Blockchain in the Public Sector: insights from pilot implementations
This is the second issue of Overtheblock’s Public Sector Series. It analyzes some relevant experimentations of blockchain adoption in the Public Sector with the objective to understand potential impacts and clarify possible benefits and obstacles in terms of end-users needs.
Despite the mass digitization of services and the development of e-government, the structure of Public Administration (PA) has not undergone a profound process of reform. Organizational and process barriers, difficulties in the interaction with different stakeholders and a lack of skills in many occasions represent an obstacle to Public Sector Innovation [1]. The new, emerging technologies represent the opportunity for the Public Sector to offer better, innovative and improved services shaped on the basis of actual end-users needs. Among the main technological trends that may influence the Public Sector, Distributed Ledger Technologies (DLTs) are assuming increasing importance [2], [3]. They are expected to potentially support Public Administrations by reducing administrative barriers and by fostering digital interaction with citizens and businesses. In this regard, the first issue of the Overtheblock’s Public Sector Series proposed an analysis of the main benefits and challenges of using blockchain in the Public Sector, through an analysis of the societal needs addressed, that allows to better understand why blockchain could be successfully applied in this context.
Starting from these preliminary considerations, the present post focuses on real and successful implementation cases of blockchain in the Public Sector in order to:
- understand the potential impacts,
- point out the level of maturity of these solutions,
- clarify the possible benefits and obstacles in terms of end-user needs.
The analysis leveraged a 3-steps methodology:
Step 1: Relevant cases identification, through multiple sources: existing maps and search engines (including: EC initiative EU Blockchain Observatory [4], Illinois Blockchain Initiative [5] and Deloitte + Fletcher School at Tuft University [6]) and relevant literature (Deloitte [6], OECD [7], JRC [8], Mc Kinsey [9], European Commission [10]);
Step 2: Individual cases examination based on a common framework of analysis;
Step 3: Cross cases analysis, focusing on the most mature projects and with reference to the societal needs addressed.
So, which are the main and most promising applications of blockchain in the Public Sector?
A well-known synthesis of existing experimentations has been proposed by Deloitte [6]. The study identifies three key areas of implementation: identity management, land registration, and voting. The main values of blockchain leveraged by such applications regard transparency, citizens’ participation in public life, processes simplification through the reduction of intermediaries, reduction of time and costs for services delivery. In addition, according to OECD [7] other potential application fields in which blockchain can bring value to the Public Sector are financial services and banking; benefits, entitlements, and aid management; and, in supply chain management, asset tracking, and inventorying. In order to provide a more concrete vision on which types of services can benefit from blockchain, hereafter, relevant examples of blockchain-based public services are reported. For each service, the most promising experimentations are listed, highlighting the value proposition and pointing out the key results of such experimentations.
SERVICE: Land title registry
Main objective: digital transfer of a property that automatically updates the Land Register.
Blockchain value proposition: strengthen property owners’ rights; enhance citizens’ trust in government (handles digital originals; verifies both legal actions and processes; secures transparency; reinforce data security).
Cases:
- Exonum land title registry (Georgia from 2016). MATURE, LARGE SCALE EXPERIMENTATION. Main outcomes: Since April 2016, over 100,000 land titles have been registered using the technology. The Exonum protocol can handle up to 5,000 transactions per second between the private nodes. Hence, the adopted blockchain solution does not have bottlenecks related to registration. [Partner: Bitfuri Group]
- HM Land Registry (UK from 2018). TEST, SMALL SCALE EXPERIMENTATION. Main Outcomes: In 2019 the first digital transfer of a house took about 10 minutes, with respect to average 22 weeks. [Partners: Mishcon de Reya and MyHomeMove, Shieldpay, Yoti, HM Revenue & Customs].
- Lantmaeteriet (Sweden from 2016). TEST. Implementation level: the project is split into three phases. Phase 1 developed a theoretical understanding of what blockchain technology is and how it works, and why it would be relevant in the context of the Land Registry Authority. Phase 2 aimed to develop the technology to best respond to the needs and demands from title owners and the Government. Both phases were successfully completed. The last phase to come is one of experimentation, with the goal of developing a working and efficient Proof of Concept. [Partners: Telia Company, ChromaWay, Kairos Future].
SERVICE: Digital identity — voting
Main objective: possibility for people to remote vote for municipality issues; possibility to verify who votes without reliance upon intermediaries or vote-counting.
Blockchain value proposition: it makes voting quicker and easier than traditional ballots.
Case:
- Zug Municipality (Switzerland from 2018) MATURE, EXPERIMENTATION AT MUNICIPALITY LEVEL. Main outcomes: possibility for 200 people to remote vote for municipality issues (in 2018). 350 registered citizens successfully created a digital ID, verified by uPort. 70 citizens participated in voting on the presence of fireworks at an upcoming festival. Users skipped the cumbersome login process, logged in with their uPort account, voted, and logged off without heading to a polling station. [Partners: Uport, Institute for Financial Services Zug (IFZ) Lucerne University, TI&M, Luxoft].
