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Blockchain in Public Use: the Best Examples
19 July 2019 / Anna Agafonova
Doing Crypto Index analyst Anna Agafonova has collected the best examples of the use of blockchain technology in public administration.
Intense interest in distributed ledger technology is currently observed worldwide. Being aware of the potential benefits of the new technology, state regulators create working groups, enter into agreements with private businesses, research institutes and IT companies in order to study and introduce blockchain technology into the work of government agencies together. According to data from 2018, at least 46 countries have launched or are planning to launch various blockchain initiatives.

States can benefit from distributed ledger technology in various areas of public administration, from logistics to the social sphere.

For example, blockchain can be used to identify individuals and legal entities, including via birth and death certificates, passports, visas, digital IDs, licenses and certificates.

According to data from 2018, this field ranks second in popularity among projects employing blockchain, second only to research developments. In 2017, the Maltese government entered into a contract with Learning Machine, a blockchain company to launch a pilot project to put educational certificates on blockchain. Following successful completion of the pilot, they signed a new contract in 2019, under which all education certificates will be issued on blockchain, including secondary school certificates issued by public, church and independent schools. According to government representatives, this should minimize bureaucracy and provide greater security for students' private data.

Personal data in the field of insurance, health, finance, etc., can be stored in an integrated form on blockchain. For example, Estonia introduced an electronic system for recording medical data backed by KSI blockchain in 2008.

Each visit to a doctor is registered in the form of an online record, which can only be accessed by the patient themselves or the doctor via an electronic ID. The technology allows doctors to make more informed decisions based on more detailed information. New data, such as test results, X-rays, etc., appear in the system in real time regardless of the hospital or laboratory they were taken at. In an emergency, a doctor may use the patient's ID code to access the necessary information, such as blood type, allergic reactions, recent treatment, medications, or pregnancy. The system also collects data for national statistics and allows measuring trends, tracking epidemics and monitoring reasonable expenditure of health resources. Today, 99 percent of the country's medical data is stored electronically.

When it comes to financial services, state regulators are interested in blockchain technology seeking a decrease in transaction costs and increase in transaction speed, especially for interbank and international payments. The central banks of some countries are experimenting with their own cryptocurrencies, and the Venezuelan authorities have taken a bold step forward by introducing into circulation Petro, which is backed by the country's oil reserves.

A more typical example in this area is the Ubin project launched in 2016 by the Monetary Authority of Singapore in collaboration with R3, as well as a number of financial institutions around the world. The first phase of the project included experiments with interbank payments and an attempt to convert the Singapore dollar into blockchain. The second phase successfully demonstrated that confidentiality transactions are possible in a decentralized system.

The use of distributed ledger technology for the land cadastre allows tracking data necessary for real estate transactions without resorting to third parties. In 2016, the Republic of Georgia's National Agency of Public Registry (NAPR), in cooperation with BitFury, launched a pilot project for managing land titles based on blockchain technology. The project involves applying blockchain to the existing electronic land registration system rather than creating a new registry.

BitFury representatives see one of the most important advantages of innovation in the immutability of information that allows tracking when data was entered into the system. The NAPR website now offers an opportunity to get and check the official statement on real estate with the help of blockchain In 2017, the pilot project was recognized as successful, and work in this area continued. According to data from 2018, 1.5 million land ownership records in Georgia were stored on blockchain.

Blockchain can be used in logistics for supply management, article surveillance and stock control. The immutability of the data offered by blockchain allows tracing every stage of goods transportation up to the place of their origin. This can be useful in relation to food, drugs, precious stones. In July 2018, the British Food Standards Agency announced the successful completion of a pilot in tracking meat products. The regulator announced its intention to continue experimenting in this area, and in case it proves to be successful, blockchain technology can be implemented to track food supplies throughout the UK.

Blockchain applied in social welfare systems allows streamlining processes and helps to track the misuse of funds. In 2018, the Government of the Kaliningrad Region of the Russian Federation and Vnesheconombank announced joint plans to use blockchain technology for social payments.

The pilot project will cover four most requested social assistance measures provided on an
application basis, namely housing and utilities subsidy, child allowance, monthly large family supplement and urgent targeted assistance to citizens in difficult life situations. The government also considers the possibility of testing the new technology when making annual cash payments for the preparation of children for school provided to large families. The regional administration notes that the introduction of distributed ledger technology will help to streamline the interaction of citizens with government agencies, reduce costs and time spent on processing requests, and also identify misuse of social benefits. It is emphasized that the project provides for the full confidentiality of people applying for support.

Blockchain can be used to manage contracts and suppliers, as it ensures transparency, for example, by providing the public with the opportunity to survey the public procurement process. The Canadian National Research Council is experimenting with an Ethereum-based blockchain applied to government contract management. The program developed under the pilot project publishes real-time information on new contracts with companies and on amendments thereto.

Blockchain can also be useful in utility payments management. Having been actively engaged in the introduction of blockchain technology into the country's infrastructure in recent years, Azerbaijan announced its application in the housing and utilities sector in 2018. It plans to switch the existing contracts of citizens for utility services (water, gas and electricity supply) over to blockchain, which will ensure transparency and will allow suppressing the cases of falsification in this area.

Distributed ledger technology can also be useful in determining copyrights. For now, private companies are developing products in this area. Since it is state regulators who are tasked with registering patent rights and handling disputes in the field of copyright, the adaptation of such technologies at the state level is to be expected.

Blockchain can be applied in the democratic election process. The authorities of the Swiss city of Zug are currently engaged in the development of the blockchain-backed voting system. The city administration together with Hochschule Luzern's Blockchain Lab and Luxoft jointly announced the successful testing of the new system in 2018. The participants of the experimental voting accessed the application through their smartphones using the city's eID system. The project authors say that electronic voting eliminates geographical restrictions, boosts turnout and also ensures confidentiality and increases confidence in the voting results, since the user can check their vote in the system at any time.

Blockchain contributes to fight against fraud due to its ability to integrate immutable data. The Central Bank of Brazil announced the creation of the Pier blockchain platform used for exchanging data between national financial regulators in the summer of 2018. According to the project authors, the characteristics of blockchain will prevent data falsification and reduce the likelihood of financial fraud.

Traditional paperwork generally involves multiple duplication of information and redundancy of actions to verify it. Blockchain allows streamlining interdepartmental and intersectoral processes, making them much faster, easier and cheaper. For example, Vienna, the capital of Austria, implements a multi-year strategy for creating a smart city and employs the blockchain technology built under the control of Ernst & Young to streamline and automate administrative processes.

Despite the interest of state regulators in blockchain technology, it has been unable to expand beyond the limits of pilot projects in many areas so far. The technology is still poorly understood and continues to evolve. However, the advantages it demonstrates suggest that blockchain will revolutionize public administration processes, reducing the significance of centralized authorities in the near future.