What are the benefits of blockchain for government services?

chirag July 4, 2022
Why Do Governments Need to Take Blockchain Seriously in 2020

Gone are the days when blockchain was considered a technology for the future. It is now being implemented in various industries with government being one of them. Moreover, the possibilities of using blockchain for government services and public sectors is behind the scenes, where it operates to make government bodies more efficient, secure, speedy, and trustworthy.

Blockchain-based digital government – however, is visible in every interaction that the public have with the decentralized system.

As per a report, the market size of blockchain in government sector was valued at USD 153.9 million in 2021, but it’s expected to reach USD 18.15 billion by 2030. This clearly indicates that governments are showing keen interest in this technology.

Global blockchain market

To know how to implement blockchain technology in government sector, we need to dive further in this article. So, let’s get started

How blockchain can transform the government sector?

The hyper-connectivity that can now be seen in the world around us, has not just given birth to more data but has also brought in a significant transformation in how the economy is now operating and interacting.

This era of constant change and the economical shift is demanding the government to become more transparent, efficient, cost-conscious, and real-time, which translates into a government that is truly citizencentric.

And meeting this newly emerged demand will call for a shift that would shake the grounds of a bureaucratic government body. A shift that will only be made possible by fostering the induction of a secure blockchain architecture and other features of this technology.

The many benefits of a decentralized government revolve around making government bodies more efficient, in not just how they work but also in where they stand on the public loyalty chart.

The blockchain use cases in government and the public sector are majorly centered around three of the technology’s core areas:

Blockchain Delivers business value in three primary areas Indiviually and in combination

The role of blockchain in government services– when these core areas are used either in combination or individually – affect plethora of areas, with three of being the most nationimpacting ones.

A. Building trust with its citizens

When people do not trust their government, there is a need to reverse this trend of constant distrust. And blockchain, with all its different features, comes as the solution to this problem.

The primary feature of blockchain applications  – Transparency changes half of the sentiments by allowing citizens to view and verify data. Blockchain solutions allow citizens to perform their personal verification on the claims that the government makes – something that expedites the entire issues resolving process.

B. Protection of sensitive data

Data hacks and stolen identities have become a sad part of today’s reality. And as a by-default record manager of the society, governments have become the main target of hackers globally.

Issues like 2017’s Equifax breach where the personal details, including the social security number of millions of Americans, were exposed and 2015’s data loss incident where millions of government employees data were compromised straight from under the nose of the Office of Personnel Management are continuously being held responsible for bringing the citizens’ trust down.

The good news is that the blockchain application development is a solution to these problems. By using blockchain to store and manage digital identities, we can create a system that is secure, convenient, and tamper-proof.

Blockchain data structure strengthens the security of the network by eliminating the scope of the single point of failure errors and this in continuation, makes a system unhackable.

C. Improvement in efficiency and reduction of costs

The third in our list of premium benefits of blockchain for government services is cost reductions. For the leaders of nations that operate on a budget of X dollars to meet the need that amounts to X+1 expense, blockchain can be a lifesaver.

The use of blockchain, when incorporated rightly, can not only lower the costs but also limit redundancy, streamline processes, increase security, decrease the audit burden and even ensure that the data integrity is maintained.

To explain this a little further, let us look at the fact that there are around a trillion dollars lying as unreconciled funds within the federal budget. Now the process of reconciling these funds is expensive, and timeconsuming. But when you look into blockchain applications examples in the accounting and payment system of public sector, you get a permanent audit trail and a much-expedited reconciliation.

These benefits of blockchain and the myriad of other benefit strings that come attached with these have not gone unnoticed by governments around the globe. There are many government bodies who have either started planning for the deployment of blockchain data structures and its other use cases in their process or have already introduced it.

Blockchain in Public Sector

Now that you know how blockchain affects the government services, let’s move forward to know blockchain government use cases and how governments of world’s biggest economies are using this technology.

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Blockchain use cases in government and public sectors

The increased transparency and security that blockchain can provide could help to streamline many government processes, from voting to taxes and more. So, without further ado,  let’s witness how governments can use blockchain to solve real problems. Let’s get started.

Blockchain use cases in government and public sectors

Smart cities

As our world continues to become more connected, the need for secure and efficient ways to manage data has never been greater. Blockchain technology offers a unique solution to this problem, and it is already being used by governments around the world to improve the way they manage data. For example, the city of Dubai is using blockchain to store and manage health records, while the State of Illinois is using it to streamline the process of issuing birth certificates.

In addition, blockchain technology can also provide a safe and secure infrastructure for managing smart city applications such as energy management and transportation. By combining the security of blockchain with the efficiency of smart city technologies, governments are able to create a more seamless and secure experience for their citizens.

Central banking

By eliminating the need for a central authority to issue and manage currency, blockchain could provide a more efficient and democratic alternative to traditional banking systems. Moreover, blockchain technology in banking could allow for a more transparent and accountable banking system, with reduced opportunities for corruption and fraud. Blockchain supported RTGS can ensure real-time payments without any chances of fraud and delays.

HSBC and Wells Fargo use blockchain for international payments, and other big banks are also planning to do the same in near future.

