Despite experiencing a historical moment of acceleration with new technologies, it seems that there is still a strong disconnection between technological advances and government. Today, almost every government in the world uses an administrative system that can be defined as centralized, bureaucratic and outdated for today's needs.
This disconnection with technology is usually seen by citizens in a negative light since, ultimately, it results in slowness, errors and, in some cases, corruption. However, some countries globally have already started experimenting with new technologies to improve government management. Among them, there is blockchain.
Although blockchain became known for cryptocurrencies, it has many more advantages for governments and institutions: security, agility and transparency. In this article, we will review the main benefits of this technology. We will also look at some real cases of governments that have applied blockchain technology in their systems, as well as analyzing the future challenges that exist for the implementation of these changes in the coming years.
How can blockchain technology help the government?
Today, most governments still use a poor system that has been handed down over decades. In most cases, this type of bureaucratic system leads to common problems at various levels:
Increase in management costs.
Decisions are made very slowly.
They tend to be inflexible.
There are more opportunities for corruption.
All these problems, added to the alienation of citizens from the government, lead to an inflexible, participatory and transparent scenario. Simply put, if we want to achieve a more participatory and open society with the government, the need for a change to other ways of working is becoming more and more evident.
In this context, blockchain technology presents itself as one of the best solutions, thanks to its agile and secure nature. A blockchain, as defined by the Collins Dictionary, is “a system for storing records of transactions using digital currencies, that can be accessed by linked computers”. However, this technology not only enables the management of digital currencies but also confidential documents and contracts, which need to be managed on a large scale.
So, how can blockchain help the government? Within this technology, we find many benefits compared to current management.
A more efficient and secure system
Systems using blockchain technology drastically reduce the duplication or loss of documentation. Being supported by several computers, information can be processed efficiently whenever it is requested. In this way, the information of the citizen or the entities involved is also safer, and any point where there could be a leak of sensitive information is eliminated.
On the other hand, accessibility to information also improves exponentially because central authorization is no longer necessary to access it. In this way, all authorized users can quickly see the necessary documentation for their operations.
Less associated costs
Currently, most processes are still slow and require multiple people to give their consent in order to process information. This system ends up affecting both the deadlines for document management and the costs associated with bureaucratic management. Through blockchain, a much more agile system can be built that eliminates these unnecessary time lapses.
Transparency and protection against corruption
In addition, blockchain technology also makes it possible to reduce the points at which it is possible to commit corruption. Thanks to this system, the information is safeguarded, protecting the data from fraud or abuse.
This system also encourages greater trust towards society, which will be able to check how government documents are really processed without abuse by any involved party.
Decisions based on data
Another notable benefit of this system is the ease and speed to access the processed data, which allows the people responsible for making decisions to have a clear view of reality.
In short, the need for the use of blockchain technology in governments and public administrations is increasingly visible, in order to ensure transparency and security for the population. In addition, the correct execution of this new model would allow citizens to recover or strengthen their trust in governments, a key step to encouraging their participation in future decisions.
Blockchain government use cases
We have already outlined the advantages of using these technologies, but what real application does it have in governments? In fact, this technology can be applied in many places where it is necessary to protect or transfer information, such as:
In identity management.
The voting system.
The property register.
Secure digital payment.
The registration of new companies.
And a long etcetera.
In fact, at any point where information has to travel, the use of blockchain is recommended. Around the world, different countries have already started experimenting with this new system for specific cases, with very positive results.
Estonia is one of the best-known examples of the use of blockchain technology. In 2016, the government aimed for an innovative proposal to improve the security of its residents' health records. Thanks to this change, the information in the health records has an extra layer of security and has managed to protect citizens' data through a cyberattack. For healthcare professionals, patient information is also much more accessible for their consultations. Toomas Hendrik, former president of Estonia, showcased their experience in Democracy4All a few years ago.
The capital city of Vienna has also been one of the pioneers in using this technology to manage Open Government Data, related to different aspects of the city, such as energy and public transport. The city has even considered the use of tokens to reward the good behaviour of citizens. Its goal, as indicated by Ulrike Huemer, CIO of the Austrian capital, is to use technology to achieve social change and make the city more liveable.
Republic of Moldova
In some specific countries, blockchain is big news to be able to combat systematic government corruption. This is the case of the Republic of Moldova, which has decided to implement blockchain technology and the use of Bitcoin to increase capital investment in the country. With this arrangement, the government can eliminate some points where corruption could be committed and increase the trust of citizens towards the government.
Other countries, such as Sweden, are also starting to test blockchain technology to improve the management of the property register, given the need to speed up these processes. With the right implementation, this transaction could go from a period of months to just a few hours, approaching another advantage of this technology.
Australia is another country that is actively looking for ways to use new technologies to improve their government. In fact, at the beginning of 2019, the government announced a strategy to implement blockchain in the nation, both in terms of regulation and innovation, as well as a future investment. The same government has also launched different initiatives, such as Hackathons, to explore different options when it comes to improving transparency and tax transactions, in this case, associated to luxury cars.
Another area of politics that calls for total transparency is elections, and in this sense countries like Kenya are investigating how they can implement the blockchain to ensure greater transparency and efficiency in electoral processes. According to the Independent Electoral and Boundaries Commission of Kenya (IEBC), in the future, they want to make use of blockchain in order to be able to offer results in real time. This way, they would be able to strengthen the confidence of citizens in the voting process.
What political actions are needed to fully utilize these technologies for the benefit of society
Are we close to being able to implement the blockchain in our everyday life? Although there are already forces in countries that are researching or have started to implement blockchain in their processes, there are still some limitations that can slow down its incorporation.
On the one hand, many still question the security of this system. Although one of the main benefits of blockchain is to prevent the modification of its data in case of hacking (thanks to the interconnection with different computers), the information would be accessible to all authorized users. In this case, it would be necessary to stipulate very well what characteristics these users must have to access the database. However, compared to the current situation, blockchain protection is much more effective. So what else is holding back its implementation?
On the other hand, it is necessary for governments to commit to creating new laws and processes so that transactions through the blockchain can be valid. In fact, this is an open debate in the case of Sweden (with property management), where some involved parties do not accept these transactions as legitimate. Therefore, before we can continue to move forward, it will be necessary to establish what the legal relationship with this technology will be in order to have transparent and reliable bases for everyone.
And finally, we are in a rather significant change in the way most governments operate. Applying blockchain means decentralizing power, to manage resources more independently. To be able to take this step firmly, it will be necessary for the different governmental entities to collaborate to be able to change from a centralized model to a decentralized one, a process that will probably take some time. As the secretary of the vice president of the Republic of Indonesia says (another country that has strongly bet for its implementation), one of the main factors for the adoption of the blockchain will be the political will to take this step.
What role will blockchain play in the future of governments?
In conclusion, blockchain is presented both as a disruptive and necessary technology for the improvement of governments. Currently, we are at a point of tangible separation between new technologies and the mechanics of institutions, which affect the agility of processes and the trust of citizens. Fortunately, several countries have already started testing how they can implement this technology to improve their service and take advantage of it.
In any case, at Democracy4All we encourage the different actors involved in government to look face-to-face at new technologies, experiment with them and see in each specific case how they can improve the processes of each department. Only with joint collaboration and the will to change, we can begin to see positive results in the coming years.
"Blockchain for Governments: The Case of the Dubai Government" by Shafaq Khan, Mohammed Shael, Munir Majdalawieh, Nishara Nizamuddin and Mathew Nicho (2022)