Blockchain and the public sector

Written by Steve Thorn on 11 February 2016 in Opinion
Opinion

Steve Thorn explores claims that the technology behind crypto-currency Bitcoin can improve transparency and trust between government and its citizens

The government’s chief scientific adviser, Sir Mark Walport, recently published a report exploring the potential benefits of using distributed ledger technology, specifically, blockchain, in the public sector.

If you’re not yet familiar with blockchain, you soon will be. It is making waves within the commercial sector – most notably in financial services – and is being heralded as one of the most significant advances in technology for a generation. In simple terms, it is a database technology based on a cryptographically secured distributed ledger. The ledger is secure and transparent, ensuring the information on it is irrefutable and updates across all copies – everyone can add to it but no one can delete anything. It is ideal where there is a need for tamper-proof central record keeping.  

Blockchain is best known for its use as the backbone to crypto-currency Bitcoin, but other payment applications and investment banks are now applying it to their own processes. In the US, Bank of America has already filed for at least 15 blockchain-related patents including a Real-Time Conversion System and a Risk Detection System. Other sectors, too, are starting to see how they can benefit from the technology: Everledger, a London-based startup, uses blockchain to combat fraud in the diamond industry with serial numbers and metadata points describing each diamond it tracks. Everledger’s goal is to work with insurance companies and eventually track a variety of luxury goods.

Just as the TCP IP Protocol, upon which the Internet is based, has transformed how we share information, the blockchain has the potential to transform and improve public services.

Using distributed ledger technologies can help governments with a range of activities from issuing passports to delivering benefits. Developer Christopher Ellis created a platform for what he calls the World Citizenship Platform. It allows for a secure registry of IDs that makes it nearly impossible for a person to fake his or identity. Ellis’s idea was that the technology would be used by people themselves rather than issued by countries, but governments could easily adapt the technology for their own forms of identification. Similarly, blockchain could be used to document births and deaths, making it easier for citizens to prove their identity and benefit taxpayers by reducing the problem of governments paying benefits to deceased people.

The Honduran government reportedly is working with startup Factom to secure land title records with blockchain technology. Although the project is apparently stalled, if it does turn out to be more than rumours and comes to fruition, it would guarantee property ownership is accurately recorded and cannot be questioned – a big step forward in a country known for being plagued with corruption in land dealings. This also has applications in developing countries throughout the world, where people may not have formal land titles but do own their homes. A blockchain-based system could lay the foundation for a more transparent property economy. For instance, the instantaneous and 24/7 updating of the blockchain would allow for immediate purchases of houses and the potential transformation of how the Land Registry approached its record keeping function.

 

These examples are just a few of the ways blockchain technology can revolutionise the public sector. Walport notes in his report that “distributed ledger technologies have the potential to help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally ensure the integrity of government records and services." In all of these cases, there is a need for irrefutable record-keeping, for fraud-resistant updates showing ownership and obligations. This is where blockchain becomes a key to transforming the public sector and improving public trust in their records.

Sharing information is critical to so many of the business processes that underpin the UK’s public services. Of course, it’s vital that this data is kept securely, and blockchain is extremely difficult to hack due to its founding ‘proof of work’ concept. Any change to the record is seen by everyone – not just what change was made, by when and by whom. A hacker would need to change information across all access points at the same time to make the change valid and undetectable. In the Bitcoin application of the blockchain the computing power securing it cryptographically surpasses the world’s entire super computers combined – that’s why it’s cryptographically secure.

As the public sector strives to create more efficient ways of providing services for its citizens, blockchain could become a key underlying technology. The report also recommends the government use blockchain to enhance accountability at a local level and reducing reliance on centralised government, which ties into the growing need for collaboration amongst civil servants and different departments. Blockchain can reduce fraud, error, and the time and cost of paper-intensive processes while making the public sector more transparent to its citizens. At CGI our Open Source Development Centre in Scotland is already experimenting and we are involved with pilot deployments in the banking industry. The blockchain has enormous potential, and I’m glad to see the UK government is beginning to embrace it. 

Steve Thorn is senior vice president, UK Public Sector, at supplier CGI

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