data highly transparent and traceable.
- Given it is an unchangeable ledger of transactions with end-to-end encryption, Blockchain inherently offers the highest level of security. This prevents fraudulent activity and unlawful conduct as it is impossible to hack the chain directly.
- Finally, by removing the need for any intermediary and replacing manual operations in exchanges, the technology accelerates business processes while reducing expenses.
These characteristics make Blockchain software incorruptible, and therefore highly suitable for storing sensitive data such as personal information, medical records, and voting results.
What is Blockchain, exactly?
At its core, a Blockchain is a digital ledger of all transactions that have ever been executed. It constantly grows as “completed” blocks are added to it, consisting of new transactions. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.
The Benefits of Blockchain
Blockchain has numerous advantages. However, only the most important are discussed here:
- Blockchain enables trustless data economies. This is increasingly important in our globalized world where people from all over the globe share and exchange sensitive data (Financial, Health, Legal, etc.)
- Blockchain’s decentralized character eliminates the reliance on middlemen and assures that no single entity is solely responsible for data exchange
- As all data is stored in a public database, anyone with an internet connection can access it, making the data highly transparent and traceable.
- Given it is an unchangeable ledger of transactions with end-to-end encryption, Blockchain inherently offers the highest level of security. This prevents fraudulent activity and unlawful conduct as it is impossible to hack the chain directly.
- Finally, by removing the need for any intermediary and replacing manual operations in exchanges, the technology accelerates business processes while reducing expenses.
These characteristics make Blockchain software incorruptible, and therefore highly suitable for storing sensitive data such as personal information, medical records, and voting results.
Use Cases of Blockchain in Government
Identity Management
Identity management is a major concern for many countries as poor handling opens up a huge risk of fraud. Cyber attacks are aimed at stealing citizens’ identities to use them for criminal activity. Information leakage as a result of mishandling would cause great damage to the reputation of a Government.
By leveraging Blockchain solutions, it is possible to issue each citizen a unique digital identity that is stored on a decentralized network, containing sensitive data (such as social benefits or pensions). Hence, it is impossible for fraudsters to use someone else’s identity as all data is encrypted and constantly verified. Blockchain’s decentralized character also minimizes the risk of information leakage.
To provide better services and prevent identity theft, the Australian Department of Human Services is already leveraging Blockchain to store citizens’ data. Further, The United Nations has implemented a digital ledger-based ID system to help refugees claim their identities and access essential services.
Land Registry
For many countries, maintaining an up-to-date land registry is a complex and costly process, that requires a great deal of manpower. These processes are also often prone to corruption (i.e., selling the same piece of land to multiple buyers).
Therefore, land registry is another field that would highly benefit from harnessing Blockchain technologies. With a decentralized ledger, all data related to ownership is stored in a secure way and accessible to relevant parties with zero chance of multiple selling or fraudulent activity.
Supply Chain Management
Blockchain software solutions can be employed by government entities to optimize supply chain management.
Many items are lost or damaged during transport due to inefficient communication between different stakeholders (such as manufacturers, suppliers, and logistics companies), resulting in a high number of compensations and returns which is not only costly but also time-consuming.
With Blockchain, all item data is stored on a shared ledger that is accessible by all relevant stakeholders. This allows for real-time tracking to improve coordination and facilitate loss prevention.
Public Records Management
Another usage scenario for Governments to take advantage of Blockchain software development is public records management. This includes birth certificates, land ownership titles, business licenses, and marriage licenses.
Given that these documents are primarily paper-based, they can easily be exposed to loss or damage. Further, retrievement processes often take weeks or even months.
Such documents are often a target of fraud as they can be forged more easily than digital assets. This can have a significant impact on people’s lives.
An example: Ownership of a house in the U.S. is currently proved by a registered deed. Imagine someone creating an unauthorized duplicate of the document. This person would be able to get a mortgage loan or even sell the house to a third party.
By utilizing Blockchain software development to store crucial documents on a digital ledger, security is maximized, and ease of access is optimized by making the retrieval process faster and more efficient. Moreover, anyone with the necessary permissions is able to view them, given the transparency of Blockchain software.
Going back to the housing example: If you want to get a mortgage, you can grant the lender access to view the cryptographic record so they can ensure authenticity. Blockchain is tamper-proof which eliminates the risk of fraud in issuing deeds, business licenses, and other unique documents.
Patents
Blockchain has the potential to reshape the way patents are granted. The current process is oftentimes slow and bureaucratic. Further, the manual effort of granting patents is prone to errors as even a small mistake by an employee can invalidate the patent. Storing the proof of a patent in a conventional way also increases the risk of fraud.
