Blockchain Is Transforming Government - Part II

We continue our look at how blockchain can steer eGov and help create better public services

Ramy Caspi
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Developments And Adoption Of Blockchain In The U.S. Federal Government

(Before continuing, please read Part 1 here)

While the U.S. government was late to embrace cloud computing due to challenges with deciphering the model, lack of suitable procurement options and slow adoption, it appears to be engaging actively with the potential use of blockchain technology. The appeal of blockchain may center on the decentralized nature of the technology along with interoperability and reduced cost outcomes.

In one of the first contract awards for blockchain technology implementation for the U.S. government, the Department of Homeland Security awarded a blockchain contract to “Prove Integrity of Captured Data From Border Devices.”

The Food & Drug Administration issued a "sources sought" notice late in 2017 for an application of blockchain. According to the notice, this was for real-time application for portable interactive devices (RAPID) "to enable [the] exchange of patient-level data within the United States Critical Illness and Injury Trails Group network." 

The U.S. Department of Defense Transportation Command also showed a recent interest in blockchain centered on an innovative use of distributed ledger capabilities. Its interest also included extensibility, monitoring and scalability of the technology across extended domains.

U.S. Army Medical Research and Materiel Command (USAMRMC), in coordination with the Medical Technology Enterprise Consortium (MTEC), published a notice that it will be issuing a request for proposal that will include an application of blockchain, among other goals. The MTEC mission is to assist USAMRMC to partner “with industry and academia to augment the supply chain and next generation inventory management capabilities that are utilized to protect, treat, and optimize Warfighters’ health and performance across the full spectrum of military operations.

Current US States trailing Blockchain

Delaware, USA – Smart blockchain contracts, public archives

In 2016, Delaware became the first US state to embrace distributed ledger technology. Blockchain technology will be used to store contracts and other corporate data on a distributed ledger, allowing companies and agencies to store their documents in more than one location. This will keep them more secure and allow automated access by constituents, shareholders and employees. The Delaware Public Archives will be among the first to use the distributed technology to archive and encrypt government archives. The use of blockchain means the documents can be replicated in multiple locations, providing better disaster recovery and saving the cost of off-site physical storage.

Georgia – Blockchain Land Registry

The government of Georgia is using blockchain to register land titles and validate property-related government transactions. A custom-designed blockchain system has been integrated into the digital records system of the National Agency of Public Registry (NAPR), and anchored to the Bitcoin blockchain through a distributed digital timestamping service. The digital timestamping service allows the government to verify and sign a document containing a citizen’s essential information and proof of ownership of property. The system will boost land title transparency, reduce the prevalence of fraud, and bring significant time and cost savings in the registration process.

Illinois, USA — forms initiative to explore blockchain innovation

In Illinois, a consortium of state and county agencies has established the Illinois Blockchain Initiative. Its objectives include creating a welcoming regulatory environment in which businesses can operate, as well as a public/ private collaborative platform to develop prototypes of blockchain applications that could be used by the government. Sharing the consortium’s eagerness to embrace blockchain, the Cook County Recorder of Deeds expects to become the first land records office in the United States to register property transfers on blockchain technology.

Other Global Governmental Blockchain Programs

Canada - National Research Council funding & grant data

The Canadian government has launched a trial to explore the use of blockchain technology in making government research grant and funding information more transparent to the public. For the trial, the National Research Council (NRC) is using the Catena Blockchain Suite, a Canadian-made product built on the Ethereum blockchain, to publish funding and grant information in real time.

When the NRC creates or amends a grant, the pertinent information is stored on the Ethereum blockchain, and posted on an online database that Canadians can peruse.

Colombia — Peaceful Voting

In order to give Colombian expatriates a voice in a 2016 Peace plebiscite and to test the potential of blockchain technology in the electoral processes, the tech non-profit Democracy Earth Foundation set up a digital process that allowed the expatriates, who were unable to vote through the official process, an opportunity to vote on whether to approve a historic peace treaty. This process raised interesting questions for governments about the future use of blockchain in electoral processes.

Dubai – Global Blockchain Council

Dubai has set up the Global Blockchain Council to explore current and future blockchain applications. The council currently consists of 47 members from both the public and private sector and launched seven blockchain proofs-of-concept trails, covering health records, diamond trade, title transfer, business registration, digital wills, tourism engagement and shipping.

IBM has partnered with the Dubai government to trial the use of blockchain for a trade and logistics solution. The solution transmits shipment data, allowing key stakeholders to receive real-time information about the state of goods and the status of the shipment, and replaces paper-base contracts with smart contracts.

The Crown Prince of Dubai has also announced a strategic plan that would see all government documents secured on a blockchain by 2020. The Dubai government estimates that the blockchain strategy has the potential to save 25.1 million hours of economic productivity each year.

Estonia – Blockchain identity management, e-voting, electronic health records

Estonia is considered to be a leading nation in the adoption of blockchain technology. Estonia's citizens and e-residents are issued a cryptographically secure digital ID card powered by blockchain infrastructure on the backend, allowing access to various public services. On a blockchain platform, citizens can verify the integrity of the records held on them in government databases and control who has access to them. Earlier this year, Nasdaq successfully completed a trial in Estonia that will enable company shareholders to use a blockchain voting system.

