Blockchain's Impact on Government
Government is practically synonymous with inefficiency. Its processes are slow, often paper-based, and require seemingly needless and time-consuming visits to agency offices to handle routine tasks. One agency’s records may not match another’s, creating headaches and wasting time and money for individuals and businesses alike. Government databases hold some of our most sensitive personal information, yet they are insecure, as the IRS data breach so poignantly illustrated. And we rely on voting to support our democracies, yet voter registration records can be erased all too easily, among other voting problems and irregularities.
Government Industry Challenges Blockchain Can Help Solve
- Government employees spend too much time making sure various copies of documents match—time that could be better spent on other activities
- Public records are scattered across multiple agencies. The lack of a single, complete record creates opportunities for fraud
- Governments use centralized databases full of citizens’ personal information. These databases are attractive and vulnerable targets for hackers
- The election process is expensive and corruptible
- Citizens don’t always trust election results, even in developed countries, hurting leaders’ legitimacy in their own countries and abroad
- Corrupt politicians and bureaucrats can alter official records to benefit themselves or their cronies
- Inefficiencies increase costs for taxpayers and waste everyone’s time
- Governments take too long to analyze proposals from private companies bidding on government projects, holding up the process of undertaking important work
One stumbling block is the time and money required to move government records to blockchain. The technology could save resources once implemented, but finding the resources to pull off the implementation is not easy.
Further, while blockchain holds the promise to make individuals freer from restrictive governments, it could also do the opposite. Since blockchain transactions are only pseudo-anonymous and not fully anonymous, governments can monitor transactions that citizens may wish to keep under the radar. The first thing most people think of in this regard is the Silk Road, a marketplace where users bought and sold illegal drugs until the authorities shut it down. Many people don’t see the circumvention of drug laws as a worthy use of blockchain—and that’s fine. But consider its more humanitarian uses.
For citizens of oppressive, authoritarian regimes, the ability to transact anonymously via blockchain could make it possible to receive lifesaving financial aid from foreign donors that could be used to purchase food, shelter, medicine, or a way out of the country. Corruption in foreign aid, as well as uncertainty about how serious of a problem it is, prevents those in need from receiving vital resources. Blockchain can be used to improve accountability and transparency.
Blockchain can also be used to store one’s identity and could be a valuable way for citizens of countries whose governments withhold identity documents as a means of control to prove their identities so they can receive services provided to refugees. Also, in countries with unstable governments and currencies, blockchain can keep businesses open and keep daily life running by allowing people to continue to earn a living, buy food, and cover their expenses, as it has in Venezuela.
Still, as blockchain technology continues to evolve, developers must be cognizant of the ways blockchain could be used not just as a tool of liberation, but as a tool of authoritarian control, especially against politically or ethnically unfavored groups.
How Blockchain May Disrupt the Government Industry
With blockchain, we can:
- Improve citizens’ trust in their governments by increasing transparency and independent verification
- Create records that corrupt politicians and bureaucrats cannot delete, change, or reverse
- Record anonymized votes permanently and transparently to bring legitimacy to election results
- Use digital currencies whose value central banks can’t manipulate, unlike fiat currency
- Lower the time and cost for government to analyze business proposals
How It May Impact Citizens
Shifting government to a blockchain could:
- Provide greater security for personal data because blockchains are less vulnerable to hacking than centralized servers are
- Dramatically decrease the time spent filling out forms. Information can be entered once, stored on a blockchain, then managed using smart contracts that determine who can see certain information, when, and for what purpose
- Allow smart contracts to prevent governments from reneging on commitments
- Improve efficiency in changes in ownership that are processed through government agencies, such as vehicle and real estate titles
- Store birth and death certificates, driver’s licenses, state ID cards, passports, and other identity documents in a permanent and tamper-proof way
- Reallocate time spent processing documents to more productive activities
- Provide for storage of patents and trademarks and protect intellectual property
- Improve the ease of doing business and attract entrepreneurs by reducing bureaucratic headaches
- Improve safety, security, and convenience when traveling
How It May Impact Employment
Blockchain in government may:
- Cause jobs heavy on paperwork, data entry, and record keeping to dwindle
- Put toward higher-level jobs funds freed up by the requirement for fewer administrative jobs
- Increase demand for blockchain developers and for workers with blockchain experience
- Squeeze out inefficient employees who can’t adapt to blockchain-based systems