Blockchain software can help businesses in the event of a patent lawsuit. Organizations would be able to flag a document’s distributed ledger entry with the time stamp of its creation before it goes through the entire patent filing process. This allows judges to quickly determine who had the idea first, whenever a rival company seeks to register a comparable patent.
Smart Contracts
The use of Smart Contracts can have a disruptive impact not only on Government work but also on every other industry. A Smart Contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code that are stored on a Blockchain.
This means that two or more parties agree on certain conditions in a transparent and irreversible way without the need for third-party involvement or an intermediary. Given the storage on a decentralized network, they are tamper-proof. With manual processing no longer required, they also allow companies to move much faster and improve their efficiency.
In the context of government software solutions, the benefits of Smart Contracts are increasingly harnessed. The country of Estonia has become a pioneer in adopting innovative technologies. The use of Smart Contracts has allowed the Government to offer e-Residency, a digital ID that grants non-citizens across the globe access to Estonia’s e-services such as company formation, banking, taxation, and healthcare.
Process of Decision-Making
As digitalization continues, the decision-making process within Government entities is more and more data-driven. This creates a need for accuracy and reliability – a situation ideally suited for the use of blockchain software. By storing the results of statistics, polls, tests, and other surveys on cryptographic ledgers, they become 100% tamper-proof, immutable, and transparent. This eliminates corruption while increasing trust between different parties.
As an example serves one of our clients, a public health organization. We developed a decentralized app that ensures the accuracy and quality of test results in order to create public trust and transparency among governments and citizens. Utilizing Blockchain technology, our Blockchain experts built an application that standardizes and immutes clinical information to allow rigorous and factual reporting capability. This enabled the leaders with the ability to make well-informed decisions.
Voting
Blockchain software has the potential to reshape a country’s voting system. The security of election systems has been questioned numerous times in recent years. Given this growing distrust in electoral results, storing each individual’s decision on a Blockchain prevents manipulation and eliminates doubts about validity.
There have been several successful pilots already. Most notably, the city of Zug in Switzerland allowed residents to vote, using their digital ID on a blockchain-based mobile app.
How can Government entities get started with Blockchain?
After elaborating on some of the ways Government entities can take advantage of Blockchain, here are the steps you can take in order to start a project.
1. Blockchain Consulting
The first step is to evaluate the business value of Blockchain for your organization. Based on objectives, your current tech stack, and workflows, ELASTECH’s Blockchain consultants will determine the right technology and architecture.
2. Proof-of-Concept (PoC)
We always recommend starting with a pilot project, which in most cases will be a Proof-of-Concept (PoC). PoCs demonstrate the feasibility and potential of the project (typically involving a small-scale implementation to test key features and functionalities). This helps organizations build the vision and secure funding for the project.
3. Blockchain Software Development
Once we confirm the feasibility of using the blockchain for your application, your project is ready for development. As a leading-edge Blockchain development company, ELASTECH develops applications that map exactly to your business requirements.
We continue to help Government entities capitalize on the benefits of Blockchain through Blockchain consulting, ideation and design workshops, and Blockchain development. In a conversation with a trusted expert, you can explore the value of using Blockchain within your organization. Schedule a call below, if you are interested.
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The Barriers to the Adoption of Blockchain
Given the number of benefits that Blockchain software has to offer, why are there still relatively few real-life examples of Government entities taking advantage? Here are some common caveats:
Lack of Awareness
The first reason is the lack of understanding about how Blockchain can serve the public sector. Many decision-makers still consider Blockchain as a synonym for cryptocurrency, associated with volatility and fluctuation.
As more and more use cases are developed and piloted around the world, this is starting to change
An ever-changing field of Technology
Blockchain is still a relatively new space for companies to enter. In addition, the field is very dynamic. New technologies come up frequently, and practices that might have been state-of-the-art one year ago are now outdated. This challenges Government entities and their IT departments to keep track and determine the next steps.
The Right Talent
Given the immaturity of the Blockchain space, there are not many people that have the experience and expertise to execute development projects with confidence. From conversations with many executives, we hear that they immensely struggle to attract the right solution architects or engineers.
Do not let those reasons stand in the way of your potential gainings with Blockchain technology. We continue to successfully provide Blockchain consulting and development services for Government entities to increase transparency, and reduce costs while maintaining the highest levels of security.
Whether your entity is ready to use Blockchain with a specific project in mind, or if you want to explore the opportunities and advantages for your operations, we welcome you to take advantage of our expertise. Schedule a Blockchain consultation with a proven expert by clicking below.
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