Blockchain in the government sector

Blockchain based solutions can be applied by government entities to make their operations more seamless, while also improving the delivery of public services.

As Blockchain continues to gain more global traction, different industries will also start seeing the potential and varied applications of this distributed ledger technology. The end result would be an increase in trust of the public sector, the saving of money, and the overall improvement of public services delivery.

The road to increased transparency and efficiency

In recent months, different government entities around the world have started to explore the possibility of using Blockchain technology to improve their performance. It empowers its users to record transactions on distributed ledgers, which has several potential applications for governments to increase transparency, prevent fraud, and improve efficiency.

Recent surveys undertaken by leading names such as IBM and the Economic Intelligence Unit have indicated that there is a relatively high overall government interest in Blockchain. However, whether it involves financial transactions or contract management, as little as 14% of government organisations expect to have Blockchain technology implemented by the end of 2017.

One of the main benefits of applying Blockchain technology to governmental operations is that it allows for increased traceability of how public money is spent. This would curb fraud and corruption to a degree, which instills more trust in government institutions. Let’s take a look at how different governments have been, or are planning to use Blockchain technology in their jurisdictions.

Secure welfare payments

In the United Kingdom, the government has implemented Blockchain-as-a-Service through its Digital Marketplace. This empowers government agencies to experiment, build, and provide services which tie in to Blockchain. One of the ways this was applied was for the distribution of welfare payments.

In 2016, the Department for Works and Pensions initiated a trial using Blockchain where claimants could make use of a mobile app to receive and spend benefit payments. Furthermore, if the claimants gave their consent, their transactions would be recorded on a distributed ledger. The advantages of such an application include the reduction of benefits fraud, which has been a long-standing issue in the UK, as well as protecting critical infrastructure, and registering of assets.

Issuing of educational certificates

Another European country that has started exploring the use of Blockchain technology is Malta. The Maltese government has recently announced that it will be launching a pilot project which will allow government agencies to issue educational certificates on Blockchain. All diplomas and training certifications issued by state institutions, as well as documentation from the national accreditation agency, would feature in this emerging technology.

This application of Blockchain has the benefit of introducing a system which is both transparent and secure. Learners will have joint ownership of their credentials, as once the educational institution issues the certification on the Blockchain, the document becomes jointly owned by the issuing entity and the receiver. This would give the learner the liberty to no longer require the permission of the issuing institution to share their credentials with third parties, which is an added bonus in an ever-increasing transient world.

Blockchain identity management

One of the European leaders in the application of Blockchain technology is Estonia. Citizens and e-residents of this country are provided with a cryptographically secure digital identity card which is powered by Blockchain technology, giving them access to several public services. Essentially, Estonian citizens can verify the integrity of the information that is stored in government databases, and control who has access to them.

In addition to identity management, Estonia has also recently completed a trial which will allow company shareholders to utilise a Blockchain voting system. Furthermore, Estonia wants to go a step further and try to implement Blockchain technology for the country’s one million health records. The main idea is that each time there is an update, the health records will be registered on the Blockchain.

Governmental smart contracts

Smart contracts that are created using Blockchain technologies can be converted to computer code, stored, and replicated on a system. While traditional contracts still rely on a middleman such as a lawyer or notary to get the necessary documents (incurring additional fees), with smart contracts you can avoid the middleman (and cost) altogether.

In 2016, the US State of Delaware was the first one to start implement smart contracts. They have been used to store contracts and sensitive corporate data on a distributed ledger, allowing companies and agencies to keep copies of their documents in multiple locations. One of the first entities to make use of this was the Delaware Public Archives, which applied the Blockchain technology to archive and encrypt government files.

When it comes to Blockchain technology, it can drastically reduce the lags in transactions between buyers and sellers in a commercial setting. Governments are still trailing behind the private sector, but Blockchain has a lot of potential for enabling the government sector to deliver citizen services in a more efficient, cost effective, and trusted manner.