Blockchain Implementation in the Public Sector

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Blockchain Implementation in the Public Sector

In 2008, Estonia revolutionized its private and public sector processes by launching the “Hash-linked time-stamping” technology. Considered as a pre-cursor of Blockchain as we know it today, the initiative helped Estonia significantly reduce its administrative load and emerge as the front-runner of Blockchain implementation. This exemplifies the potential of Blockchain to augment and innovate public sector services and intrigues us to explore similar possibilities that can be achieved by Governments around the world.

The Blockchain Biography

Blockchain represents a huge shift from traditional systems comprising a de-centralised database hosting validated transactions. A set of timestamped transactions make a “block”. Individual blocks are linked in a sequential manner. Any change in the information stored or in the block sequence immediately informs the owner and breaks the link, thereby indicating Blockchain’s fraud detection capabilities.

Ways Blockchain Can Help Government

Blockchain’s integral characteristics like transparency, immutability, and resilience, have captured the attention of Governments around the world to facilitate critical tasks like:

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Storing personal identity information

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Preventing cyber hacks

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Managing contracts, assets, financial transaction and regulatory compliance

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Managing information security

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Streamlining government functions to increase efficiency

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Enhancing data security and transparency

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Improving voting systems and enhancing other public services

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Providing relevant support in back-office functions

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Managing information security

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Mitigating fraud

Ways Blockchain Can Help Government

Jonny Voon, the Innovation lead at Innovate UK opines in his article on the blockchain that Governments often face a challenge in identifying an ideal and valid implementation of the technology in areas that cater to organizational needs, ensure seamlessness in daily processes and imparts technical strength.

To prevent technology overkill, a few priority areas have been identified for Blockchain implementation in the public sector:

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Asset Management for efficient handling of property transactions

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Identity Management by compiling, checking and verifying multiple data sources, transactions or events in a secured manner

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Seamless and secured citizen services like voting or tax collection

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Regulatory Compliance to automate legal and statutory requirements

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Enhanced vendor performances through improved Contract Management systems

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Improved Borderless Services

Government’s Role in Blockchain Implementation

Governments around the world are slowly but surely waking up to the immense potential of Blockchain in enhancing public sector services and achieving their digital milestones. In its May 2017 Survey report, NASCIO terms Blockchain implementation as the “next big transformational technology” owing to its safe, resilient and immutable nature.

Currently, Governments in 46 countries including Australia are making their mark on the digital map with around 200 planned Blockchain implementations. The map below highlights the status of Blockchain implementation across the world (as of March 2018).

Governments are increasingly entering into partnerships and forming communities both within and across sectors to implement Blockchain. This has led to the establishment of several Public-Private Partnerships (PPP) to explore and implement Blockchains.

The article “Blockchains Unchained: Blockchain Technology and its Use in the Public Sector – Berryhill, J., T. Bourgery and A. Hanson (2018) ” cites the example of the ID2020 initiative, between United Nations, Microsoft, Accenture, and Rockefeller foundation that works towards strengthening identity management based on Blockchain technology.

To successfully implement Blockchain, Governments are purchasing technology services using three principal approaches :

Principles for use

To successfully implement Blockchain, Governments are purchasing technology services using three principal approaches:

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Promoting Entrepreneurs

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Awaiting innovations and best practices from private firms

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Seeking partnerships with contract Technology vendors

Governments go through a detailed internal process before awarding the RFP to the selected contractor. The illustration below highlights the stages involved in the pre-selection process.

Blockchain in Australia – Transforming Processes Down Under

Australia is aggressively adopting digital transformation in its government policies and processes. The country has consistently secured a second position in the United Nations E-Governance Development Index Survey list ever since it was launched in 2014.

The chief stakeholders in the decision making during the selection process include Business Decision Makers (BDM), IT Decision makers (ITDM), Chief Financial Officer (CFO) and Chief Information Officer (CIO).

In 2016 Australia garnered substantial global attention by becoming one of the first countries to combine the power of IoT and the brilliance of Blockchain technology for trade with China. Moreover, its e-governance initiatives, economic policies, and encouragement for innovative enterprises indicate an appetite for comprehensive digital transformation.

Tracing Australia’s Blockchain Footprints

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In 2017, Queensland was the first provincial government to leverage the smart contract technology and issued a “virtual cryptobond”. This facilitated automation and management of coupon payments.

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In July 2018, the Australian Government, through its Digital Transformation Agency (DTA), concerted with IBM to design a transformative digital network. The platform, known as the Australian National Blockchain (ANB), aims at facilitating businesses to leverage smart contract technology to manage transactions and events through their entire lifcycle.

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The Commonwealth Bank of Australia (CBA) has partnered with World Bank to issue Blockchain bond based on Ethereum. The bond will be denominated in Australian Dollars.

Blockchain Around the World – Implementation Use Cases

Countries around the World are also initiating their Blockchain implementation. Three sample use cases are cited below:

Dubai, UAE

In 2017, The Wall Street Journal opined that “Dubai Aims to Be a City Built on Blockchain” owing to the varied implementation of the technology in different areas impacting citizen’s life including healthcare, trade efficiency, tourism, registrations, property ownership.

UK

The UK Government implements Blockchain for disbursing and tracking student loans and welfare checks. In 2018, it implemented the technology for regulatory compliance in the food sector.

Illinois, USA

The Government of Illinois has launched the “Digital Property Abstract” that consolidates land records from different governments into a single repository.

The Future Ahead

World Governments are increasingly acknowledging the definite advantages of Blockchain as a disruptive digital technology. However, challenges in the form of security concerns, lack of trust and awareness continue to impede the adoption in public sector services. Government agencies need to mobilise their energies to help create the right environment in terms of infrastructure, technical skills, resource capability, effective PPPs and appropriate awareness in order to make their digital dreams become a reality.

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