Why Canada Should Become a Blockchain Democracy

Published in

Ivey FinTech: Perspectives

12 min readMar 7, 2018

“This technology offers unprecedented levels of transparency and trust, allowing public records to be searched, verified, and audited at a level the world hasn’t seen before.” — The National Research Council of Canada

Imagine being able to vote securely from your phone, tablet, or personal computer anywhere in the world. The Canadian government can and should make this a reality by replacing physical polling stations with an internet voting platform, built upon Blockchain technology, and utilizing SecureKey identification technology for several reasons. With over 90% of Canadians already using the internet, 70% of Canadians accessing sensitive material including online banking, and millions of Canadians unable or unwilling to physically visit a polling station, there is a sizable portion of the population that would easily opt for the convenience and accessibility of this service.[1] This will increase GDP and the government budget by hundreds of millions of dollars, and will also increase voter turnout, voting accuracy, polling efficiency, queuing, and counting by unprecedented degrees. It will also magnify the voices of marginalized populations, decreasing civil unrest, civic protest, and civic disengagement. The following article justifies this infrastructural investment based on the federal election alone and would further benefit from additional analysis factoring in the benefits of accommodating both provincial and municipal elections as well.

In the next election, Millennials are expected to make up the largest segment of voters, but will likely continue to have the lowest turnout among any age group if voting conditions remain the same.[2] They are also the most likely group to adopt and experiment with new technologies that utilise sensitive personal information.[3] With close to half of eligible voters skipping out on the 2008/2011 elections, and costs surging to bring in additional voters for 2015, the Trudeau government has an opportunity to similarly increase future participation, and at a fraction of the cost, while revisiting part of its promise for electoral reform.

What exactly is blockchain technology?

A blockchain is a decentralized chain of publicly accessible transactions stored in individual blocks. Each block stores a record of previous transactions, requiring changes not only to the block in question but all the following blocks as well. This makes any adjustments to transaction data virtually impossible without co-opting more than half of the computing power available on a blockchain. The blockchain is accessed in a peer-to-peer network, where each peer/node validates unconfirmed transactions, recently mined blocks, and communicates with other nodes to make exchanges. Before a new node can perform these functions, it must get synchronised by completing an initial block download where it downloads and validates all blocks from block 1 to the most current one in the chain.

Simplified Blockchain Transaction (Source: European Payments Council)

While blockchain technology would act as a secure storage of transaction data, a pre-programmed set of logical instructions must be present for these transactions to take place automatically, eliminating the cost and risk of an intermediary being necessary to facilitate them. Fortunately, Canadian made Ethereum technology employs the use of ‘smart contracts’ which do exactly that. This has already allowed the Canadian government to pilot an Ethereum based tool to allow greater transparency for the public to track published information about grant funding in real-time.[4] The National Research Council of Canada has said, “this technology offers unprecedented levels of transparency and trust allowing public records to be searched, verified, and audited at a level the world hasn’t seen before”. In the context of elections, this would allow publicly auditable live-results that accurately depict what is occurring at almost any given moment. Typically, transaction data and verification are delayed a couple of hours as a security measure, after which point the transactions would be deep enough in the ledger to make malicious adjustments too costly to attempt.[5]

Can blockchain be trusted?

The most common question surrounding blockchain applications and digital voting involves their security relative to existing applications. When it comes to blockchain, it’s defining characteristics primarily include both security and immutability, eliminating many of the previously identified issues concerning internet based digital voting.

Security is limited by the size, accessibility, and infrastructure of the network. If a blockchain network is not well distributed or large enough, it becomes vulnerable to a “51% Attack”. This occurs when more than half of the server computing power, also known as the digital mining hash-rate, is controlled by a malicious third-party directing a coordinated attack. [6] Fortunately, this is an economically impossible scenario given the astronomical costs of purchasing capable hardware relative to the amount of computing power already distributed across a typical network. Additionally, accessibility over who can read, submit, or verify transactions can be controlled via building a private blockchain network. In this kind of network, the Canadian government could prevent certain nodes from connecting, circumvent those that transmit incorrect information, and reverse transactions if necessary.[7] The government could hire auditors to track incoming connections and node locations during election time, and abnormal hardware purchases or imports leading up to it. The auditors would also be able to reverse fraudulent votes tied to any nodes that are affiliated with phishing scams or identity theft.

