Public Sector: Blockchain Use-Cases

Today there are tens of thousands of pilots trying blockchain technology in numerous features of society. The public sector, specifically government, has also shown significant interest in blockchain technology. Currently governments on all landmasses except Antarctica are engaged in blockchain pilot projects. 

The public sector is responsible for many areas of trust and services so there are a large number of use cases across countries including: the European Union (EU — anti-counterfeiting), Estonia (Digital Government), US (FDA, DHS, HHS, GSA — security, anti-counterfeiting), China (Payments), India (Payments, Land Registry), Switzerland (Identity), Denmark (Voting), Dubai (Digital Government), Georgia (Land Registry), Gibraltar (Stock Exchange), and many more.

Some of the spaces in the Public sector that Blockchain can fit in to-

1.     Identity Management/Attestation

Blockchain technology provides three special capabilities that enable it to provide a better foundation for identity than current systems. First, all data is recorded on the ledger via a consensus mechanism which enlists multiple parties to verify that the data is correct before it is written. Second, all transactions in the ledger are immutable and digitally signed, which means the records are unchangeable and those who wrote the records are accountable for any issues. Third, the digital, immutable record can be linked to a biometric or set of biometrics (i.e. thumb print, facial scan, etc.) which means that it is unique, easily verifiable, and nearly indestructible.

Blockchain has the potential to solve the challenges section above — fake documents, corrupt officials, and destroyed records, as described below:

· Fake documents — identity would be verified via a biometric scan which would access official records found in a blockchain ledger which virtually eliminates the need for documents

· Corrupt officials — the data about one’s birth is immutable and cannot be modified once made so corrupt officials become powerless to make changes

· Destroyed records — as the data is digital and stored in decentralized storage it can be considered virtually indestructible

Regarding the challenges faced by those with no identity papers or destroyed records, there are various initiatives currently underway using the power of blockchain to provide solutions to governments. For example, the ID2020 initiative is an alliance of governments, NGOs, and the private sector to provide a blockchain-based framework for digital identity that will be personal, persistent, portable, and private. In essence, each individual will be able to own and control access to their personal identity information and be able to access it at all times from any location (decentralized cloud).

2.     Government Records (Personal records, Land registration, Corporate registration)

The major challenge in all of the cases listed above is that a paper-based document is used to transmit some kind of information and identity to the bearer. Because these documents are easy to forge or can be based on real, but stolen documents, they convey significant privileges to the bearer with only a small risk of exposure.

In a blockchain-based system, paper-based documents are replaced with digital documents on an immutable ledger. The immutable nature of the blockchain means that these digital documents are impossible to duplicate or forge because there is only a unique, single record. Additionally, the digital documents can be made accessible only by a biometric scan, for example a face scan, a full hand fingerprint scan, a retinal scan, or potentially a combination thereof.

Governments have begun to implement blockchain-based systems for key record types. For example, in Andhra Pradesh in India, in Fintech Valley Vizag, blockchain systems are being used for land registration records and for vehicle registration. Fintech Valley Vizag is in the process of building up a large portfolio of blockchain use cases to improve the efficiency of government and private sector operations.

Land registration was selected first because 66% of civil disputes revolve around property disputes which creates a significant drag on the economy. The primary issue was that due to paper documents, much of the populace could not prove its ownership of property and records could be easily modified for a price. Blockchain’s immutable records and audit trail have already secured over 100,000 land records, providing certainty to owners. This same system has now also been applied to vehicle registration, to provide certainty and security around vehicle registration records.

3.     Entitlements/Citizen Services Management (Healthcare, Consent)

Blockchain technology provides a single solution to all three challenges noted above. First, it can provide a secure digital identity; next it digitizes all new data transaction data automatically and securely; and finally, it creates an interoperable platform across departments and agencies. This is not a theoretical exercise as blockchain-based e-government systems do already exist.

Estonia is home to the most famous blockchain-based digital government and e-residency program. This portal enables anyone to become an e-resident of the country in 30–60 minutes and at a cost of 100 Euros. Estonian e-residents can use the portal to create a digital identity, establish a business, setup banking relationships, and execute business documents. Famous e-residents of Estonia include Tim Draper, the famous Silicon Valley VC, Pope Francis, Angela Merkel, Chancellor of Germany, and Shinzo Abe, Prime Minister of Japan. Estonia is also planning to launch its own digital currency called Estcoin.

Dubai is another leader in blockchain-based e-government. Dubai plans to have all of its government documents on a blockchain by 2020 and 50% of its services operating on a blockchain platform by 2021. These systems will streamline all government activities and are forecast to save 10’s of millions of hours of work and billions of dollars annually. Dubai is also planning to issue a digital currency to enable cross-border payments and track all real-estate transactions on an immutable blockchain ledger.

Other countries would be wise to follow a similar path because of significant cost savings, efficiency gains, and the ability for countries to compete for businesses and citizens.

4.     Government Activities (Voting, Taxation, Customs)

blockchain-based systems can create a unified and secure digital identity. Data and transactions are then stored by default in a highly encrypted format to a decentralized network where each transaction is digitally signed. A robust consensus algorithm can ensure the validity of all transactions while the immutability of the ledger ensures the data cannot be modified from its original form.

Pilots of blockchain-based voting solutions now exist in Switzerland, Denmark, Russia, and the US. In Switzerland the city of Zug has used blockchain-based voting in combination with an Ethereum-based digital identity solution. The pilot was successful and the results are now being evaluated to ensure that the results are both immutable and auditable while protecting voter privacy. In West Virginia an e-voting pilot will be launched in November 2018 that will enable overseas military to vote in the mid-term elections. The pilot will be based on smartphones and will use streaming video, facial recognition and a military ID to confirm the identity of voters.

Online tax bills can now be paid by e-residents in Estonia via the blockchain-based solution outlined in the prior section. At the World Economic Forum in Davos in 2016, 800 attendees took part in a poll on blockchain-based taxes. 73% of respondents indicated they expected blockchain-based tax systems to be in place in most developed countries between 2023–2025.

US Customs and Border Protection (CBP) in collaboration with the Department of Homeland Security (DHS) are working on two separate blockchain customs projects. One project is focused on validating certificates of authenticity for products that cross into the US. The joint goals are to enable customs officials to intercept counterfeit products while the second is to allow consumers to quickly verify the authenticity of products prior to purchase. The second is designed to secure the sharing and storage of data from security cameras and sensors and via an immutable record to prevent the manipulation and hacking of data.

Across these use cases, blockchain enables greater efficiency, less fraud, and lower costs. The holy grail is fully paperless, digital government with minimal corruption.