Blockchains for Public Use
Towards an open, innovative, trustworthy, transparent, and EU law compliant data and transactional environment
By Marnix Langstraat & Wim Bouman
Introduction
The European Commission recently proposed a Study on opportunity and feasibility of a EU blockchain infrastructure. The EU Commission is “looking carefully at blockchain developments with the objective of setting the right conditions for an open, innovative, trustworthy, transparent, and EU law compliant data and transactional environment. This study will assess, in the first place, if, when and how blockchain technologies may help public authorities to deliver European services and implement policies in an optimised way. It will examine opportunity, benefits, and challenges of a range of options, including an enabling framework at EU level or an infrastructure supporting blockchain-based services.”.
We warmly welcome this work, and look forward to learning the results of the research.
In our own work we learned that current public blockchain platforms are promising for use in the public domain and could be a valuable pillar of a digital single market. But they also currently seem to fall short on governance, incentivising strategies and asset portability that afford for a data and transactional environment that fits right in with a democratic society. In this article we foreground a few lessons learned from today’s public blockchains, and demonstrate those issues and opportunities with a vignette about electronic medical records. This way, we aim to contribute to and inspire the debate that is addressed by the Commission and advance the design and development of such a EU blockchain infrastructure.
Blockchains for public use
What do we mean with ‘public’? When using the term ‘public’ we do not refer to a generally accessible or shared functionality, like in today’s public blockchains. Those public blockchains (like Ethereum or Waves) are accessible to anyone without permission, but have not been specifically designed or intended for the use in the public domain. When we use the term ‘public’ we denote blockchain applications that are relating to, or affecting all the people or the whole area of a community (ie. a nation state) and are rooted in and serve public law. They will more often than not relate add value to a government, or are in the service of the community or nation. A prime example of such a blockchain for public use is Estonia’s e-estonia, that spans a wide e-services ecosystem.
Illustration 1: e-estonia
Public use includes both public goods and public services. Public goods include fresh air, knowledge, official statistics, national security, common languages, flood control systems, lighthouses, street lighting, and free services like Wikipedia. Public services are services provided by government to people living within its jurisdiction, either directly (through the public sector) or by financing provision of services. Public goods provide an example of market failure in economic theory, when there is insufficient incentive for market parties to produce them. Consumers can take advantage of public goods without contributing to their creation, the so-called ‘free rider’ problem. If too many consumers decide to ‘free-ride’ the incentive to provide the good or service through the market disappears. The market thus fails to provide a good or service for which there is a need. Blockchain technology, with its capabilities in the fields of distributed trust mechanisms, longevity, shared consensus and immutability, could be of particular interest to both public goods and services. For that, the blockchain infrastructure itself needs to be transparant and controllable to the citizens it serves. Deployed correctly with proper governance systems in place, such a blockchain infrastructure could contribute to the availability and quality of these public goods and services.
Why blockchains could be very suitable for public goods and services
Blockchains in the public domain could amongst other be instrumental for creating stability and reliability for private activities. Without a strong public domain no strong social private domain will be able to establish itself nor will it be able to grow and advance. Blockchain provides the opportunity for civilians to monitor, control or verify their governing bodies and public services providers. It is easy to understand the temptation to use widely available and popular digital platforms like Google, Facebook, Linkedin or the Ethereum or Iota blockchain platforms for public use. There are important considerations though, that require us to think twice before actually deploying these platforms for public use.
Vitalik Buterin has written extensively about blockchain. For public use, the following of his observations are particularly relevant (See Buterin’s ‘Visions’ blog):
To start with, public blockchains provide robustness and resilience: Data and applications have long-lasting reliability, security and availability which make them very suitable for societal uses where the ownership or transfer of long-lasting assets, rights or capital is require.. They also provide integrity and availability. Says Buterin: “You can run applications on them, and convince your users that the application’s logic is honest and is doing what you are advertising that it does” and “ You can run applications on them, and convince your users that your application will remain working even if you lose interest in maintaining it, you are bribed or threatened to manipulate the application state in some way, or you acquire a profit motive to manipulate the application state in some way.”. Such blockchains would guarantee the provisioning of public goods and services independent of political moods or governmental administrative practices.
Moreover, public blockchains provide a degree of transparency and accountability. Buterin: “You can run applications on them, and give yourself the backdoor key if it is absolutely necessary, BUT put “constitutional” limitations on your use of the key […]” , and “You can run applications on them, and give a backdoor key to a particular governance algorithm and convince your users that the particular governance algorithm in question is actually in control of the application.”. All this could come in handy for the fair and untampered provisioning of public goods and services.