Estonia is also adopting blockchain technology to secure the country’s 1 million health records. Every update and access to healthcare records is registered on the blockchain, preventing medical fraud and making it impossible for hackers to hide their trail. It also provides real-time alerts to attacks, enabling the government to respond to incidents immediately before large-scale damages occur.

Singapore – Blockchain interbank payments

The Monetary Authority of Singapore (MAS) has successfully completed a proof-of-concept pilot to explore the use of blockchain for interbank payments. Partnering with a consortium of financial institutions, blockchain infrastructure was used to produce a digital currency issued by MAS and methods were tested to connect bank systems through distributed ledger technology. The technology will simplify the payment process, reduce time take for transactions, enhance transparency and system resilience and reduce the cost of long term record keeping. MAS is currently developing links from Singapore to other countries to enable DLT cross-border payments, and will test blockchain technology for bond trading. MAS is looking at this project as the first step in leveraging Blockchain to verify and reconcile trade finance invoices, verify the performance of contracts, keep an audit trail and deter money laundering.  

Sweden — Lantmäteriet Blockchain Land Registry

Sweden's land registry authority, the Lantmäteriet, has emerged as one of the first national agencies to put its faith behind the use case. While there is a steady stream of projects pairing blockchain startups with government agencies, the Lantmäteriet's work is perhaps distinguished by the steady progress it's shown so far.

Working with startup ChromaWay and consultancy Kairos Future, as well as the SBAB and Landshypotek banks, the Lantmäteriet has been testing whether private blockchains can serve as a means of carrying out property transactions since last June.

UK – Blockchain-as-a-service, Welfare payments

Blockchain-as-a-service has been made available for purchase through the UK government’s Digital Marketplace. With this service, government agencies are free to experiment, build and deploy digital services based on distributed ledger technology.

In 2016, the Department for Work and Pensions began a trial to use blockchain technology. Claimants can use a mobile app to receive and spend benefit payments, and with their consent, transactions are recorded on a distributed ledger to support their financial management. UK government's chief scientific adviser Sir Mark Walport has highlighted in a report how blockchain can help in areas such as reducing benefit fraud, protecting critical infrastructure and registering assets.

Conclusion

Blockchain-based solutions have the potential to make government operations more efficient and improve the delivery of public services, while simultaneously increasing trust in the public sector. In mature economies, proponents of government blockchain solutions must provide strong evidence that such investments will save money and improve services that are already “good enough.” In emerging markets, the lack or immaturity of certain essential public services could allow governments to leapfrog ahead to help policymakers achieve their aims. For both markets, education and determining the right applications for the technology will be key to success.

What’s next? Open government

Ultimately, blockchains could unleash and amplify the power of open government. As part of a collaborative ecosystem enabled by blockchains, government could become a trusted partner and reinvent existing processes to enable more collaboration across agencies and with citizens. Blockchains could provide a consistent, transparent and open view of activities, information and decisions, fueling the open innovation and reinvention of government services. These include:

  • Co-created services: Disparate, top-down service delivery processes could be replaced by a seamless process that empowers citizens and government to co-create the types of services citizens want and need.
  • Integrated services: Centralized systems and disparate data silos could be replaced by a single replicated database that provides a secure and immutable version of the truth, open to use by all ecosystems stakeholders.
  • Self-governed services: Centralized government control could be replaced by self-regulated service delivery ecosystems.

Government organizations, like those in any industry, are wise to take the long view on blockchains. But unlike other industries, because they shape the regulatory and legal environment, they can’t afford to stay on the sidelines. Government organizations don’t just stand to benefit from the greater trust promised by blockchains; they are uniquely charged to create it for the benefit of all.

Resources:

  1. Beyond bitcoin: Blockchain is coming to disrupt your industry - Deloitte University Press
  2. Building trust in government - IBM Institute for Business Value, survey conducted by The Economist Intelligence Unit
  3. Will blockchain transform the public sector? Blockchain basics for government - Deloitte Insight
  4. How the blockchain will enable self-service government - Wired
  5. Blockchain 101 for Governments - WU Global Tax Policy Center — Institute for Austrian and International Tax Law of Vienna University of Business and Economics
  6. Blockchain in Government Briefing: Q3 2017 — Learning Machine
  7. How Blockchain Technology Could Change Our Lives, Feb. 2017 - European Parliamentary Research Service
  8. Using blockchain to improve data management in the public sector - Mckinsey & Company
  9. Blockchain Technology: Opportunities and risk — Vermont
  10. Distributed Ledger Technology: beyond block chain - UK Government Office of Science
  11. Estonian blockchain technology
  12. Fundamentally different perspective on government issues - Discipl
  13. Government Blockchain Association (GBA)
  14. Blockchain Technology: Possibilities for the U.S. Postal Service
  15. Congress Takes Blockchain 101 — MIT Technology Review
  16. Embracing Innovation in Government Global Trends — OECD
  17. Blockchain & Public Procurement: reducing corruption, increasing efficiency