How blockchain can be used in government agencies

One of the purposes of a government is maintenance and administration of various records of the residents. Birth and marriage records, employment histories, tax and police records, ownership titles, identification numbers and certificates – the government keeps all of them and many more. Thankfully, we have mostly switched from paper files to computer storages, but anyway, personal records are still too easy to be lost, corrupted or tampered with.
This government function makes it a perfect use case for blockchain, as it provides great opportunities for secure data storage. While the financial applications of blockchain, such as cryptocurrencies and ICOs, leave the governments cautious and wanting to regulate them, blockchain-based data and transaction management is getting increasing interest.
Governments are often at the receiving end of multiple complaints. They are too slow, too rigid, too bureaucratic – and they consume too much budget. That’s why they may welcome any chance of optimizing their processes to become faster and more efficient. It seems that blockchain may be just the thing.

Benefits of blockchain for public services

The benefits of blockchain stem directly from its nature. As a decentralized network, blockchain offers unprecedented opportunities for the public sector:

  • Immutable data storage. The blockchain is organized and maintained so that no previous records can be modified without the entire network knowing about it. This makes it a great storage of data that can be traced back to the origin. If you have ever found yourself in a situation when a document you need was lost or misplaced, you will understand what it means when all records are stored digitally and cannot be modified.
  • Transaction validation. When all transaction data is stored in a blockchain with time stamps attached to each record, it will be easy to validate any transaction or event. Birth or marriage records, ownership title transfers, insurance events – all that information will be securely stored and easily available. To verify your identity or confirm your property rights, you will no longer need to visit public agencies with tons of paperwork. Imagine the time and cost savings!
  • Data security. The cyber-crime is evolving as fast as the technology does. With lots of data already stored digitally, we are getting increasingly concerned with its security. Digital data includes all sorts of information that is vital to each of us – identity records, financial data, health information, commercial secrets, and a lot more. Blockchain provides a much more secure means of data storage than the traditional resources.

You can see that with proper implementation, blockchain-based systems can truly change the way the public sector used to operate. Blockchain has the potential to make government agencies more efficient and turn them into what they are supposed to be – providers of services rather than places where you waste your time.

Blockchain in the public sector, as of March 2017

Blockchain use cases in the government sector

The sector of public services can find multiple applications for blockchain-based systems.

Identity management

Identity management is the most commonly used public service and it has long been ripe for digital disruption. A lot of progress has already been made in the identity management area – there are electronic registers, digital signatures, and online forms. At the same time, there are too many places where the identity information is stored – we give our data to the agency issuing passports, to banks when we open accounts or apply for mortgage, to insurance companies when we purchase policies, to healthcare institutions when we need medical assistance. From the birth onwards, each of us leaves a wide identity trail.

Of course, it is natural to be concerned, on the one hand, about the easiness and transparency of your identity data management and, on the other hand, about the security of such data. Once we provide our information to a government office, we no longer know what happens to it, where it is stored, who has access to it.

With the implementation of blockchain, most of these concerns will be alleviated. Once the identity data is recorded on a blockchain, only those holding the key can access it. Moreover, nothing can be modified anymore – even the government officials will not be able to tamper with any information on the blockchain, as the blockchain itself prevents it.

At the moment, there are no tried-and-tested cases when blockchain is used as an identity management system. However, quite a number of governments are already trying the new technology for size. For example, the state of Illinois, USA, is actively researching the implementation of blockchain to revamp its identity management system. The state authorities are thinking of creating a user-centric system where an individual becomes the owner of their personal data. The government functions will be reduced to verifying the information.

The city of Dubai has worked out its Dubai Blockchain Strategy aimed at making it “the happiest city on Earth”. The initiative includes the implementation of blockchain for government services and claims to achieve considerable savings in document processing only.

Tax administration

Currently, the tax and revenue sector is facing problems on two sides. On one side, the tax authorities find it increasingly difficult to collect the due payments, as businesses apply sophisticated evasion schemes involving different jurisdictions.On the other side, taxpayers are unhappy with their minor role in the tax distribution.

If the taxable transactions are recorded on a blockchain, it will create an uninterrupted and transparent register. For example, in the value-added tax administration, blockchain can assist in providing a complete record of all buyer-seller relations and showing where the tax base was created. Moreover, the blockchain can be set to automatically transfer the VAT to the tax authority.

Blockchain can be used to administer other taxes, as well. With all transactions clearly shown on a blockchain, it will be easy to sort out different jurisdictions and avoid double taxation. At the same time, the share of tax frauds and evasions will be lower due to the increased transparency.

In addition, taxpayers may become more involved in tax distribution when the taxes are administered through blockchain. When each taxpayer sees the share of their taxes that each budget gets, they may be better motivated to pay taxes. Better still, if taxpayers can choose the budget they prefer their taxes to go, their satisfaction with the tax distribution system will increase.

For example, the government may establish some mandatory budget categories, such as defense, social security, and healthcare, and let taxpayers decide on the rest of the budget. Some will prefer to finance education, while others may wish to support construction.

Voting

Almost every elections are accompanied with bursts of voting fraud investigations. On the one hand, in the pre-election phase, various techniques are used to influence the voters. On the other hand, there may be direct vote manipulations during the elections.

Electronic voting is designed to solve most of these problems, while also providing a much more convenient way of voting for the citizens. With blockchain added to the equation, we may expect an even more efficient result.

In blockchain-based elections, each voter can easily establish their identity that cannot be tampered with. Their identity can be digitally verified, and their votes will be recorded in an immutable distributed ledger. In addition to the voting transparency, this method gives an opportunity for remote voting to those who are abroad or physically unable to come to their voting district.

The state of West Virginia is already testing the blockchain election system in its state elections. The scope of the blockchain application is rather narrow and focused on allowing the military men stationed overseas and their families to vote. At the same time, it is the first step towards a wide use of the blockchain technology to support the election system.

Administrative processes

All administrative processes run by government agencies usually involve a lot of complicated paperwork and are extremely time-consuming. With all records, events, and transactions requiring verification or participation of a middleman, the time and cost of administration become too high.

One of the fundamentals of the blockchain technology is the absence of middlemen. When all transactions are verified by the consensus, the middlemen become obsolete, and the transactions are processed directly between the two parties.

For example, the property registration sector can clearly benefit from using blockchain. When all ownership titles and their transfers are recorded in a blockchain, and the buyers, sellers, and the corresponding authorities are given access to their records, the ownership transfers can become easier and faster. At the same time, the costly paperwork can also be reduced significantly.

Swedish government land registry is exploring the blockchain opportunities by implementing a new platform for buying and selling property. At the moment, the authority claims that the technological components are ready, and they are looking for volunteers to test the new procedure.

On the way to the blockchain society

The increasing global adoption of the blockchain technology is a clear indicator that the humankind is ready for change. We want more time for ourselves, our hobbies, self-education, and travel. We do not want to spend our precious time on dealings with government agencies. Moreover, we are concerned with the security and availability of our information that we supply to the government.

This means that any technology capable of improving the government flows will be welcome. Today, blockchain seems to be the technology that can make a difference. By moving our relations with the government to the blockchain, we, on the one hand, get better trust and assurance that our data will be handled properly, and, on the other hand, spend less time and effort on the inevitable government activities.

The latest news suggests that we may see some real implementations of the blockchain technology in the government sector, and quite soon. Many countries are experimenting in this area and engaging professional development teams in the creation of secure and robust blockchain solutions.

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