Slightly over a decade since the release of the Bitcoin whitepaper which brought forward the concept of blockchain, this technology has entered the mainstream and is being explored widely.
Blockchain technology now plays transformative roles in many sectors of the global economy due to its reception by enthusiasts as well as the tremendous success recorded by Bitcoin.
In order to keep up with the growing technological trends, many organizations in the supply chain, finance, energy, automobile, and health sectors of the economy are gradually adopting blockchain technology.
Many governments, at the moment, seem to be exploring this technology. So far, there are suggestions that the application of blockchain technology in governance can minimize bureaucracy, increase the level of trust among citizens and also enhance the efficiency of administrative processes and record keeping.
The blockchain sometimes referred to as distributed ledger technology, is a collection of immutable blocks of data that is usually distributed among millions of computers connected to the decentralized network. This collection of computers are called nodes.
Because this data is distributed across all computers connected to the network, it creates trust and transparency. This eliminates third-party accusations of manipulation of important data.
The use of blockchain has also eliminated the need for middlemen and central authorities, thus reducing transaction costs and preventing the impact of negative government policies.
This article will cover the application of blockchain technology in government as well as the risk involved.
Can blockchain be used in Government?
Blockchain can be used in government to enhance public and administrative processes, ultimately creating a digital government.
User-centric, agile, and innovative public services could be provided when a government decides to embrace digitization, and blockchain technology is one.
Blockchain is considered one of the most innovative technologies in governmental policymaking and service delivery. Theoretically, the advantages of using blockchain in governance are quite numerous. These include:
- Elimination of bureaucracy, corruption, and discretionary power.
- Minimizing economic cost
- Reduction of complexities in intergovernmental operations.
- Increased automation, audit ability, transparency, and accountability of government activities.
These advantages are due to the distributive nature of the blockchain, as well as programmable smart contracts. Ultimately, blockchain usage will also increase citizen trust in government due to the use of decentralized algorithms.
Why is it necessary to use blockchain in Government?
The use of blockchain in governance will promote automation, increase transparency and reduce bureaucracy. Below are some explanations on why the use of blockchain in the public sector is necessary.
Reducing costs and enhancing efficiency
The use of blockchain will reduce overhead costs and enhance efficiency. How? You may ask.
Even in the face of acre resources, every government agency has an objective that must be fulfilled. For instance, sensitive data must be secured, processes audited and integrity ensured.
To meet these goals efficiently and at a low cost, blockchain technology may just be the answer. This is because its solutions reduce redundancy, reduces the stress of audits, while also ensuring data security and integrity.
It increases citizens’ trust in government
A major attribute of the blockchain is transparency which comes to play because of the distributive nature of this technology. This is because all participating nodes connected to the network get a copy of the ledger.
Transparency will always lead to increased trust. This means a government that leverages blockchain technology will be trusted by its citizenry.
A study by the Pew Research Centre suggested that trust in the American government nearly got to an all-time low with only 18% of citizens saying they can trust the government to do what is right most of the time.
While this distrust may be triggered by a number of factors, there is a potential for blockchain technology to bring more trust. When both those in power and the masses have access to public records will increase credibility. Equally, citizens will be able to verify claims made by government authorities.
Preventing theft of sensitive information
Malware and ransomware are now rampant in today’s society. In the case of ransomware, a malicious individual steals a person’s personal information and threatens to expose them except a certain amount of money is paid.
For instance, in 2015, data of over 20 million past and present government employees were stolen from databases held by the Office of Personnel Management.
Another example is the 2017 Equifax database breach where sensitive data of over 140 million Americans such as full names, date of birth, addresses, and social security numbers, were exposed.
Such security and data breaches could cause harm to an individual or organization. However, the deployment of blockchain technology can mitigate such occurrences to a great extent. This is because data stored on the blockchain are highly encrypted, making it difficult for hackers to manipulate them.
With blockchain, government parastatals will be able to protect sensitive data.
Use cases of blockchain in government
Blockchain technology can be used in many areas of the public sector to streamline processes, enhance transparency and promote accountability. These areas include registries, healthcare, digital identity, administration, data storage, central banking, and voting.
Registries
The use of legacy tools in public agencies covering the registering of land titles, corporate ventures, divorce, marriage and more, often results in slow processes, fraud, corruption, and high cost.
Since blockchain uses distributive ledger technology, deploying it to registries could eliminate fraud and corruption by promoting transparency, as well as increase speed and minimize cost.
For example, in order to resolve property disputes, the governments of Sweden, Estonia, and Georgia are experimenting with blockchain-based land registries, so that multiple parties can securely hold copies of the registry.
Healthcare
Proliferation and breaching of electronic health records can be minimized if the health sector decides to deploy blockchain technology to store data. This technology can also eliminate redundant tests and procedures, enhance health administrative processes, screening digital prescriptions for possible reactions, and also automate payment for staff and vendors.
Data storage
Blockchain can be used to support the digital storage of publicly accessible records. By distributing storage across multiple nodes, both the resiliency and the integrity of the data can be ensured.
For example, the Department of Homeland Security is trying to leverage this technology by funding blockchain startups to conduct research and explore new approaches to cybersecurity.
Identity management
Identity management is important for service delivery. The use of legacy tools often makes identity management inefficient.
The use of blockchain in identity management will enhance easy verification of citizens’ data and also give them sovereign control over their identity.
Blockchain-based identity management systems will simplify academic credential verification, enhance tax and electronic health records.
Voting
A major challenge of electioneering processes in many countries is election malpractice and inefficient counting of votes. However, blockchain technology can make voting processes efficient by creating transparency and making election results, right from the stage of collation, immutable.
Central banking
Blockchain technology will have an important role to play as many countries are looking in the direction of Central Bank Digital Currencies (CBDC). CBDCs will help central banks improve the management of money supply and also enable governments to improve transparency on money issuance and government spending.
Challenges of Using Blockchain in Government
As we have seen, the use of blockchain in government has so many benefits. However, there are some challenges associated with the use of this technology exists in government. These challenges include:
Adoption Issues
This challenge is associated with understanding the different implementations of this technology as it relates to privacy, security, and other capabilities. Before deploying this technology, it is important for policy and decision-makers to assess it properly and gather some experience on its workability. Some factors that may influence the adoption of blockchain technology include the cost of deployment, data quality, and security of the system.
Technical issues
Technical issues are often associated with operation. Blockchain requires experienced hands to operate them and this may be a challenge because not every government employee has the ability to work with this technology. Besides technical know-how, scalability is another issue. As the blockchain gets crowded, speed becomes limited.
To solve issues of scalability, attention is now being shifted to promising alternatives such as Algorand.
In Conclusion…
- Blockchain has potential vital roles to play in the public sector. From data storage to identity management, central banks, and registries, this technology has the ability to enhance efficiency, promote transparency and minimize fraud and corruption.
- Generally, governments, especially developing countries, have faced serious criticisms for having some of the most inefficient processes. A solution to this will be the use of blockchain technology.
- With the rate at which blockchain technology is being adopted, many governments will also adopt this technology soon.
