Where in the world is blockchain for Government?
Blockchain is becoming part of the establishment as governments around the world find ways to apply it.
While Bitcoin continues to dominate the headlines, breaking records and bursting bubbles, there is a quieter but equally powerful move in the background to find new uses for blockchain, the technology behind Bitcoin.
It is moving away from its anti-establishment flavor, with proponents wanting independence from central control, to becoming part of the establishment. Companies such as IBM and Microsoft are selling it, and major banks and stock exchanges are buying. The Nasdaq has its own blockchain called Linq. It stores and vouches for the authenticity of documents and records the issuance of shares. It plans to add shareholder voting to the list of applications for blockchain.
In essence, a blockchain is a public ledger. It is like a big spreadsheet that registers transactions and makes them visible to the public. What makes it different to traditional databases is that it has a consensus mechanism that allows multiple parties who do not know or trust each other to have a shared database. Everyone has the same view of the state of and changes made to the database, without the need for a third-party intermediary.
Increasingly, governments are piloting projects to use it.
Sweden, the USA, India and Georgia are testing the use of blockchain to digitize land registries. Dubai has announced that all government documents should be secured with blockchain by 2020. Estonia, Japan, the UK, Singapore and Malta all have plans and projects in place.
In this article we look at how blockchain is spreading.
Land registries on blockchain
Sweden
The Swedish Mapping Authority, the Lantmäteriet, has been testing blockchain technology for property sales since 2016. According to a report in the Wall Street Journal in March 2018, the 400-year-old agency has partnered with telecommunication firm Telia, consulting firm Kairos Future, blockchain technology company ChromaWay and loan management company EVRY, to set up a platform for real estate deals.
Mats Snäll is Lantmäteriet’s chief digital officer. He says that from a technological point of view they are ready to go. By July 2017, the land registry was using blockchain to register land and properties on the ChromaWay blockchain. Now are now looking for volunteers to buy and sell their properties on this system. He believes that they will be able to cut manual paperwork significantly and reduce the time required from time of signing of purchase contract to the final registration of the sale from the current 3–6 months to a few hours. Deals could be signed and registered, even if buyer and seller are not in the country. Each document in the process would have a digital “fingerprint” and would reduce the risk of fraud or registering incorrect information. Everyone would have the same documents and the system would ensure that all steps in the process have been completed.
Georgia
Georgia is a small country in the Caucasus. It has had difficulty knowing what its land holdings are since it gained independence from the Soviet Union in 1991 and following subsequent annexures of land by Russia.
The Georgia National Agency of Public Registry has worked with the blockchain development company BitFury. It has created a private blockchain called Exonum which is automatically backed up to the main Bitcoin blockchain. This removes the possibility of hacking and illegal changes to the database and provides the security of hundreds of thousands of nodes and almost unlimited computer power. The next step is to add smart contracts. Georgian citizens will then be able to buy and sell properties through an app on their phones and will not have to deal with multiple layers of bureaucracy.
USA
In the U.S., local governments looking into blockchain technology include the Cook County Recorder of Deeds in Chicago and the City of South Burlington. The current system is a series of handoffs of information from one party to another — for example, credit reports to the lender, title verification to the buyer, appraisals to everyone. Many of the steps and the people involved in them don’t add value but create expense and delays. This could be changed to a single set of connected files where everyone can record their data, and everyone can see what is happening.
A loophole in the Illinois title insurance system means that a homeowner who has a claim against his property does not have to divulge it. The new owner could be faced with these claims. One of the reasons for adopting a blockchain-based system would be to ensure that all transactions are recorded in real time, so this type of loophole can be avoided.
A pilot of the system in Cook County was designed by Velox.RE, a blockchain-based real estate platform based in California. One of the learnings that they quote, is that adoption of a blockchain system is going to depend on its acceptance by buyers and sellers. If they want it, all other parties will be forced to adapt as well.
The long-term goal is to have all information about a house recorded on the blockchain, and easily accessible. This would include home improvements and details of the construction companies involved, permits, loans, insurance, title deeds and records of payments. This will provide valid information for owners and potential borrowers.
India
The Indian state of Andhra Pradesh is leveraging on the experience of Sweden to set up a blockchain-based system to manage land records. It is using the same Swedish blockchain startup, ChromaWay, and Kairos Future, the consulting firm.
This is an important solution for India. A study in 2016 found that property-related disputes account for a staggering 66% of all civil cases in the country and represent a 0.5% drag on the GDP. The current land records date back to colonial times and are open to fraud and dispute.
The state is also testing a vehicle registration system, using the same technology, and plans to have all of its administration on it in time.
These projects are part of a bigger initiative called FinTech Valley Vizag. This is to turn the city of Visakhapatnam, or Vizag, into a world-class fintech hub bringing together government, academia, corporates, investors and entrepreneurs. It is similar to the previous drive to turn Hyderabad into a tech hub.
Whole government systems on blockchain
Two places are taking the lead in placing their entire government systems onto blockchain: the city of Dubai and the country of Estonia.
