Although blockchain technology was originally designed to function as an architecture for Bitcoin, it is now being used in a variety of fields. One of them is serving the government where distributed systems have great potential to create revolutionary changes to the public sector.

Why Should Governments Consider Applying Blockchain Technology?

While blockchain has many potential advantages for its possible use in governance, there are a few key reasons for government organizations to consider using blockchain technology. Those reasons are to increase decentralization, data integrity and transparency - as well as to increase efficiency and reduce operating costs.

Decentralization and data integrity

There are many different ways to build a blockchain, however, because they are distributed systems, all blockchains have a certain level of decentralization. That's because a blockchain network is maintained by multiple computer nodes, which work synchronously to verify and validate all data. Essentially, they need to reach consensus and agree on the state of the database to preserve a single version of the truth.

As a result, blockchain systems can achieve a high degree of immutability and their framework can be customized to ensure that information can only be accessed and - in some cases - modified by other users. litigant. In practice, different regulatory bodies can act as authenticating organizations, each contributing to the data distribution and verification process. This will significantly reduce the possibility of data tampering and fraud.

In other scenarios, NGOs, universities, and citizens could also be included as validating nodes, which would lead to a higher degree of decentralization. Furthermore, these verification mechanisms can prevent other common types of errors, such as data entry errors (e.g., a block of data lacking basic information will be rejected by the distributed node network). .

Additionally, blockchain could one day play an important role in the election process. Fair and open elections are one of the cornerstones of democracy, and blockchain's high level of immutability makes it an excellent solution for ensuring that votes cannot be tampered with. In addition to improving the security of voting at polling places, blockchain has the potential to make secure online voting a reality. The state of West Virginia piloted a real-life example of such a system in the 2018 US midterm elections.

Plainness

Blockchain databases can be used to store and protect government records making it impossible for anyone to manipulate or hide information. Under the current model, most government data is stored in centralized databases, controlled directly by authorities. And some of these databases are in the hands of just a few people, making manipulation quite easy. In those cases, blockchain may be suitable because it can distribute the verification and data storage process to multiple parties, thereby effectively decentralizing power.

Therefore, blockchains can be used as a transparent database that reduces (or eliminates) the need for trust between government agencies and civilians. For example, some European authorities are looking into the possibility of creating blockchain-based registries to reduce property disputes. This model could be based on a distributed system that both government agencies and citizens could access and verify - and each party could securely keep a copy of official documents and requests. full.

Additionally, decentralized blockchains can provide permanent access to records that law enforcement officials and watchdog organizations may need to use to uncover incidents of corruption or abuse. permission. By reducing or eliminating the need for intermediaries in data sharing and financial transactions, blockchain systems can also prevent government officials from concealing wrongdoing by transferring funds through through a series of shady private companies.

Increase efficiency levels

Another reason to use blockchain in governance is to reduce operating costs by maximizing the work efficiency of national institutions. Because governments rely on tax dollars, they need to use their budgets wisely. Blockchain systems and smart contracts can be used to automate tasks and workflows, which will greatly reduce the time and money spent on bureaucratic processes.

While cuts in administrative spending make practical sense, they can also help bolster citizen confidence and satisfaction. Greater efficiency and lower costs can help regulators achieve higher approval ratings. And by cutting operating costs, the government can invest more in other areas, such as education, security and public health.

Blockchain technology can also be applied in another important area of ​​administration: tax collection. Blockchain-based ledgers can easily move funds between parties according to preset conditions. This can significantly reduce administrative costs associated with collecting and distributing tax revenues and enforcing tax laws. For example, by storing records and processing returns on private blockchains, tax collection agencies can also protect taxpayers from fraud or identity theft.

Disadvantages and Limitations

While blockchain can be used to improve data integrity, transparency, and efficiency, its use in the public sector also has certain limitations.

Interestingly, the very property of immutability, which underlies many of the advantages of blockchain, can also be a disadvantage in some cases. The immutability of data means that records must be entered correctly before validation, meaning that measures are needed to ensure that the initial data collection is done correctly.

Although some blockchain implementations can be designed in a more flexible way, allowing changes to data, this requires approval (consensus) of most validating nodes, which can raises questions about the decentralization of the system and ultimately leads to disagreement. However, this drawback can be quickly resolved on private blockchains that do not require a higher degree of decentralization.

Privacy concerns are also important, as records added to the blockchain become permanently available to anyone with access to it. This may conflict with procedures intended to seal documents, such as expunging criminal records. In countries that recognize a technical right to oblivion in their laws, these immutable records may also conflict with existing laws or judicial precedents. These problems can be solved by using destruction functions and encryption techniques, such as zk-SNARK or other types of zero-knowledge proofs.

Finally, it should be noted that governments themselves may present obstacles to this adoption. In some cases, authorities simply do not understand the value of blockchain technology, which leads them to ignore the potential benefits. In more extreme cases, governments in which corruption is a common and entrenched practice may oppose the use of blockchain to protect the interests of their own officials.

Conclude

Despite these potential drawbacks, blockchain systems still have some possible applications in governance. From increasing transparency to streamlining the tax collection process, decentralized networks can help governments operate more efficiently and build higher levels of trust with their citizens. Although some applications are still hypothetical, many countries are already testing it.

It is worth noting that digitalized systems have been used for governance since the early 2000s, many years before the advent of blockchain. Estonia is a prominent example, the country launched a digital identity program in 2002 and was the first country to hold elections over the Internet in 2005. In 2014, the Estonian government launched the eResidency Information program, which covers the use of blockchain technology for digital data management and security.

Although blockchain technology was originally designed to function as Bitcoin's architecture, it is now being used in a variety of fields. One of these areas is governance, where decentralized systems have the potential to greatly transform the public sector.