Rhode Island wants to make it easier to do business by using blockchain technology
We’ve all dealt with bureaucracy and red tape. We create new accounts for each department, validate our identity multiple times, and question why public services don’t share our data securely.
Liz Tanner, Secretary of Commerce for Rhode Island
Liz Tanner is trying to change that. She served as the Director of the Department of Business Regulation for Rhode Island since 2017, before being appointed Secretary of Commerce for Rhode Island by Governor McKee. When Tanner joined state government, she set out to change the bureaucracy and raise Rhode Island’s ranking in business climate statistics. Tanner scoured the country and found no inspiration from larger states with more resources. In fact, with a few exceptions, the states conducted business in the same way. Looking internationally, she was fascinated by Estonia as one of the first nations in the world to embrace and implement blockchain technology into manufacturing systems.
Introducing Blockchain technology to the government with Estonian model
The Estonia model made it easy and frictionless to do business with the authorities. Using blockchain technology, citizens enter their information only once, and the same information will be available when interacting with many agencies and departments of the government, such as applying to college or obtaining a license or permit. Tanner was keen to bring the Estonia blockchain experience to Rhode Island.
In 2017, the state launched an RFP to explore the concept of introducing Blockchain technology to the government. The response was outstanding, with over sixty ideas from over thirty vendors covering various businesses, from marijuana to permitting and licensing to healthcare.
Rhode Island chose Infosys Public Services to streamline the process of opening a new business. However, a deep dive showed that five independent government agencies were involved in this process. Recognizing that long-term adoption is dependent on the success of the pilot, the project scope was limited to the Department of Business Regulation.
The initial proof of concept work centered on endorsing Certified Public Accountants (CPAs) as a low-risk project that could prove the technology.
Reduces a multi-week process to thirty minutes
Normally, it was a cumbersome process for a CPA to renew a license in Rhode Island and prove their credentials. The blockchain pilot developed by Infosys Public Services dramatically reduced time and allowed CPAs to keep their credentials in a wallet on their phone.
Obtaining a CPA license requires proof of educational credentials, CPA exam results, work experience, and identity verification. A driver’s license verifies identity and residence, the employer verifies identification, and the Department of Business Regulation verifies all documentation before issuing or renewing the licence.
The blockchain-based solution establishes an identity blockchain network that digitizes and automates workflows that enable the secure exchange of information between government agencies and citizens. In the future, CPAs will be able to initiate a service request (eg, a CPA license renewal) by simply interacting with any agency they have worked with in the past. This ‘primary agency’ via the identity blockchain network works with the Department of Business Regulation to complete the service request. This solution eliminates the need for the resident (CPA requesting renewal) to share information multiple times.
The Department of Motor Vehicles (DMV) also provided the option of a listener-only node to the identity network. This will enable Rhode Island to develop more DMV use cases on this One Rhode Island identity network.
Infosys Public Services used Hyperledger Indy, tools and libraries to create and manage digital identities and used core blockchain standards to ensure data security. Hyperledger was built in such a way that it was scalable in the cloud with the help of Amazon
The solution is very secure as all data about a person remains in the individual’s wallet and the user has control over who and which part of her/his data can be accessed. Personally identifiable information is never stored in the ledger; verification is only requested via a decentralized identifier that represents the credentials.
CPAs are one of the few professionals who can practice across states. However, they must provide a valid license to provide their services to a client. With this solution, CPAs have a fast, secure and easy way to verify their credentials using the digital wallet. Several states and national organizations are exploring ways to adopt blockchain as it simplifies the credential verification process by leaps and bounds.
Three key technology components in the solution
A blockchain consists of secure blocks of information linked sequentially to each other. The chain forms an immutable ledger distributed across participating nodes. The first element of the solution is digital identity. Today, every document that proves our identity, such as a driver’s license or passport, is controlled and owned by the government, whether we like it or not. Blockchain digital identity technology establishes a “Self-Sovereign Identity” (SSI) that shifts ownership of identities from governments to individuals.
SSI shifts identity and credential management from centralized systems run by the government with all its associated silos to a peer-to-peer model using public key encryption, decentralized identifiers over a blockchain.
The second element is Hyperledger Indy, a distributed ledger purpose-built for decentralized identity. Hyperledger Indy comes with tools, libraries and reusable components to create and use independent digital identities on blockchains.
Finally, there is Hyperledger Aries, the client part of a decentralized identity application. Væren is the client layer in Hyperledger Indy that facilitates interaction with other platforms.
Ends
Talking to a government agency is a first for me. But here’s the cool part: Rhode Island with their partner Infosys Public Services is doing this instead of talking. I know the CPA digital credential choice was certainly not sexy, but it proved the technology. The importance of establishing a base is immense and can lead to a complete overhaul of how to do business with the government.
The state of Rhode Island and Infosys Public Services deserve credit for delivering a pilot blockchain initiative in the middle of a pandemic, which is heroic. It’s also important to note that this project would not have happened without the strong leadership of former Governor, now US Commerce Secretary Gina Raimondo, who understood the opportunities and learned about the technology to help advance it. When the time finally came to push the pilot forward, Lieutenant Governor, now Governor Dan McKee, gave approval from the top.
Looking ahead, Tanner, with new funding, wants to go back to his original desire to establish a new business by providing the information in one place. Today, when you form your LLC or corporation, you do so in multiple areas of state government, including four or five different websites. In the future, citizens will use a single data entry website to enter information once, and from there it will go wherever it is needed. Now that is sexy.
Through the blockchain initiative, Rhode Island residents and businesses will establish a digital credential to be used across various state and government websites. Tanner avoids calling it blockchain because of its association with cryptocurrency. Tanner describes it as “a way of keeping information in a very safe and secure place so that you can use it repeatedly.” It’s a worthy goal that I hope other states will follow Rhode Island’s example.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.
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Moor Insights & Strategy Founder, CEO and Chief Analyst Patrick Moorhead is an investor in dMY Technology Group Inc. VI, Dreamium Labs, Groq, Luminar Technologies, MemryX and Movand