Dubai
The Dubai Future Foundation was founded in 2016 as a vehicle to provide the bright and prosperous future that Dubai wants. It has the full backing of the rulers and the government of the UAE.
Initiatives include
· “Dubai 10X”, which sets the Dubai government on a mission to be 10 years ahead of any other city.
· Museum of the Future, to explore the future of science, technology and innovation.
· Dubai Future Accelerators, to “bring the future forward faster”. It bring together top international companies and entrepreneurs to work out how to apply cutting edge technologies, and to provide opportunities for prototypes and products to be deployed on a city-wide scale.
· Global Blockchain Council to explore and discuss current and future applications and organise transactions through the blockchain platform.
It is an indication of how serious the country is about the development of technology that they launched a “One million Arab coders” programme to train a million young people to learn the “language of the future” over a period of three years. It is also working with top academics and institutions to roll out programs and courses specializing in Fourth Industrial Revolution skills and technologies.
According to Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the Ruler of Dubai, all government documents will be secured on a blockchain by 2020. This is part of an initiative towards setting the standard for smart cities and ensuring that they can continue to attract the right talent and investment.
The Smart Dubai Office programme aims to make Dubai the best connected and happiest city in the world. The Smart Dubai Platform links local telecoms, IoT, cloud services and big data — and this is where the head of the Smart programme Dr Aisha Bin Bishr sees blockchain fitting in:
“Blockchain technology is one of the most elegant and advanced technologies for cross-business efficiencies. We believe blockchain will have an important role in boosting productivity, increasing the competitiveness of Dubai and securing our economic infrastructure.”
Blockchain is seen as the technology to manage the vast amounts of data involved in government. It will power the Internet of Things and as a result to be able to deliver government services to citizens via their smartphone devices. Projects include investigating how blockchain can be used for identity management, ensuring the ability to transfer authenticated data.
In a statement, Mohammed Abdullah Al Gergawi, Minister of Cabinet Affairs and the Future said:
“Users will only need to log in their personal data or business credentials once; it will then be updated and verified in a timely manner through the blockchain network in all government and private entities including banks [and] insurance companies.”
Interestingly, the government intends opening much of this initiative to other cities and nations. This would make it possible, for example, for travellers to cross borders with pre-authenticated and approved forms of identification and digital wallets.
If any place can make blockchain work, it is probably Dubai!
Estonia
In 2007 Estonia suffered massive cyber-attacks on multiple organizations, including parliament, banks, ministries, newspapers and broadcasters. The attacks lasted for several weeks and more or less brought the country to a standstill. They also set off a concerted effort by Estonia to protect itself from future attacks, and to become one of the most advanced digital nations in the world.
The country has been testing blockchain technology since 2008. It has been used in Estonia’s data registries since 2012. These include national health, judicial, legislative, security and commercial code systems, and there are plans to extend to personal medicine, cybersecurity and data embassies.
Today, nearly all government services are digitalized and citizens can access them through their secure digital identities.
The KSI blockchain used by Estonia was developed by a software security company called Guardtime. It was founded in 2007 in Estonia and is currently headquartered in Amsterdam.
The Public Key Infrastructure (PKI) will ensure a trustworthy networking environment and eID systems are based on advanced encryption, 2-factor authentication and decentralization via decentralized ledgers, or blockchains.
Estonia is a good example of how a new technology such as blockchain can be widely adopted if there is a clear policy framework from government and verified online identities of individuals. With these two elements in place, any number of innovative programmes can be introduced. The government is also well-placed to respond quickly to emerging technologies or industries.
The ledger gives citizens control over their own data. For example, citizens can log into the Healthcare Registry to see if anyone has accessed their records. If this has been done without authorization the parties can be challenged and prosecuted. At the same time, information is easily accessible to healthcare professionals, with 500,000 doctors using it every year. According to the e-Estonia website, 95% of health data in the country is digitized, 99% of prescriptions are digital and 100% of billing is electronic.
Other countries and applications on blockchain
Japan aims to use a blockchain platform to process government tenders, removing the threat of cyber-attacks and data theft. The UK is trialing blockchain technology for welfare payments. The Monetary Authority of Singapore (MAS) is exploring the use of blockchain for interbank payments.
In July 2018, the Maltese government passed laws that provided a regulatory framework for blockchain, cryptocurrency and digital ledger technology (DLT). This has created an enormous amount of interest in the “World’s Blockchain Island”, with multiple companies wanting to register their businesses there. The next move by Malta is to become the hub also for Artificial Intelligence (AI) and the Internet of Things (IoT).
According to Malta’s Junior Minister, Silvio Schembri, who has been given this task,
“Now that the Blockchain related laws are in effect, and our vision in making Malta The Blockchain Island is materializing, we can start looking at new economic niches, finding ways to incorporate them in our ecosystem. We want Malta to become a powerhouse of economic innovation.”
Blockchain across the world
Individual entrepreneurs and developers are constantly coming up with new ideas for blockchain-based use cases. They may be well-advised to look to some of the countries that are setting up the regulatory and support systems for blockchain and cryptocurrency, if they want mass adoption and scale.
