Why you can’t block the chain series 4b/6

Blockchain use case landscape across industries, enterprises and government

In our previous post, we highlighted some examples where blockchain and its applications have the potential to significantly change the way businesses and industries operate compared to today. The focus in this second part of the post is now on governments and how the relationship between government agencies and citizens can change through the implementation of Blockchain solutions for certain activities that are currently conducted and managed on behalf of citizens. 

Governments and their registries

As a system of "social control under which the right to make and enforce laws is vested in a particular group of society," - as defined by the Columbia Encyclopedia - governments provide many services to their citizens. 

In many countries, governments are considered trusted parties. One of their tasks is to document the various forms of certain assets in the form of registers and to manage changes to these registers. Registries play an important role in our economies today, as they are one of the fundamental reliable components that enable the open and dynamic economy, we currently live in. 

The most common type of registries administered by governments are land and city registries. Other related registries include water well registries, documentation of licensing activities such as hunting or firearms licenses, or motor vehicle license plate registrations. Certain certifications are also administered by governments, such as educational certificates or even professional certificates by regulatory agencies. 

Most registries operate very much like this: Record keeping, and all processes related to changes in the registry are managed in some form by a government agency or authority. This government entity has permission to accept and or change a record. This is done based on an input to create a new record or modify an existing one. 

The disadvantages of this type of registry are essentially the need to trust the government entity as well as the general inefficiency of the processes involved in the registrations. Governments are trusted to record submitted and accepted records and to document the record securely in the registry. While some governments are trusted a good deal, unfortunately there are also those who are not. This is because they are not always able to keep their registries and associated documents secure, which can sometimes have drastic consequences for citizens. 

The processes and systems around changing these registries can be very cumbersome, usually slow and expensive. A change in a registry means a change in a record: either the characterization of an asset changes, such as from a rural to an urban area, or the ownership changes when a buyer and seller engage in a transaction. The process of changing these registers or ledgers is a cumbersome activity, usually tied to an unidentified process within a government institution. Registries, for the most part, are intended to be public and easily amended to capture the changes that occur in the surrounding economy. There is a need for better registers or better ledgers. 

As these basic elements are used more and more by economic agents for informational purposes to support their decision-making processes, given that we live in an information economy, it can be argued that any advancement in technology that provides better capabilities of these registers can have multiplying effects within the economy that are intended to support these registers. 

Like Japanese buildings

A simple analogy and the basic concept behind

Let us take Japanese buildings as an analogy. Japan is known for the intensity of the earthquakes that strike the region. Normal building foundations are designed to be static and fully connected to the ground so that all forces acting on the building can be transmitted to the foundations, which then pass them on to the ground.  However, in very strong earthquakes, the forces that need to be transferred from the foundations to the ground are so high that they would fail, and the buildings would collapse to the ground, drastically reducing their economic value. With a clever idea, namely the use of ball bearings, Japanese building foundations can still remain upright without causing catastrophic failures. This is because the foundations can move slightly during earthquakes or allow the ground to move without affecting the building. It is as if the building were standing on really big roller skates and the earthquake caused the structure to be slightly off-balance!

This small improvement to the basic layer of a building has extended the life cycle of that building and, more importantly, the benefits to a large number of people in the economy. The basic concept behind this analogy, we believe, can be applied to concepts for the many registries that governments manage: Improvements at the technology level by improving the processes for creating records, and changes to those records with trusted processes and platform governance. By documenting these legacy registries on blockchain platforms, we have eliminated the trust required from the government institution managing the registry to the blockchain platform and software. As a result, we have expedited the documentation of new records and the required changes to the registry. This digital platform can greatly improve the visibility and speed of changes to these registries. It also allows third-party systems to be layered on top of these registries and provide analytical insights that are important for future planning purposes. Blockchains can give registries their own style of roller skates. 

The benefits, as is common with other applications, are the cost of implementing and especially maintaining such a solution, which can be drastically reduced compared to current practices. In some countries, governments are skipping all the existing legacy solutions that are common in the developed world and going directly to these digital blockchain registries because they currently do not have trusted ones. This is because they have suffered prolonged wars and all previously documented registries are unusable or non-existent. Ethiopia and Georgia are two countries going down this path, where they have set up initial pilots to implement education certification management on the blockchain, which would cover a population of over 5 million students in these pilots alone.

There are areas where people have trusted their governments to play a supporting role in securing and protecting citizens' information. We believe blockchain solutions can play a critical role when implemented alongside digital identity management solutions, namely in data privacy in general and electronic health records. 

Consumers have relied heavily on governments to enforce privacy rules on organizations that collect, aggregate, and analyze data from their users. In many cases, this enforcement has been unsuccessful as companies continue to be hacked and millions of personal records have been leaked or even sold. A particularly thorny privacy case involves electronic health records. 