Vignette: E-Health and Electronic Medical Records (I)
Electronic medical records (EMR) are a good illustration of our thesis. Such records could benefit immensely from a proper public blockchain infrastructure. At the same time, electronic medical records should be protected from the unintended consequences identified above. In this case, a society could decide to create a blockchain based digital platform for electronic medical records, thus mitigating the risks and quality issues that come with typical EMR implementations. For reference, see what Estonia is doing in healthcare.
Illustration 2: E-Estonia healthcare
The benefits of creating an distributed EMR app (dAPP) and accompanying blockchain infrastructure versus a typical implementation are plentiful. In a happy flow scenario we would expect to see happy citizens that are in control of their own citizen data vaults, and are free to control who can use and process their data. Through the use of blockchain technology, encryption is by default on a high level and availability is not an issue. Unnecessary or unwanted intermediaries and (infrastructure and software) service providers have been eliminated from the process, making healthcare much more efficient, and healthcare operations more trusted. The access to and use of data is well-organised, and adequate measures have been taken to ensure access in medical emergency situations without compromising personal privacy. Even in case of technological turmoil when technical decisions will be taken that affect the EMR case negatively, it would be possible to fork the EMR blockchain and secure the data (which is something that has proven hard to do in current regular information systems). In the end, better technology deployed responsibility could contribute to better use of data in medical situations and in the end reduce e-iatrogenesis (which is patient harm caused at least in part by the application of health information technology).
Public blockchains available today are not yet eligible for public use
So, should we deploy today’s public blockchains on a large scale in the public domain? We may want to think twice before doing so. According to Ethereum, a public blockchain is:
“… a blockchain that anyone in the world can read, anyone in the world can send transactions to and expect to see them included if they are valid, and anyone in the world can participate in the consensus process — the process for determining what blocks get added to the chain and what the current state is.
As a substitute for centralized or quasi-centralized trust, public blockchains are secured by crypto-economics — the combination of economic incentives and cryptographic verification using mechanisms such as proof of work or proof of stake, following a general principle that the degree to which someone can have an influence in the consensus process is proportional to the quantity of economic resources that they can bring to bear.
These blockchains are generally considered to be “fully decentralized”.”
For blockchain to fulfil a valuable public function, it needs to be an open, stable, reliable and fair infrastructure for wealth, welfare and well-being for many — not a provision of prosperity to the few. Buterin notes in his ‘Visions’ blogpost mentioned before:
“In ten years time, the highly networked and interdependent nature of these services may make it such that it is harder for individuals to switch from one system to another than it is for them to even switch which government they are living under — and that means that making sure that these services are built correctly and that their governance process does not put a few private entities in positions of extreme power is of utmost importance.”.
Current governance of the important blockchain technology platforms unfortunately is more often at odds with public law or regulatory frameworks than it is designed or intended to serve the public for public use. As citizens, we would like to see the governance of blockchains containing assets that are relevant for decades to come to advance beyond the circles of tech or crypto-elitists or experts that dominate governance these days. One of the promises of blockchain technology is the exclusion of a third party in a value exchange between two or more parties. Shifting the third party role from for instance a bank to the Bitcoin miners or Ethereum foundation members does not sound as releasing the promise of elimination of the third party.
The crypto-economic approach to keeping the blockchain run may well work in a private setting, but is doubtful when applied to the design, development and operation of public good and services. The funding of blockchain is not to be neglected, but we seriously doubt whether the current mining practices and fat protocol thinking based ICO’s add any value for the public domain. As citizens, we would certainly not want to experience the risk of our blockchain transactions having no or lower priority when market circumstances favour other applications. Therefore an alternative could be looked at in the social space. A governance structure which is embedded into its community and based upon separation of duties might be a more promising and less risky way forward.
Lock-in is another issue of concern. Interoperability and portability of assets are as far as we can observe not top in mind in the blockchain discourse. As a citizen though, we would not want our assets locked down in a rogue digital platform. Some guarding of the guardians of the assets is due. The blockchain is here to facilitate free value transfer and in that way it creates a platform for wealth exchange.
