The excitement around the applicability of blockchain in the public sector is building at a large scale. Government agencies have started testing blockchain technology’s potential to improve the public sector. However, the technology’s application in the public sector remains in the experimental stages.
Blockchain-based solutions could shift governments away from siloed and inherently insecure centralized systems. Public blockchains may transform the foundations upon which every government sector operates.
Blockchain technology could accelerate key government functions. Such functions entail identity verification and certifying transactions such for land-use registry and safekeeping of medical records.
What is a blockchain?
A blockchain is a decentralized network comprising data records or “blocks” that cannot be modified by a single actor. In the blockchain network, each block in the chain contains many transaction records. When new transactions are added to the blockchain, those transactions are recorded automatically once the block as a whole is verified and added to the chain.
The recorded transactions are then distributed to every participant’s ledger. That’s why if someone were to change one block in a chain, it would become immediately obvious that the system was compromised.
It’s highly infeasible for malicious parties to corrupt a blockchain network. In theory, feasible attacks such as the 51% attack can be carried out, where a majority of the network is owned and commanded by malicious actors.
Why should governments use blockchain technology?
States can gain many advantages from using blockchain technology in their governmental infrastructure. One fundamental role of governments is to store and manage sensitive information. States store details about their citizens, assets, organizations and activities.
Storing sensitive public data while maintaining data privacy can be complex and cost-intensive. Even first-world governments routinely fail to prevent data leaks.
Centralized government systems are inefficient and inherently costly and insecure. Governments everywhere have been actively seeking novel technologies to offer improved public services that are also cost effective.
Blockchain prevents government corruption
Blockchain has the potential to eliminate intermediaries in many e-government services. In this regard, it serves a unique role in combating government corruption.
This technology provides a remarkable combination of tamper-proof record keeping. Blockchains can allow states to adopt a decentralized approach where appropriate. Such approaches foster real-time transparency, auditability and smart-contract functionality.
Blockchains enable secure identity management, or e-identity
Cybercrimes and data breaches have become a frequent occurrence in various industries. Governments face serious challenges when safeguarding sensitive data and protecting their citizens’ identities.
A blockchain is an ideal approach to resolving identity and access management (IAM). In IAM, a distributed ledger allows everyone in the network to verify credentials. Participants can do so without compromising the actual data.
Distributed ledger technology (DLT) allows states to register each person’s identity so that they may easily safeguard against any breaches. DLT also enables shared record keeping. The network records and verifies identities instead of relying on a central authority.
Blockchains reduce costs and improve efficiency
Government agencies must deliver public services while managing scarce resources. Blockchain technology can help state actors with budgeting and financial management.
Consensus algorithms can be used to track and reconcile government transactions. Consensus makes it possible to reduce costs and increase efficiency.
A blockchain-based accounting system provides faster, more permanent and auditable reconciliation. Blockchains streamline processes and reduce redundancy. They also help audit financially weak areas, all the while maintaining data integrity.
Blockchains promote transparency in grant disbursements
Many governments disburse millions of dollars every year to support various causes. Key among them are humanitarian aid, social assistance, education, arts and others. In most cases, the grant disbursements process is opaque, convoluted and inefficient. In the process, economic rents are high with much of the funds finding their way to third parties and banking fees.
Blockchains also have the potential to mitigate corruption and build public trust. The technology reduces the number of actors involved in grant disbursements and management as well.
Blockchain technology in government e-voting
Voting remains an area that draws considerable negative attention due to corruption. Incidents of gerrymandering, manipulated ballot boxes and voters disappearing from registries are common. Even when everything is done by the book, voters are still required to leave their homes and deliver paper ballots to a local authority.
Not only is this voting system outdated, but it’s also vulnerable due to major security vulnerabilities. So, why not migrate this process to a blockchain?
DLT could be used to create a more secure and convenient digital voting system. The network comprises peers and nodes. Nodes verify, process and record all transactions across the system.
Blockchain technology in government for e-identities
Citizen identity is an integral part of a functioning society and economy. However, traditional identity systems are not secure, vulnerable to hacks and fragmented. Physical forms of identification also present their own set of problems. These issues range from inaccessibility to data insecurity and outright identity fraud.
Blockchain technology’s decentralized identity (DID) approach could eliminate these issues. The technology lets users create and manage their own digital identities.
A key element of DIDs is cryptography. In cryptography, a pseudonymous identifier for a user is secured with a private key. Only the owner of the private key has control over their identity, whereas the public key can be shared openly.