The promise of electronic medical records has been long in coming, and no solution has taken hold. The problem is complex, but solvable once digital identities begin to play a much larger role in our lives and people generally start having more control over their data.

Just as we store various information about ourselves in the digital identity, we now would have the ability to link health-related data and share that information as we see fit, depending on the circumstances. Some information could be made public, e.g., allergies to certain medications, blood type, certain chronic conditions for emergency situations. Other information could be secured and shared only with certain physicians, given the sensitivity of the data and the impact it could have on our lives if it fell into the wrong hands. Most importantly, the user would have much more control over their own medical data, allowing physicians to make better decisions and thus better medical results for the patient. 

The promise of electronic medical records has been long in coming, and no solution has taken hold. The problem is complex, but solvable.
How blockchains can increase citizens participation in government affairs

The ultimate case for blockchain in a government environment is in one of the basic processes for allocating the power of national government, the electoral process

Today, abstention from voting is high in many democratic countries. This is partly because people feel that a single vote to elect their political leader to head the government is not enough participation, especially when we think of the other areas where people's feedback is considered valuable and desired. e.g., customer reviews of products, surveys of service providers, forums where people share experiences, etc. Governments have failed to involve more of their population, the people they are supposed to represent, in their own affairs, and to some extent this has discouraged people from voting. Currently, most democratic governments function in such a way that the electorate delegates its representation with respect to government activities to members of the House or Senate in a Congress. These act as agents for the general public, but not always in their best interests, as the many studies of the principal-agent problem have shown.

One way to overcome this abstinence and the general distance between governments and their citizens is to increase participation in government affairs by reducing the burdens of participation through the use of blockchain-based technologies

A mobile application that is securely connected to an immutable ledger can greatly improve people's participation in government activities. Governments can create a secure mobile application to reach as many people as possible and enable a voting platform that records results on the immutable blockchain ledger. Identity solutions can ensure that votes are tied to an identity, but with anonymity at the individual level. The representative model can still be in place, as people can choose within the application whether or not to delegate their vote to their current representative in parliament. The beauty of this is that people now have a louder voice and can choose to vote themselves or delegate their vote. 

The votes are then stored in the blockchain in its immutable ledger, which maintains its consensus and verifies that each vote cast is valid according to protocol rules. The results can be verified, aggregated and published quickly, in a much shorter timeframe than currently and at a significantly lower cost. 

We believe that the efficiency that blockchain technologies can provide to the process of voting can greatly increase people's participation in government affairs. People can feel like they have a say in matters that in the past they would not have been able to directly influence with their vote. This is because they would now have the opportunity to vote directly on the decision that the government is asking its citizens to make. Not only that, but they would now be able to verify that their vote actually counted; something that has always been assumed to be true but has never been possible to verify. 

In many ways, there are increased efficiencies in such a use case, as the resources required are significantly reduced compared to paper-based ballots. The latter involves creating the ballots, distributing them to the various polling places, securing those ballots until Election Day, managing the voting process on the day of the election, collecting the votes, transporting them, and counting the paper-based votes. 

Compare this to the hypothetical activities required for blockchain-based voting in the near future. A mobile application would need to be developed, but with lessons learned from multiple blockchain-based digital voting rounds conducted in the past, the structure and security of these applications would already be battle-tested. The application would then be distributed or part of a state voting application that notifies when a new ballot is available. Voters would identify themselves by their digital signature within the application, cast their vote within the specified time period, and the votes would then be published on the blockchain. 

Implementing such a blockchain-based voting system would be notoriously difficult. Although it is probably not one of the first implementations of blockchain in governance, it could be one that brings the most benefits, as it could pave the way for further decentralization of government and further popular participation. There is a high rate of absence, probably in part because there are few opportunities to get involved. Having the ability to intervene more, and at a lower cost than before, could lead to more participation.

Governments are centralized entities that pool resources to enable systems to guide a nation's population. The benefits of centralization are believed to be efficiency in decision making and execution, but in many ways, governments are not suited for these characteristics. So, if blockchain platforms now exist to enable broad national participation in governance, we are moving toward a more decentralized form of governance where things do not have to be decided in the nation's capital. 

Blockchain governance is a new topic on the agenda of some of the major platforms and there is a lot of experimentation with different democratic models on blockchains. The need to address blockchain governance has increased due to the nature of updating a platform. Deciding what should be updated, who should pay for the updates, when the updates should be made, and who should propose the updates are issues that the community is deeply engaged with. Governments can use the evolution of governance on the blockchain as a model to encourage decentralization of their own operations.

Whats next?
These two pieces on blockchain applications have provided an overview of the impact blockchain technologies can have on a variety of industries, as well as probably the least anticipated area of all; government. Our next post will look at some applications specific to the pharmaceutical and biotechnology industries. There we will outline some use cases with a few high-level design principles that can be used for such solutions. 
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