Blockchain For Governments: Threat Or Solution?

Blockchain is often seen as the technology undermining the very concept of government and nation-states.

Governments used to play leading roles in economy and define the ways citizens interact. But in the past few years the tools normally applied by governments for regulating our life have become less effective and more difficult to implement. There are many reasons why things are getting out of control — and blockchain, as a nascent technology, is very far from being responsible for it.

In fact, blockchain, often seen as a threat for central authority, can be a good solution to many problems the world governments are facing today.

Let us show you how blockchain can improve the way the public sector works.

Trust building

According to the Pew Research Center data public trust in governments remains near historic low, with only 18% of Americans saying they believe the government does what is right ‘just about always’. We will not dig into why people are disappointed in their leaders and systems — the reasons are diverse and numerous.

But we will suggest one solution, which is blockchain.

Blockchain-based network is transparent by nature and thus allows all the parties follow and verify the data. The good example is provided by Georgia and Estonia, currently experimenting with blockchain-based land registry. As both citizens and authorities have shared access to the records and can audit them from anywhere at any moment, no one can compromise the information for their personal benefit — or for a bribe.

When government officials have zero opportunity to indulge in corruption and other unethical practices, it greatly improves their public image and relationships with fellow citizens. It should be noted here, that digital society is growing less and less tolerant to corruption, and has many more methods to uncover it.

Data transparency can bring a lot of benefits, introducing a new era of public cooperation. After all, most of our personal activity is no secret to the governments, so maybe it should go both ways?

Efficiency increase & cost reduction

Blockchain may be the best answer to another big complaint of citizens. Today, many of us find public service very inefficient — it wastes our time and money, and involves too much unnecessary paperwork and multi-layer validation. This discontent is partly caused by the fact that digital citizens are getting more demanding and impatient. They want things done faster and better than before, and are unlikely to take heavy and slow bureaucracy for granted.

Smart contracts may help governments become more efficient, fast and direct. Blockchain will cut out a lot of middlemen who now validate transactions, and make service more complicated. This solution will also reduce the risk of corruption — when everything goes fast and smooth by itself, there is no need to grease anyone’s palms.

With blockchain it will be much easier to sell or buy property, start a new business, pay taxes or fines, distribute benefits among people in need, keep health records, make donations, obtain passports and visas or getting proof of your identity. Today, if you want one of those things done, you normally come in person to some agency and bring all required papers with you — just to get them checked and rubber-stamped manually.

In the digital age it all looks really weird — for both parties.

Blockchain can help streamline all those and many other awkward processes — a good news for those who hates completing paper forms and standing in line.

Improved compliance with laws and regulations

So far we have been talking about how citizens can use blockchain to make their governments work faster and better. But governments themselves can directly benefit from the new technology, making people follow various regulations and restrictions.

In almost every state there are special regulations to help saving environment and prevent improper waste disposal. But those laws may be useless if officials are unable to make every person or company comply with them. Some people falsify data and tamper with equipment that monitor air or water quality (or bribe a government inspector). The result can be disastrous — there are many countries in the world that have massive problems with air pollution and public health. If lawbreakers are caught, they might pass years in jail, and have their business ruined.

It can all be prevented if all data gets transparent, unchangeable and available for everybody to see. Though blockchain cannot stop some individuals ‘tuning’ air sensors, it will greatly decrease the number of global data falsifications.

Let’s see another example. In the financial sector each institution keeps its own records and sends separate report to regulating authorities. It inevitably causes some inconsistencies and data duplications that can lead to mistakes and mean a lot of reconciliation work for governments. Blockchain allows to automatise and shortcut a lot of processes here, saving huge amount of time and effort for all the participants.

Tax collection is another field that can be made more efficient with blockchain introduction. Right now the process is somewhat complicated as it goes through several intermediaries and steps. If all the records are placed in one decentralized ledger, the regulators will have direct access to the data they need and keep track of economic activities of citizens.

Sensitive data protection

It may sound counterintuitive especially if you have heard a lot about blockchain being an open and transparent system. But yes, it actually helps protect our personal data. In a centralized system the government or institutions like banks serve as record keepers for society. Therefore, they are very attractive to hackers.

In 2015 they managed to steal millions of records of American government employees. After 2017 Equifax database breach more than 140 millions US citizens suffered massive exposure of their social security and driver’s licence numbers, as well as other personal info they would have preferred to keep secret.

The situation could be improved if we use blockchain data structures instead. Due to the absence of a single point of failure, they make system much more challenging for hacker attacks.

Conclusion

If wisely implemented, blockchain may actually be the future of the governance, and the end of it. The technology is able to change the way persons, industries and legal bodies conduct themselves.

Governments around the world should start testing blockchain potential to identify the weak and strong points of it in praсtice.

Those who want to stay ahead of the curve should be doing it right now.

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