Blockchain will transform government services, and that’s just the beginning
Governments are tasked with bringing fair and efficient services to the public. Unfortunately, providing transparency and accountability often results in a reduction in efficiency and effectiveness or vice versa. Governments are usually forced to choose to improve one at the cost of the other. On rare occasions, technology comes along that enables governments to improve fairness and efficiency.
The move from paper-based record keeping to computer databases was one such technology. The internet was another. Blockchain is the next. Like the internet before it, blockchain will not only improve how the public interacts with government services, it will have broad economic and social implications.
Blockchain will have a wide and varied impact on government services. Here we explore some promising examples.
Identity forms the cornerstone of interaction with government services, but current systems are flawed in many ways. Let’s look at two. First, identity requires extensive and expensive infrastructure. While developed nations enjoy the benefits of strong national identification, many developing countries struggle to provide robust identification. The World Bank estimatesapproximately 1 billion people do not have official proof of identity. Second, current identity systems are not secure. For example, India’s biometric authentication number system, known as Aadhaar, is vulnerable to a wide range of frauds, including those involving land transfers, procuring passports, getting loans, casting votes and more.
Blockchain’s strengths align remarkably well to mitigate the weaknesses mentioned above. Blockchain’s decentralized design makes its deployment and coordination much less expensive than centralized designs. Its trustless nature makes it more secure.
Public procurement accounted for 29% of general government expenditure in OECD countries in 2013. Unfairness and lack of transparency in the procurement cycle open the door to corruption. The OECD estimates that up to a third of investment in publicly funded construction projects may be lost to corruption.
Blockchain-based solutions have the potential to affect almost every aspect of the procurement cycle, such as major reforms around transparency and stakeholder participation. This pilot project concluded that despite challenges, “blockchain-based e-procurement systems provide unique benefits related to procedural transparency, permanent record-keeping and honest disclosure.”
Despite the advent of the digital age, paper-ballot-based voting remains the dominant method of voting. This is understandable, given the importance of elections to the democratic process. Still, paper-based systems suffer from problems related to costs, time and integrity. The replacement to paper-based voting, known as direct-recording electronic (DRE) voting machines, has met with mixed success. Brazil introduced DRE in 1996, yet security concernspersist. DRE in America began in 2001; however, progress and adoption have slowed as incidents with DRE machines continue to occur.
As an even newer technology, blockchain is not yet ready to replace current voting systems, but it is already bolstering current systems. For example, our company, in collaboration with the University of Indonesia, set up an independent blockchain-based verification system to secure the results of Indonesia’s paper-based April 2019 elections.
