The government has a mandate to provide people with fair and efficient services. Unfortunately, ensuring transparency and accountability often results in reduced efficiency and effectiveness, or vice versa. Governments usually have to improve one at the expense of the other. In rare cases, technologies that enable governments to improve equity and efficiency emerge.
One such technique was the transition from paper documentation to databases. The internet was different. Blockchain is next. Like the Internet before, blockchain will not only improve the interaction between residents and public services, but will also have greater economic and social implications.
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How the government can use the blockchain
Blockchain will have a broad and diverse impact on public services. Here we explore some promising examples.
Identity is the cornerstone of interaction with public services, but today’s systems have many flaws. Let’s look at two. First, identification requires a comprehensive and expensive infrastructure. Although developed countries benefit from strong national identities, many developing countries struggle to provide strong national identities. The World Bank estimates that about 1 billion people do not have an official identity. Second, current identification systems are not secure. For example, India’s biometric authentication numbering system known as Aadhaar is vulnerable to a wide range of frauds, including land transfers, passports, loans, voting, etc.
The strength of the blockchain combines surprisingly well to mitigate the weaknesses mentioned above. The decentralized design of the blockchain makes distribution and coordination much cheaper than the centralized design. The unstable nature makes it safer.
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In 2013, public procurement accounted for 29% of total public spending in OECD countries. Inequality and lack of transparency in the procurement cycle opens the door to corruption. The Organization for Economic Co-operation and Development estimates that up to a third of investments in publicly funded construction projects may be lost to corruption.
Blockchain solutions can impact nearly every aspect of the procurement cycle, such as key transparency and stakeholder engagement reforms. The pilot concluded that despite the challenges, blockchain-based electronic procurement systems offer unique advantages associated with procedural transparency, consistent record keeping, and fair disclosure.
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Despite the digital age, paper voting is still the dominant voting method. This is understandable given the importance of elections to the democratic process. However, paper systems suffer from cost, time, and integrity. Replacing paper ballots, known as Direct Registered Electronic Voting (DRE) machines, has had mixed success. Brazil introduced the DRE in 1996, but security concerns remain. DRE started in America in 2001; However, progress and adoption have slowed as events continue to occur with DRE machines.
As a newer technology, blockchain is not yet ready to replace existing voice systems, but it does support existing ones. For example, our company partnered with the University of Indonesia to create a blockchain-based independent verification system to ensure the results of paper elections in Indonesia in April 2019. The project was able to report 25 million votes in the hours after polling closed. On the contrary, the official results were not published until a few weeks later.
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Beyond public services
Governments experimenting with blockchain are beginning to see it as an important infrastructure. They are beginning to understand that having a blockchain infrastructure is important for the development of economic activity. Governments want to say something about developing standards that will eventually be accepted around the world. China and the European Union are two of these leaders, and both are developing blockchain initiatives.
The Chinese leadership is very supportive of blockchain initiatives. In December 2016, blockchain was mentioned in the country’s 13th Five-Year Plan as a technology of strategic importance along with artificial intelligence.