In terms of network infrastructure, this is typically where cyber attacks have exploited or revealed vulnerabilities. Instead of using an online exchange or wallet where votes are stored, the public can be issued a single vote at the time of voting, consequently eliminating security risks associated with storage. Cybersecurity risks can further be reduced by building upon proven technology, limiting all access to sensitive information, monitoring the network, simulating third-party attacks, and carefully guarding encryption keys with the highest-grade security standards.[8]

Relative to existing infrastructure, centralized networks on the other hand are not only subject to outside forces, but particularly to those of internal stakeholders who may have access to manipulate sensitive data. With blockchain this problem is irrelevant as no one person or small group retains exclusive access to the data, since the ledger is distributed among all users and hence fully transparent as well. This also means that since blockchain is not run from a centralized location, there is no single point of failure.

Benefits of Blockchain Decentralization (Source: SecurityIntelligence)

But how can voters be verified remotely from their own neighborhoods or workplaces?

Aside from security concerns, the key issues that have stalled the implementation of a remote online voting system to date have surrounded the inability to verify a voter and their condition upon voting. In terms of confirming that a voter is not being coerced or influenced, a dual-witness and two-factor authentication system may work. At the time of every vote, a voter will have to ask two other eligible voters to confirm two pieces of the voter’s identification (eg. a driver’s license and credit card) and then provide them with a randomly generated code from their own accounts. To then protect voters from fraudulent votes, a follow-up communication will be received via email or other means through which the voter can confirm that they voted at the documented time or location.

Beyond having two witnesses validate them, their identification will have also been verified using Toronto based SecureKey Technologies upon voting. SecureKey is backed by $27M in investments from Canada’s leading banks and has announced a partnership with IBM to deliver blockchain-based digital identity verification for bank accounts, driver’s licenses, transactions, and utilities. It is currently being tested here in Canada, using Hyperledger Fabric, the most advanced permissioned-blockchain technology available.[9] In order to gain acceptance from the public, a pilot initiative can be undertaken during advanced polling in the next federal election, with tweaks being made to accommodate provincial and federal elections thereafter.

Two-Factor Authentication (Source: Server Intellect)

To prevent voters giving out their personal information in email phishing scams, access to the network should not be as easy as clicking an internet URL, instead facilitated through applications downloaded from verified mobile and desktop app marketplaces. Public education should also be of paramount importance, especially since witnesses will be expected to critically analyse voter identification and their behaviour at the time of voting to rule out identity theft. When a witness must access their own application to retrieve a necessary ‘witness code’ for a voter to enter alongside their vote, they should be presented with a checklist of key reminders and tasks to follow. Additionally, eligible voters would be able to report their vote as being compromised or not placed by themselves, so that their vote can be reversed, and the fraudulent node removed from the network, while a new digital identity would be assigned.

While this sounds interesting, does it make economic sense?

The total cost of the Canadian federal election went up 53% by $150M from 2011 to 2015, while the cost per voter went up 43% from $12 to $17.[10] This was due to doubling the campaign length from the previous election, adding 30 new ridings, and 71 satellite offices, the cost drivers of which are increased labour demanded and voting facilities rented, both of which would be eliminated with a digital voting system. This does not include financial, economic, and environmental costs incurred through offering free transportation to voters by public transportation and private enterprises.[11] Given that there are 66,000 polling stations in Canada, operating 10 hours a day for 4 days of advanced polling and 1 election day, total labour costs should approach $40M, using an estimated average poll-clerk wage of $17 per hour and 7 poll-clerks on-duty at any given moment.[12] Additional cost savings from the total $443M 2015 election expenditure would come from not having to rent as many facilities, count votes, perform recounts, or mail as many documents. For example, to vote internationally, a special ballot voting kit is paid for by the government, providing the mailing of a blank ballot, three envelopes, and an instruction flyer — a relatively costly procedure both in terms of price and time expended compared to an online voting alternative.[13]

Using data from the United States as a proxy for Canada, aside from travel costs to polling stations, the possibility and act of waiting in line undermines public confidence in the electoral process and would have discouraged 50,000 to 70,000 voters in the last federal election.[14] Similarly, the economic cost to GDP as a result of workers standing in line would be approximately $50M, excluding time spent traveling from and to work, and logging in again.[15] This proxy excludes additional losses to GDP from over 300 American companies being closed on election day.[16] Average wait times ranged from 2 minutes in some areas to 45 minutes in others, with solutions limited to applications of queuing theory, such as reducing the number of in-person voters, through special or advanced polling, and increasing service points.[17]

Does the public even want this?

