Why Governments Need to Embrace Blockchain Technology

Blockchain technology has gained attention in the public and private sectors in recent years due to its unique properties such as scalability, integrity, efficiency and stability. Blockchain has enormous potential to revolutionize government operations and address key concerns such as regulation, reputational risk, compliance and security.

Promote accountability in government

Regulatory frameworks are the cornerstone of good governance, ensuring fairness, transparency and accountability. Because it provides an immutable and auditable record of transactions and interactions, blockchain technology can act as the technological bedrock from which compliance can grow. In addition, the entire process can be automated using smart contracts.

“Smart contracts execute transactions automatically when pre-defined conditions are met, ensuring that all data related to those transactions is securely stored and immutable, reducing potential manipulation,” explains Bryan Daugherty, global public policy director for The Bitcoin Association.

Once programmed, smart contracts cannot be changed by any individual or group, allowing government agencies to automate regulatory processes while ensuring compliance with even the most complex rules.

With the rise of the Internet of Things (IoT), where services across multiple industries are interconnected, any single data breach or perceived lack of security can have serious consequences for everyone involved.

“Blockchain can offer a reliable way to manage and secure huge amounts of data that IoT systems will generate. For example, micropayments enabled by Bitcoin can serve as an efficient way to manage resource consumption in smart cities, where transactions happen between machines, not just people, adds Daugherty.

Applications and use cases

The most obvious immediate application of blockchain technology in government is in voting systems, where it can provide a secure, transparent, and tamper-proof method of recording votes, thus maintaining the integrity of election results and increasing trust in the population.

Beyond voting, less obvious use cases include land and property rights, where the blockchain’s transparent ledger can transform opaque registry systems and provide clear data to settle disputes. Public procurement can be cleansed of inefficiency and corruption, making it easier to audit and hold departments accountable for their use of resources.

Identity verification is fast becoming a promising application area for blockchain technology, and could provide the framework for the European Central Bank’s recent call for solutions that can be based on a digital ID system.

Even environmental regulation can benefit from the use of blockchain. Daugherty has overseen a scheme that provides evidence of environmental, social and government impacts for Virginia hemp farmers, using blockchain technology to certify efficiency improvements and provide time-stamped auditability of activity.

“Use of [blockchain] platform in partnership with farmers in Virginia enabled real-time capture of IoT data from sensors strategically placed in hemp fields, providing the first authenticated CO2 credits, says Daugherty.

Governments around the world have already started using blockchain for a multitude of applications. Daugherty points to Estonia as “a pioneer in the implementation of blockchain technology at the national level”, noting that they have “integrated blockchain to secure health records, judicial, legislative, security and commercial coding systems, among others. This has significantly improved data integrity, reduced red tape and increased the efficiency of public services.”

Australia, the United Arab Emirates, Singapore, Sweden, Georgia and others have begun using blockchain for real estate transactions, registration of shareholdings, international payment settlements, land registration and more.

Challenges in implementing blockchain technology

“Understanding and implementing blockchain technology is certainly a challenge given its complexity,” says Daugherty, who points to a possible solution in the EU’s sandbox method, where companies and businesses are encouraged to present potential ideas, policies and technologies so that they can be tested in a safe environment before a full-scale implementation.

Daugherty notes that regulators need to come together with technologists and businesses to design a blockchain framework that allows governments and businesses to fully embrace the technology while protecting citizens and consumers.

“It is important to remember that blockchain technology, like all others, is not beyond the scope of regulation,” says Daugherty, adding: “Rather than regulating the technology itself, it is the use cases and applications built on the technology that should be the focus . of regulatory efforts.”

Bryan Daugherty will be speaking at the first London Blockchain Conference between May 31st and June 2nd.

Register for free and attend the London Blockchain Conference here