SERVICE: Digital identity — civil registry certificates
Main objective: A self-sovereign ID can be used to verify identity without needing an individual to produce numerous documents and paperwork each time they need their identity verified.
Blockchain value proposition: Enhanced transparency, quicker processes, time and costs savings.
Cases:
- South Tyrol (Italy from 2018). PROTOTYPE. Expected result: it is seen as a possibility to create a chain of certification that authenticates and maintains people’s data indefinitely — instead of having to verify every instance of someone’s data each time a citizen enters their personal information. [Partner: SAP].
- llinois Blockchain Initiative (USA from 2017). PILOT. Expected result: the end goal of this larger process is to make it easier for individuals to, in the broad use case of digital identity, identify themselves, identify experiences and those attributes that they have gained throughout their lifetimes that allow them to do certain things or be eligible for certain benefits. [Partner: Evernym].
- Nevada — marriage certificates (USA from 2018). MATURE, REGIONAL LEVEL EXPERIMENTATION. Main outcomes: in Reno, Nevada, the region saw over 950 blockchain recorded marriages in 2018. Typically a traditional marriage certificate can take 10 business days to process and the blockchain-backed certificates take less than 24 hours. [Partner: Titan Seal].
- Brazil — marriage certificates (Brazil from 2019). MATURE, SMALL SCALE EXPERIMENTATION. Main outcomes: in 2019 Brazil had its first civil partnership notarized using blockchain technology. The digital certificate was also accompanied by a physical certificate, which was produced 20 mins after the digital process completed. [Partners: IBM + Growth Tech].
- Brazil — birth certificates (Brazil from 2019). MATURE, SMALL SCALE EXPERIMENTATION. Main outcomes: Unlike previous ways of registering births, which could take several hours to complete, this new approach can reportedly generate a fully valid certificate in no more than 15 minutes. [Partners: Growth Tech].
SERVICE: Education — School enrollment and diplomas
Main objective: Possibility to manage education-related documents in a more transparent and fast way. This includes: enrolments, management of academic records, diplomas authentication.
Blockchain value proposition: Processes simplification, enhanced transparency, quicker processes, time and costs savings.
Cases:
- Nidi Gratis (Italy from 2019). MATURE, MUNICIPAL LEVEL EXPERIMENTATION. Pilot project at EU level. Main outcomes: in 7 minutes each family of the municipality of Cinisello Balsamo (MI) has been able to complete the school enrolment procedure. 60 applications after 1 hour.
- Blockcerts academic credentials (Malta from 2017). MATURE, LARGE SCALE EXPERIMENTATION. Main outcomes: Students from ITS and MCAST had both received their academic credentials through the blockchain process at their graduation ceremonies. [Partners: MIT and Learning Machine].
- certified 4 life (Netherlands — Belgium). TEST. Implementation level: test on diplomas authentication and sharing. [Partner: Uport]
SERVICE: Pensions
Main objective: realize a more flexible and transparent pension administration system for citizens, while reducing significantly pension management costs.
Blockchain value proposition: increase the efficiency of parts of pension administrative processes, which will eventually lead to a structural reduction in costs for all pension participants.
Cases:
- Pension infrastructure (Netherlands from 2018). USE CASE, PRE-COMPETITIVE PHASE. Expected results: increase the efficiency of parts of pension administrative processes, which will eventually lead to a structural reduction in costs for all pension participants. [Partners: pension funds APG and PGGM].
- Accenture project “Blockchain and pensions” (2018). PROOF OF CONCEPT. Expected results: if used by multiple pensions entities: shorten administration times, increase policy and decision making processes traceability, reduce administrative costs.
Other public services
- Vouchers for low-income citizens (Stadjerspas smart vouchers) (Municipality of Groningen from 2016). MATURE, MUNICIPAL LEVEL EXPERIMENTATION. Main outcomes: the system is fully operational since 2016 and is used on a daily basis. Over 20.000 citizens and service providers are registered in the program and around 4.000 smart voucher transactions occur per month. [Partner: DutchChain].
- Vehicles identity and insurance — Finnish State Treasury (Finland). PROTOTYPE. Expected results: Blockchain-based vehicle identity allows people to safely share time-sensitive data simultaneously, transforming government registries into distributed information management systems between different clients. It also showcases what a new process of buying insurance could look like for the end user. With blockchain and progressive web app technologies, the team designed and launched a cross-platform application called AJAA, which is Finnish for “driving”. [Partner: Accenture].
- Blockchain in the city of Wien project (from 2017) PROOF OF CONCEPT regarding: (a)digital food voucher for employees; (b)Open Data Government history and notarization.
