Governments embracing blockchain-based pilot projects
Blockchain technology enables a new generation of cross-industry relationships where users can exchange supply and demand openly and efficiently. In recent years, it has met with high expectations due to its potential to revolutionize business models and financial systems.
The hype surrounding crypto and its underlying blockchain technology attracted not only institutional investors but also many governments. At the end of 2021, the crypto market capitalization exceeded 3 trillion dollars, which received a huge response from every sector in existence! 2022 wasn’t the best year for crypto, but that didn’t stop countries from launching blockchain-based pilot projects.
Although governments became skeptical of cryptocurrency, they openly embraced blockchain technology for decentralized ledgers and smart contracts in finance.
It also reduces the need for costly intermediaries and ensures greater trust in contracts between organisations. Well, that’s what blockchain technology is all about, providing financial freedom to its users.
Not only is this technology poised to revolutionize what has traditionally been a centralized industry, but it is also giving rise to new opportunities that have yet to be tapped by governments around the world. For example, in the financial industry, banks are traditionally involved in many intermediary functions such as settlement, lending and asset management.
However, the blockchain presents an alternative method of financial transactions by eliminating the middleman or bank. This technology helps businesses cut out costly intermediaries to mitigate concerns about fraud or theft and facilitates an open, transparent relationship between buyers and sellers by eliminating the need for third parties.
The transparency offered by the blockchain has enabled greater security. As governments also become aware of blockchain’s potential applications, they are trying to incorporate it into their operations. So that’s because blockchain technology can solve many inefficiencies that have long plagued public services.
The authorities’ ongoing Blockchain-based pilot projects
A number of US government agencies have begun testing blockchain technology for its potential to increase transparency and improve security. We’ve listed several active government blockchain-based pilot projects here to tell you about their growing adoption.
1. The United States
The Bureau of Fiscal Services, a division of the US Treasury Department, is leveraging blockchain technology to track transfers, determine whether physical assets can be tracked in real time, and study other potential use cases.
An application developed by the US Department of Health and Human Services called Accelerate enables researchers to access a variety of materials on the blockchain. Although the technology is still in its early stages, the project is designed to better manage HHS’s portfolio of 100,000 contracts.
In addition, the National Public Health Agency of the United States CDC has begun researching the use of blockchain to improve tracking of public health outbreaks, tracking of medical trends, and tracking of survey health data.
Also read: SEC approves WisdomTree’s nine new blockchain-enabled funds
2. Australia
Another government agency that has embraced technology is the Australian Department of Industry, Science, Energy and Resources. A new initiative aims to develop a digital framework for governance in Luxembourg. This will include a blockchain-based system for tracking and distributing public resources.
As well as providing insight into the sector, PwC Australia has partnered with the Federal Government to provide assistance in the blockchain space. Their newsletter Digital Pulse provides weekly updates on developments in the area.
3. India
The Reserve Bank of India (RBI) is enlisting the support of a number of leading banking institutions in its blockchain project. The project is run by the central bank’s innovation hub in Bangalore, and will include technology from IBM and Corba Technologies.
RBI has also launched a Digital Rupee pilot project in four major cities including Mumbai, New Delhi, Bangalore and Bhubaneswar. India is currently working on a blockchain identity management project that aims to provide a digital identity system for its 1.3 billion citizens.
4. UAE
The United Arab Emirates has set up a regulatory sandbox for FinTech companies. Among other things, it will monitor the use of blockchain technology and provide feedback to the authorities. The country is leveraging blockchain technology for public efficiency, industry creation and international leadership.
Moreover, the Dubai Future Foundation established the Global Blockchain Council which consists of 46 members, including government entities, leading UAE banks, free zones and international blockchain technology firms.
While the government is pursuing its own initiatives, it has also provided support to other governments to trial similar initiatives. Some of the countries that are busy creating blockchain based projects and CBDCs are UK, China, Lebanon, Switzerland, Bahamas, Estonia and Japan.
Now let us understand how these countries are leveraging blockchain technologies in their existing financial system and industries.
Why governments are adopting Blockchain-based projects
Authorities are piloting several blockchain-based applications to improve citizen services, including identity management, e-health and e-governance.
These technologies have the potential to reduce regulatory compliance costs, make payment processes more efficient and improve the citizen experience.
But before governments can take advantage of the technology, they need to invest in development and support. They must also consider the risk and potential for unintended consequences. Here are some examples of how blockchain can increase transparency and trust in financial transactions while preventing disputes and reducing the cost of services.
1. Supply Chain Management:
Governments are starting to take blockchain and use its capabilities for supply chain management. This application is developed in Australia, Canada, China and the United States. To improve efficiency for both government suppliers and contractors, governments need to understand how blockchain can manage their supply chain process.
The Australian government is one of the first to use blockchain-based supply chain management software to streamline the procurement process. One of their goals is to help small businesses and startups have more transparency in their procurement process so they can grow.
Similarly, the United States government is working on a blockchain project to make federal grants more accessible and efficient. At the same time, Canada places greater emphasis on streamlining the purchasing process as well.
By developing an integrated database, authorities can cut out a lengthy manual process that takes up enormous resources and time. As this technology grows in popularity and companies begin to use it, it may become necessary for governments to collaborate or collaborate with third parties so that the right data can be shared between organizations efficiently without compromising security. Such data may include contracts, transfers, delivery status reports, etc.
2. Voting:
The government is also considering developing DLT and adopting blockchain technology for voting. The Estonian Parliament also recently discussed how users can use this technology to improve their presence globally. By accessing the blockchain, governments can make informed decisions quickly, which can help improve their overall efficiency and strengthen their democracy.
3. Tax
What is important to note above is blockchain technology offers automation that will help governments reduce paper traffic and deliver more accurate data. One such use of blockchain for taxation is the implementation of verified property registers. This new system can help governments with paperless licensing and tax procedures for property registration.
4. Retail stores:
By working with a blockchain-based solution, governments around the world can track products sold and ensure that they were purchased legally by private citizens. In addition, it will provide an additional layer of transparency to the authorities by allowing them to see which products are sold or exported and where they come from.
Governments are also looking at blockchain technology for trade finance for businesses large and small. One of the advantages is that it provides greater transparency to suppliers and subcontractors, which can help with auditing and information gathering. Another significant advantage is that it is easier for authorities to track goods movements in real time compared to current methods.
5. Other use cases:
Governments from around the world are beginning to realize the enormous potential applications of blockchain technology. Having all public services managed by the blockchain would make it easier for people and organizations in India to access them, improving overall efficiency and security.
Blockchain technology could make online voting and elections more secure as countries begin to see potential benefits.
