There is significant interest in many countries in the potential of blockchain for government services, both in terms of cutting costs and for building trust and transparency. And, indeed, there already are many compelling pilot projects around the world.
But many are not built to scale and/or to achieve financial sustainability, and that is where leadership, partnerships and standards have crucial roles to play. Government chief information officers (CIOs) and information technology (IT) leadership must do the groundwork of building a culture that is ready to embrace and capitalize on the change brought by technology innovations such as blockchain. Governments, furthermore, require a trustworthy paradigm for evaluating design options that are now available in blockchain and a strategy for adopting the technology space’s quickly emerging framework of technical standards.
A good match
Blockchain is an open-source distributed database using state-of-the-art cryptography through a distributed ledger that enables trust among disparate individuals or third parties. In short, blockchain transforms the way transactions happen in the Internet age.
Blockchain’s capabilities are especially well matched for the requirements of electronic government (or “eGovernment”) services—especially in developing countries where governments are scaling the introduction and operations of digital services.
Per the European Commission, “Effective eGovernment can provide a wide variety of benefits including more efficiency and savings for governments and businesses, increased transparency, and greater participation of citizens in political life. ICTs (information and communication technologies) are already widely used by government bodies, as it happens in enterprises, but eGovernment involves much more than just the tools. It also involves rethinking organizations and processes, and changing behavior so that public services are delivered more efficiently to people. Implemented well, eGovernment enables citizens, enterprises and organizations to carry out their business with government more easily, more quickly and at lower cost.”
International landscape of projects
Whether governments are introducing services for food or pharmaceutical traceability, land record management, corporate registration or healthcare, blockchain’s design and characteristics of a decentralized distributed architecture, encryption, data immutability and transparency are appealing virtues.
Every country, for example, wants to be able to trace the path of its food—all of the way from the farm to the restaurant or to the home—in order to better understand touch points in case there’s some contamination. Thailand’s National Electronics and Computer Technology Center (NECTEC) has conducted pilots and implementations using RFID tags for shrimp it was selling to the European market. Such a system is a perfect candidate to be enhanced or replaced by blockchain.
Similarly, many countries want sophisticated systems for pharmaceutical traceability, especially those countries that experience significant counterfeit drug problems. In some countries, pharmaceuticals is not a heavily regulated market—drugs might come in nonstandard packaging and be sold in independent corner markets with little accountability. In these instances, it can be very challenging to tell whether a drug is real or counterfeit. Some countries have worked with drug companies to code drug packages in such a way that consumers send in a text message with the code to verify its legitimacy. This, too, is the type of government service that could be revolutionized by blockchain.
Many countries including Kenya and Ghana are looking at blockchain to bring greater transparency and credibility to land records, Sweden has implemented a pilot and Georgia has successfully implemented a system. Estonia has applied its KSI blockchain technology not only for land records but also for business registration, eHealth records and other applications. And Dubai as part of its Smart Dubai initiative has three pillars of government efficiency, industry creation and international blockchain leadership and recently incorporated blockchain as part of its online payment portal DubaiPay.
There are many factors to success of these government blockchain projects, especially in terms of bringing them to scale, beyond simply implementation of a workable technical solution. For one thing, there must be a clear view as to what the customer need is.
For example, Japan has multiple objectives for its Society 5.0 – Super Smart Society vision. Japan has an aging society with significant citizen needs in terms of health, transportation and safety including from natural disasters, particularly among rural populations. In addition, Society 5.0 initiatives further Japan industry competitiveness to compete effectively worldwide in technology. In this sense, Japan has a crystalized vision for the customer need that is to be satisfied in implementing blockchain and other innovations such as UAVs, robotics and interconnecting ICTs with the physical world including for traffic and transportation systems.
Leadership, institutional capacity, regulation and policy are other critical elements. Success also demands a vibrant business ecosystem of both smaller and larger businesses, as well as a sufficient degree of digital literacy among the citizens.
Estonia is perhaps a good illustration of best practices in this area. The country has been a leader in terms of how far they have come with digital services since restoration of independence in 1991. Estonia had a history of strong computer science education from its time as part of the former Soviet Union. A consensus took firm root within the independent republic that Estonia would compete in technology and that innovative technologies were going to be the basis for its economy. So, for over 25 years now, Estonia has been oriented around this notion, and then the country ramped up its successful digital-services initiatives in the early 2000s. Blockchain is a key enabler of the transformation that is still playing out in Estonia.
A focus on path to scalability and sustainability also is crucial to success of these government blockchain projects, as is engaging customers early in development and implementation of eGovernment services.
Finally, innovations such as blockchain offer developing countries especially the opportunity to leapfrog generations and quickly bring services to state of the art because they often do not carry the burden of having to maintain or reap value from legacy-system investments. One of the challenges with blockchain, however, is that it is a little bit of a “black box” for much of the global population—while the technology is designed to bring transparency, traceability, security, etc. to what are traditionally low-trust environments, there needs to be public trust in the blockchain itself. That does not always exist.
The global technical community has an important role to play, too, in helping governments leverage blockchain to the maximum benefit of their populations. The IEEE Blockchain Initiative, for example, seeks volunteers to participate in the initiative and support ongoing activities in pre-standards and standards development, education, community development and outreach, etc.
To engage with this effort and learn more please visit our webpage on IEEE.