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November 29, 2016

As the Royal Mint experiments with digital gold, is blockchain the future of government services?

How can blockchain be used by governments in delivering services?

By Alexander Sword

When talking about blockchain, it’s usually the cryptocurrency, bitcoin, that springs to mind, and its application in financial services technology. But the reality is that the possibilities of blockchain span far beyond this. And, in the same sense that prevalent trends in the financial services sectors can have a huge impact on the way that the public sector operates, blockchain too has huge potential to shake up the public sector to create a fully transparent and digitised government.

 

Blockchain: What it is, why it matters

blockchain

Bitcoin is a successful implementation of blockchain technology.

Blockchain technology is a publicly distributed ledger that maintains records, called ‘blocks’. Everyone can see it, but no single user owns it, and it’s not stored in a central repository. Each block of data is linked to the previous block in the chain, and therefore cannot be altered without this being transcribed in the ledger – it’s a decentralised, self-policing panopticon of data.

But, it’s not just the self-policing nature of blockchain that makes it so trustworthy; particular rules can be implemented within blockchain environments too. For instance, two parties might be needed to endorse a transaction before it is made, or a transaction might not take place unless another one has been made previously. These rules enable blockchain to facilitate a number of bespoke processes.

But what kind of data can be recorded on the ledger? And how exactly is this technology set to impact the public sector?

 

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Digital identities

Looking to Estonia is a great place to start, as this eastern European country is pioneering the way forward when it comes to eGov services. One of Estonia’s main blockchain innovations is its e-residency programme. This works in the form of a digital ID card that has a cryptographic key stored on the blockchain that citizens can use to securely sign digital documents. It removes any need for physical signatures on government forms, and means that tax returns, healthcare forms or land ownership documents can be processed entirely online.

These digital signatures can speed up often cumbersome processes; ensure more security for the individual in question; and they can have a constant track of where these documents are at any moment in time. What’s more, by storing digital identities on the ledger, citizens are able to vote for general elections online – something they have been doing since 2005. It’s the transparency of blockchain that means the election results can be fully trusted, and the convenience of online voting in theory means that more citizens cast their vote. In Estonia’s 2015 general election, 30.5% of participants took to this method to cast their ballots, and its popularity grows year upon year.

Converged databases

blockchain

The Royal Mint has partnered with CME Group to build and launch a digitised gold offering called Royal Mint Gold (RMG).

Public sector bodies are reliant on a lot of data from citizens and businesses alike for a multitude of processes. Whether it’s health information, credit history, their address or their national insurance number, it can be frustrating to share the same details with different organisations over and over again. Having a blockchain ledger in place can connect databases between different areas of government, so that each department can be plugged into the same data source. This is a vastly more efficient method, and saves on cost too.

Imagine this in terms of tax offices, for example, if you granted them permission to your bank account data, your tax return could be entirely automated.

This model can also give the public democracy over their own data if governments implement a system that allows users to choose who can see what. Whether it’s healthcare institutions accessing your address and medical records, or tax offices accessing your bank account data, citizens could grant various public sector bodies permission to automatically access data should they need to. In this system, individuals are very much in possession of their own information, and are in control of it too.

 

Decentralisation leads to efficiency

The decentralised nature of blockchain means that this technology can save public sector bodies a lot of money when it comes to costs associated with infrastructure. Look at collecting tax as an example – currently individuals and businesses need to provide a lot of specific information that offloads a lot of data onto the government’s centralised systems.

But imagine if this data was decentralised? The load it would take off of central government infrastructure would be monumental, and would save the government money in the process. The trustworthy, secure, cryptographic credentials of blockchain make this the government’s best bet.

 

Paving the way for blockchain

Whether it’s streamlining government processes, saving public sector time and money, or giving citizens ownership of their own data, there are clear, tangible benefits to blockchain technology in the public sector environment. However, completely changing digital infrastructures would be no mean feat, and by decentralising such important data, there are a lot of cultural changes that will need to be addressed alongside these technological transformations.

The future looks bright though, and with a number of blockchain offerings in places such as Estonia and the Isle of Man, the road is being paved for other governments to follow suit. The UK is already on its way, too, introducing a Blockchain-as-a service offering that’s available from the Government Digital Services’ Digital Marketplace. With blockchain technologies now available to public sector bodies across the UK, British business and citizens look set to reap the benefits of having transparent and digital government services in place.

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