Comparing the 2011 and 2015 election, there was an increased turnout of 71% in advance polling, totalling 21% of all voters, indicating an increased demand for polling convenience.[18] Research has correlated the cost of traveling to reach a traditional voting site with nonvoting, [19] in some cases making it harder for certain marginalized communities or ethnic groups to vote.[20] In the 2015 Canadian Federal Election Report, frequent complaints included polling stations running low on ballots, many ballots being pre-marked or smudged, and another 3085 reports about poor accessibility.[21] To accommodate students, First Nations, and young people, Elections Canada piloted 71 satellite offices in the 2015 election which received 70,000 votes, running costs to operate for 10 hours per day for 4 days consecutively. Another 22,000 Canadians voted in hospitals, including 764 in acute care facilities. Between the last two elections, an average of 35% of expatriates, 57% of Canadian forces, and 52% of voters aged 18 to 24, did not vote. [22]

As of now, discontentment with available political candidates and/or the electoral system is not able to be clearly expressed, with spoiled ballots and non-casted ballots also being tied to mistakes and/or apathy.[23] Digital voting will eliminate spoiled ballots and the ambiguity that comes along with them. Undergoing this process of electoral reform may also allow room for an adjustment to ballots to include new choices such as a ‘None of the above’ option. This would allow special interest groups and other Canadians an easier route to voicing their discontent with available candidates and the system itself, reducing the likelihood of some protests, demonstrations, and railway blockades. Another issue this would tackle involves voter demobilization efforts from competing parties, which included automated voting location misinformation phone calls, shown to have contributed to decreased opposition voter turnout of 7% in the 2011 federal election.[24]

Canadian voting districts have also been impacted by long working hours, lack of mobility, as well as geographic and climatical factors. These include voter reliance on public transit and choosing to avoid traveling to polls in unfamiliar areas, especially in darker portions of the evening where safety or comfort may be compromised.[25] Data involving the 1km relocation of dozens of polling stations in 2006 indicated a reduction in votes casted at those station by several percentages.[26] Comparatively, an online voting system would make the location and discoverability of a polling option one Google search away.

Is this realistic?

This could all be financed with cost savings from the existing federal election budget. The Canadian government has also had experience developing mobile applications, costing them as little as $11,000 for a shared taxi application to $750,000 for a mobile application for geoscience data management.[27] Given the existing identification infrastructure being developed and piloted by SecureKey Technologies in Canada, this application would see most funding going toward development, server capacity, stress testing, public education, additional security measures, and maintenance.

If certain segments of the population strictly oppose using remote online voting, one option can involve having small polling stations where an employee would guide users through the application interface on a rented computer terminal. Alternatively, a self-operating solution would involve the purchase of digital voting machines that could be set-up at public institutions, costing roughly $2,500 to $3,000 USD[28] for basic ones, and $5,000 USD[29] per machine with optical scanning technology, with an additional $100–200 USD in annual maintenance.

The possibility of implementing this effectively is high, as Canadian made Ethereum technology is being used by BitCongress to develop an altcoin called Votecoin in the United States, using the application Axiomity to handle the voting process.[30] In Moscow, an Ethereum-based platform is also being used to allow the public a say in the make-up of their city and to build their trust as part of the city’s Active Citizen Program.[31] Not only are these voting results being publicly audited, but the government has commissioned the accounting firm PwC to inspect the code and simulate external cyberattacks to strengthen the infrastructure further.

Ultimately, with the economic, social, and technological considerations explored, this initiative appears to make rational sense. There is enough time, public interest, and international case-studies to pilot an initiative by the next Canadian federal election. Instead of waiting for solutions, Canadians have already proven with the introduction of Ethereum technology that they can shape the global blockchain landscape. All that stands between our nation and being a step closer to true democracy involves our government’s decision to further empower our local talent.

[1] https://cira.ca/factbook/the-state-of-canadas-internet

[2] http://www.cbc.ca/news/politics/grenier-pollcast-coletto-1.4491818

[3] https://www.newswire.ca/news-releases/canadians-open-to-innovation-and-technology-in-their-banking---led-by-millennials-cibc-poll-530613511.html

[4] https://discover.coinsquare.io/government/canada-pilots-ethereum-blockchain/

[5] https://hbr.org/2017/03/how-safe-are-blockchains-it-depends

[6] https://www.economist.com/sites/default/files/plymouth.pdf

[7] https://hbr.org/2017/03/how-safe-are-blockchains-it-depends

[8] https://www.ibm.com/blogs/blockchain/2017/12/blockchain-security-what-keeps-your-transaction-data-safe/

[9] https://securekey.com/press-releases/ibm-securekey-technologies-deliver-blockchain-based-digital-identity-network-consumers/

[10] http://www.cbc.ca/news/politics/elections-canada-443-million-1.3436139

[11] https://globalnews.ca/news/2285286/need-a-lift-to-go-vote-a-list-of-options-for-a-free-ride-to-the-polls/

[12] Primary data, Liberal party volunteer