Blockchain – a “new steam engine” for government or just a silly fad?
There is no way to avoid the blockchain topic. While popular magazines focus on massive losses of bitcoin users, business and tech magazines are full of articles on new ideas/use cases for blockchain technology. While most of them deal with use cases in finance and supply-chain, there are also a few ideas which might be useful in the area of traditional government.
Prior discussing potential use cases, let’s quickly recap what is considered blockchain technology and what benefits it can bring.
Blockchain is a concept to record transactions so that they are tamper-proof, do not require trust between the transaction participants, are transparent for the public, but anonymous concerning the person who originated the transaction. Furthermore, all the transaction records are stored in full not just in one central database, but many databases. Not one owner controls the databases, but they are spread among several owners.
However this technical design comes with certain disadvantages (e.g. the number of transactions per second is rather low and does not match the transaction volume of relational databases; the computing power/electricity consumption required is huge; missing incentive model for non-financial use cases).
Therefore, it might be required that certain attributes of the blockchain concept will have to be adapted in order to accomplish another success story subsequent to Bitcoin.
Elections are a costly endeavor and also highly developed countries suffer from occasional election fraud. Simplifying the voting using the omniscient digital devices combining with a tamper-proof record keeping would clearly be a worthy use case. While one could question the need of a distributed record keeping system, the public nature of the checking whether your vote was actually counted might appeal to a skeptical public.
However, until this use case might come to fruition, a tamper-proof identification systems or device to access a blockchain voting service needs to be rolled out by the government first.
So far all hacker attacks in bitcoin were wallet attacks – the blockchain system itself has not been tampered. Furthermore, a technical approach needs to be devised which prevents that one individual can vote several times and the vote stays anonymous.
In case sufficient trust cannot be established with a central ownership registry, blockchain technology could be used to administer ownership records (e.g. land registry, patent office). A service offering (http://www.everledger.io) for diamonds has already been built. On the other hand, a land registration project by the government of Honduras has been stopped (http://siliconangle.com/blog/2015/12/27/factoms-blockchain-land-reigstry-tool-trial-stalls-due-to-the-politics-of-honduras/ )
Smart contracts no longer contain the contractual conditions in writing, but can automatically execute the fulfillment of a contract once the certain contract conditions happened (e.g. partial payment is received). Although not related to Public Sector only, the productivity gains by taking part in smart contracts might also benefit Public Sector organizations.
However, smart contracts face challenges in case the analogue world is involved. E.g. how could a program code detect whether the delivered goods had the ordered attributes?
Distribution of grants
A blockchain based grant system could be used to track all transactions between donors and recipients. While that implies that anonymity has to be comprised, it is also required that the final recipient of the grant/aid finds a supplier which accepts the virtual blockchain money. Given the transparency of each transaction, a limited number of suppliers might be interested to be part of such a system. However if large donors would join forces and no legal boundries to prevent this were to be raised, such a system could successfully reduce grant fraud.
While there are interesting use cases for governments for blockchain, no case seems ready for immediate execution, but rather might requires a change of circumstances for adoption.