Finally, in order to show additional opportunities for the blockchain in the Public Sector to be further explored, some recent noteworthy initiatives are reported below:
· European Blockchain Services Infrastructure (EBSI) (2020) a network of distributed nodes for delivering cross-border public services: it is a EC initiative that promotes the creation of a network of distributed nodes across Europe that will deliver cross-border public services. The initiative has conceived four use cases: notarization, diplomas, self-sovereign identity and trusted data sharing. The main benefit of this initiative is related to the enhancement of citizens, governments and businesses interactions.
· WIPO PROOF (2020) IP rights management: in May 2020, WIPO launched WIPO PROOF, new digital business service that provides electronic signed certification to prove the existence of a digital file at a specific date and time.
· USA elections (2020): Associated Press News published US presidential election results on blockchain, in order to reduce the dissemination of fake news
Main Takeaways
The analysis carried out in this post allowed not only to discover and study in detail which are the most promising blockchain projects and applications in the Public Sector, but also to highlight some key points about the opportunities that may stem from leveraging this technology. They can be summarized as follows:
- Existing blockchain projects in the Public Sector have different maturity levels and sizes.
Three categories can be defined:
Mature — large scale experimentations: this category includes already implemented and successful projects, that have involved a discrete number of target users. They regard the following types of services:
- Land title registry (national level)
- Education — academic credentials (national level)
- Vouchers for low-income citizens (national level)
Mature — small scale experimentations: this group encompasses already implemented and successful projects, that have involved a smaller number of target users (at most at municipal level). They regard the following types of services:
- Digital identity — voting (municipal level)
- Digital identity — civil certificates (municipal level)
General ideas/proof of concepts: this last cluster comprehends the majority of the experimentations. In this case, the general idea is proposed (in many cases as a “proof of concept”) but additional development is needed in order to reach the implementation stage. The services analyzed that are still exclusively at this stage are:
- Pensions
- Vehicles identity and insurance
- Digital food voucher for employees
- Open Data Government history and notarization
2. The involvement of key partners is a fundamental success factor for implementing a blockchain solution. Specifically, the research revealed that both blockchain-focused companies — most of the times small-middle sized (e.g., Uport, GrowTech, DutchChain) but also big international ICT service providers /consultants (e.g., SAP, MIT, IBM, Accenture) have been involved.
3. Among the relevant benefits stemming from the adoption of blockchain in Public Administrations, almost all the projects refer to speed of service delivery as the main outcome of the adoption of blockchain for public services.
4. Finally, despite many attempts to propose blockchain implementation in the Public Sector, the number of projects is still limited. This could be explained by the fact that on the one side blockchain is a quite new technology and its adoption in a traditionally static sector like Public Administrations could be difficult. On the other side, end-users engagement is fundamental: for a successful implementation of a blockchain project, the clear commitment of a core team inside the local agency is needed.
REFERENCES
[1] E. Cinar, P. Trott e C. Simms, «An international exploration of barriers and tactics in the public sector innovation process,» Public Management Review, pp. 1–28, 2019.
[2] JRC, «A multi-dimensional framework to evaluate the innovation potential of digital public services,» 2020.
[3] Gartner, «Top Trends From Gartner Hype Cycle for Digital Government Technology,» 2019.
[4] European Commission, «EU blockchain Observatory,» [Online]. Available: https://www.eublockchainforum.eu/.
[5] Illinois Blockchain Initiative, «Blockchain in Government Tracker,» [Online]. Available: https://airtable.com/shreIXQjzluCxam37/tbl7qVDFKKiEcFFrc.
[6] Deloitte Insights, «Will blockchain transform the Public Sector?» 2017. [Online]. Available: https://www2.deloitte.com/us/en/insights/industry/public-sector/understanding-basics-of-blockchain-in-government.html.
[7] OECD, «Blockchains Unchained,» 2018.
[8] JRC, «Blockchain for digital government,» 2019.
[9] Mc Kinsey Digital, «Using blockchain to improve data management in the public sector,» 2017.
[10] European Commission, «How can Europe benefit from blockchain technologies?,» July 2019. [Online]. Available: https://ec.europa.eu/digital-single-market/en/news/how-can-europe-benefit-blockchain-technologies.
Please cite as:
Pautasso E., Ferro E., (2020) Blockchain in the Public Sector: insights from implementation cases, Overtheblock Innovation Observatory, retrievable at https://medium.com/overtheblock/blockchain-in-the-public-sector-insights-from-implementation-cases-e661ffde27d
OverTheBlock is a LINKS Foundation’s initiative carried out by a team of innovation researchers under the directorship of Enrico Ferro. The aim is to promote a broader awareness of the opportunities offered by the advent of exponential technologies in reshaping the way we conduct business and govern society.
We are chain agnostic, value-oriented, and open to discussion.
