Blockchain: Potential to benefit public services and modernise bureaucracies

Stig Østergaard Nielsen from the Nordic Blockchain Association argues that blockchain can benefit public services and modernise bureaucracies

Blockchain technology has been heralded as a future pillar of information-technology by enthusiasts and thinkers, from Copenhagen to Karachi. As a base-technology that can satisfy a demand for high transparency, with clear accountability and expedient operations as well as truly globalised business, the future of blockchain points in many directions.

At one extreme, blockchain is viewed as the prime disruptor of our time, a technology that could fundamentally change the way society is run. Some have even suggested that in time, blockchain could enable safe and efficient direct democracies with little need for parliaments or politicians.

Public-sector entities certainly have a large role to play in shaping the future of the technology as developing partners, working to leverage the technology to modernise bureaucratic procedure, public administration and governance. In this iteration of the blockchain future, innovative public actors willing to invest in small-scale development projects have much to gain in the future.

The basics Blockchain like any other new technology is, of course, a very complex subject. Explaining it in a few sentences is complicated and risks painting an oversimplified picture and the same goes for its potential applications, in the public sphere and elsewhere. However, for the purpose of this article, consider this. A blockchain is a ledger that registers transactions (changing data). The links in the chain are blocks of data updated regularly and stacked chronologically on top of one another. The chain exists in multiple identical copies across a network (usually public) and all records are checked against each other continuously to ensure consensus. Once blocks are linked to the distributed network, single actors cannot corrupt or change data in the ledger, making the network hard to tamper with, so it is both transparent and trustworthy.

Layers of automation, known as smart-contracts, can be added to the chain, enabling different types of business to be conducted without humans checking the process manually. Put simply, a business process like buying a watch online can be conducted purely by “if-then” procedures like; “IF” ordered and paid for, then it was approved and shipped – theoretically saving time without sacrificing safety.

This article from Computerworld does a nice job explaining the basic qualities of blockchain. Heightened efficiency Basic bureaucracies that are the well-functioning uncorrupted kind, have much in common with the very simplified version of an “if-then” contract as described above. Take applying for housing subsidies in Denmark as an example. In essence, all citizens are potentially eligible to have a fraction of their rent-money reimbursed, provided they fulfil a specific list of criteria.

These criteria are complex, yet analogous to the “IF” in the model above. The “then” is the approval and the eventual reimbursement of funds. The basic function of the procedure is ensuring a fair and equal treatment of all applicants, under the current law. However, the current system experiences a fair share of criticism and is often said to be slow, overly cumbersome and rigid. While the rigidity is a logical consequence of complex rules, the “IF”, the speed of the process leading to “then” is determined by the amount of organic computer power employed by a given bureaucracy.

Smart-contracts (of varying complexity), in combination with the hard-to-hack qualities of blockchain, offer a way to speed up bureaucratic processes and it follows that this would also free up resources to be allocated elsewhere or simply eliminated, depending on the political priorities of the day. Public-sector entities certainly have a large role to play in shaping the future of the technology as developing-partners, working to leverage the technology to modernise bureaucratic procedure, public administration and governance. In this iteration of the blockchain-future, innovative public actors willing to invest in small-scale development projects have much to gain in the future”.

Real world examples

There are an increasing amount of real-world examples of blockchain projects for public development available around the world. They are, of course, complicated to explain and deserve a more detailed treatment than the scope of this article offers. The examples below are, however, worth investigating further. Currently, one of the most impressive collections of blockchain concepts and projects resides with the organisation, Dutch Blockchain Pilots. In Holland, the organisation has orchestrated a large number of pilot projects addressing challenges like slow processing procedures for child care payments and the identification of broken streetlights (using supplementary technology) and the following dispatch of a repairman and payment. Ultimately, this is heightening efficiency and easing workloads. Publications like “Using Blockchain To Improve Data Management In The Public Sector” from Mckinsey or “Blockchain: Opportunities for Healthcare” from Deloitte offer insights on several additional pilots and potential blockchain applications, including efficient remittance payment systems and secure personal data sharing solutions between public authorities.

In Scandinavia, the Nordic Blockchain Association is leading a similar effort to establish pilot-projects in partnership between public actors and private developers in conjunction with the organisation behind the Dutch Blockchain Pilots, working towards an early introduction of blockchain in public. At the heart of the effort lies the recognition that blockchain, despite all its qualities and increasing salience in public debate is still a young technology, no longer the infant stage of existence, but still in a formative period, as well as the belief that the technology’s prospective benefits are worth pursuing with consolidated efforts.

Early beginnings

Clearly, blockchain has the potential to affect changes in public administration and provide updates to old structures of administration and the success and progress of initiatives like the Dutch Blockchain Pilots prove that blockchain pilots are viable options. However, to fully capitalise on potential gains, more development is needed and more public entities will have to establish pilot-projects for several reasons. Government structures are very large and notoriously slow to change, of course, thus there is a need for a long learning period, as well as plenty of time for adjustment is expected. Early engagement with the development of blockchain projects offers a gradual learning period and opportunities to shape the ideal design on an extended timeline.

Small-scale explorative projects offer developers – often hungry start-ups – and public players the opportunity to grow concepts at a healthy equal pace with ample time to grow ambitions, understanding and capability at a common pace. It is also valuable to consider that the process of legislative catch-up to disruptions in both public administration and private industry can be better informed with the government as an insider and development partner.

Stig Østergaard Nielsen

Press Officer

Nordic Blockchain Association

http://nordicblockchain.com/

@nordicblock