Government procurement

The process of government procurement is often slow and cumbersome, with a large number of intermediaries involved. This can lead to delays and increased costs. Blockchain technology has the potential to streamline these processes by creating a shared, tamper-proof record of all transactions.

This would allow all stakeholders to view the same information in real time, reducing the risk of errors and delays. Also, blockchain could be used to create smart contracts that automatically execute transactions when certain conditions are met. This would further simplify the procurement process and reduce the need for manual intervention. 

Digital identity management

The potential of blockchain technology to transform the way we manage digital identities has been widely recognized. By using blockchain to store and manage digital identities, government organizations can provide their citizens with a secure and convenient way to access services and ensure that only authorized individuals are able to access sensitive information.

In addition, blockchain for government digital identity management systems can help to reduce the cost of identity verification and prevent fraud.

Land registries

One area where blockchain could have a particularly significant impact is in land registry. Blockchain-based land registries are immutable and transparent, making it far more difficult for property to be transferred illegally. In addition, blockchain technology is used to streamline the process of filing taxes, issuing birth certificates, and other government processes that currently require paperwork and are susceptible to fraud.

While it will likely take some time to understand how to implement blockchain in government sector, there is no doubt that the technology has the potential to bring about positive changes. For instance, the Republic of Georgia is already using blockchain to create a tamper-proof land registry, and the government of India is piloting various projects to use blockchain to store land records.

Validation of qualifications

The process of validating qualifications is often time-consuming and expensive. This is because there is no single repository of qualifications, and each authority has its own process for validation. Blockchain technology helps streamline this process by creating a shared, tamper-proof record of all qualifications.

This would allow employers to easily verify the qualifications of job applicants and reduce the need for cumbersome manual processes. For instance, Malta is an example of how government implements blockchain technology to store and manage student’s academic certificates.

How are governments of the world’s biggest economies using blockchain right now?

1. United Arab Emirates

The UAE government has launched a number of initiatives to promote the use of blockchain in the country. One of the most successful initiatives was the UAE Blockchain Strategy 2021, which helped the UAE government adopt the applications of blockchain in government and public sector to carry out its transactions. The government is also working on a number of pilot projects, including a system to track the movement of goods across the country and a digital currency.

2. Estonia

The government of Estonia make use of blockchain technology to empower its e-residency program since 2014. The program allows anyone in the world to apply for a digital ID, which can be used to access Estonian e-services such as e-tax and e-health.

3. United States

One notable project is the Department of Homeland Security’s Digital Identity Initiative, which is looking at using blockchain to help secure digital identities. The initiative is still in the early stages, but it has the potential to streamline many of the processes that the government uses to verify identities.

4. Chile

The country uses Ethereum to track the money and data from the energy grid in order to curb corruption by making the data available for its citizens to see.

There are many more use cases of blockchain being explored or piloted by governments all over the world. These are just a few examples of how blockchain technology is being used to improve the efficiency of government services. 

But does it mean that the time has come for every nation to look up to a blockchain-based government model? If this is the case, we must pull up our sleeves and get to know what exactly lies ahead for the government if they start introducing blockchain technology.

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What lies ahead for decentralized government?

It is an undeniable fact that when the global trust around the government is at an all-time low, a technology that relies on transparency and facts carries tremendous potential in shaping the economy of a nation.

While we have seen the potential that the technology carries, we can also not ignore the regulations which are slowing down the adoption of blockchain technology.

So, a future where the government is decentralized enough to become citizen-centric can either be a possibility or become impossible, all on the basis of how the government reacts to decentralization and how openly they involve blockchain public ledger technology, in their processes.

FAQs

Q. Why governments should be using blockchain?

A. Adoption of blockchain technology in e-governance can help start a cycle of trust in the judicial and fiscal system, which has gone missing in the last few years. A few areas where the impact of blockchain technology can be seen at its best are –

  • Land registration
  • Identity management
  • Voting
  • Sensitive data protection
  • Healthcare

Q. Is there a future for blockchain in local government?

A. The impact of blockchain technology in government is not just nation-wide. The role that can be played by blockchain in local government is also unmissable. Complete transparency, digital payments, and elimination of problem creating intermediaries are the events that lie in the future of blockchain in digitizing local government.

Q. Which cryptocurrency is backed by the government?

A. SOV is a government backed cryptocurrency and is accepted as an alternative of US dollars across the Marshall islands.

Q. Is there a future for blockchain in the government sector?

A. There is no doubt that blockchain technology has the potential to revolutionize the way that local governments operate. By creating a secure and transparent blockchain public ledger, blockchain could provide a way for government agencies to securely share data and manage transactions with greater efficiency.

In addition, blockchain could also help to reduce fraud and corruption by providing an immutable record of all transactions. While the full potential of blockchain is still being explored, there are already a number of local governments around the world that are piloting its use. As the technology continues to mature, it is likely that we will see wider adoption of blockchain in public sector.

Q. How can governments use blockchain to build better public services?

A. Governments around the world are taking advantage of blockchain technology to improve the efficiency and delivery of public services. By using blockchain, governments can reduce administrative costs, increase transparency and improve service delivery. As more governments adopt blockchain, we can expect to see even more innovative applications of this technology in the delivery of public services.

THE AUTHOR
chirag
Blockchain Evangelist
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