These issues of governance, incentivising, and lock-in are potential drivers of seriously unwanted or unintended consequences and need to be addressed when designing and developing the EU blockchain infrastructure. The combination of non-portable assets locked up in a non-publicly controlled technology platform is not a recipe for success in public goods or services. When designed or deployed without prudence, valuable assets (like deeds, ID’s or rights) could come outside the democratic control they are under now. No-one ever really designed or developed social media like Facebook for the use and abuse in the USA 2016 vote, we assume. Yet the technology and the social media that depend on it have been instrumental in disrupting society in ways that are not universally applauded. It would have been a bad idea to use those public social media services for public purposes, just like it would be bad idea to use current blockchains without precautions for public matters of concern. Herein lies a lesson for blockchain: better to get one’s act together and make sure to sustainably contribute to the collective good, and be resilient towards emerging threats and unintended use or the unintended consequences of the technology.
Vignette: E-Health and Electronic Medical Records (II)
Back to our vignette on E-Health and Electronic Medical Records. In part 1 we skectched the happy flow where everything worked out fine. In reality, the EMR dApp would probably face a series of unwanted complications. As crypto-economy dictates the use of monetary incentives, the EMR blockchain needs to guarantee the steady and indiscriminatory flow of transactions. There is a danger of becoming dependent upon greed and being driven by money. Medical records face the risk of being processed later or none at all when market circumstances are such that more direct profitable applications (games, gambling or adult entertainment come to mind) are able to offer higher transaction fees to miners.
The governance of blockchain technology could turn out a time consuming affair for the EMR dApp. For a small market party not directly involved in the public blockchain consortia of today it is hard to influence crucial and fundamental technical decisions. Yet, those technological decisions can be of great effect on the proper functioning of the blockchain. Users should be convinced that the custodians of public blockchains will not alter the rules of the game on the fly. Users should also be secured that their assets are safe, and that in case of emergency they have full disposal of their assets. Users should feel that design and development are driven by the public good, and not by other incentives such as greed. Public blockchains after all should enable the collective.
Another matter of concern is the smart contracts that could be involved in the EMR blockchain. Not every blockchain platform works with these smart contracts, but they are common. Ownership, quality and legal status of these smart agents are debatable, to say the least. When smart contracts are used and compromised, there is no easy fix nor a proven legal framework to deal with the issues that might arise. We know though, that licensing of dApps could be an issue.
As with any large scale system, identity and ID management are matters of concern. Especially EMR applications depend on adequate identification of the participants in the system. As of now, we do not know of a proven way of using official ID systems such as Dutch DigiD with public blockchains, nor do we oversee the legal status and consequences of using such government provided systems in public blockchain applications.
The EMR blockchain will depend on a technical solution, a digital blockchain platform, and as such is vulnerable for lock-in problems. Blockchains contain digital assets. Either pure digital assets, such as a cryptocurrency, or as a digital twin or equivalent, e.g. Estonia’s E-residency. Assets and valuables in the public domain, such as real estate, intellectual property or citizen data, should not be restricted to one technology implementation over time. As a citizen in the EU, we would want unrestricted ownership and disposition of our assets. Blockchains that power public goods or services should guarantee the free transfer of one’s assets, not be a limiting factor. We have yet to see a digital platform though that is designed to guarantee EU rights such as the ‘right to rectify’ and the ‘right to be forgotten’ and similar GDPR themes.
Putting it all together
In this essay we explored the use of blockchains for the public domain and indicate what the three lessons learned from our own practice could mean for the proposed EU blockchain infrastructure.
Fundamentally, the case for the use of blockchain in public goods and public services (and services of general economic interest (SGEI) as well) is sound. Yet, we identified some risks of using the current state of art technology, and illustrated these by the vignette of Electronic Medical Records. We are especially worried about governance issues, the use of financial incentives under the crypto-economics paradigm in public blockchains and about the lack of portability causing a possible lock-in of assets. All these issues seem to hinder the development of blockchains for the public domain and need to be addressed in order to mitigate unintended consequences.
With great power come great responsibilities. Blockchain technology has a great potential to support citizens when using of public goods and services by providing just the right tools for a strong public domain infrastructure. For that future to materialise, blockchain providers need to act like responsible citizens themselves and make sure their platforms, when applied in the public domain, can act according to sustainable societal practices and the civil, political, social and economic right like those in the EU Charter of Fundamental Rights.
About the authors
The views, thoughts, and opinions expressed in the text belong solely to the authors, and not necessarily to the authors’ employers or other affiliated organizations.We thank Ard Huizing, Stephen Donnelly of Spectral and Kaushik Khakhar of Toblockchain for their valuable suggestions to improve the text.
Marnix Langstraat (Marnix Langstraat)
https://www.linkedin.com/in/marnixlangstraat/
Wim Bouman (Wim Bouman)
