Innovation and changeDigital TransformationThe growing role of blockchain in government

The growing role of blockchain in government

Is blockchain the next big technology for the UK public sector?

Blockchain has, for some time now, been one of those new technologies that bubbles away in the background, much talked about by its proponents, but seldom put into practice, in the public sector at least, in everyday applications. However, there are signs that blockchain is gathering momentum in the public sector, with Vienna becoming the latest city to utilise its strengths.

Working with EY, the multinational professional services firm, the Austrian capital is using blockchains to validate and secure the city’s Open Government Data (OGD), which includes data such as public transport routes, train schedules and surrounding communities’ voting results. Is this a sign that the ledger-based technology is about to become more mainstream?

While blockchain is best known as the foundation for cyptocurrencies, the technology has the potential to be deployed in a vast array of applications at government level. Blockchain-based solutions have the potential to make government operations more efficient and improve the delivery of public services, while simultaneously increasing trust in the public sector. For example, governments around the world are investigating the benefits of putting public services on distributed ledgers to create new systems for everything from health records, voting, taxation, welfare payments, to engagement with citizens and digital currencies.

Digital Vienna

The Vienna Blockchain project is part of the city’s digitalisation initiative called DigitalCity.Wien – and will be used to simplify and automate administrative processes, especially for OGD such as energy reports and valid business registrations, which must be updated frequently. In addition, the blockchain networks are helping to improve the data security of this information.

Since the solution went live in December 2017, approximately 350 datasets have been secured on the blockchain networks. One of the first to be launched in Europe, the networks secure official documents by storing hashtags of the data sets on the public blockchains, allowing city employees as well as citizens to review the documents’ authenticity, when they were created, and when and if the data was modified.

Ulrike Huemer, CIO, city of Vienna, says: “This project, realised with the support of EY, makes the city a pioneer in the implementation of blockchains in public administration and we are committed to an open and participatory city with reduced bureaucracy.

“With blockchain, government employees, residents or app developers can trace changes in data, so if someone changes the bus route – which is linked to mapping applications – an alert can be triggered. We will continue teaming with experienced professionals such as EY to pool knowledge and establish Vienna as a centre of competence for blockchain – as well as one of the most forward-looking technology cities in Europe and worldwide.”

Paul Brody, EY Global Innovation Leader, Blockchain, adds: “When we think about the most useful applications for blockchain technology, increasing transparency is near the top of the list. From a foundation of transparent, reliable information, we can build all kinds of value add, analytics and insights, but it all starts with trustworthy information. We’re very proud to be working with the City of Vienna in this journey.”

Wide range of uses

Blockchain technology, on which digital currencies such as bitcoin are based, can be used for a wide variety of applications, such as tracking ownership or the provenance of digital documents, digital assets, physical assets or voting rights.

Brigitte Lutz, Project Manager, City of Vienna, comments: “For now, we are only notarising documents from Vienna on the public blockchains, but we will expand this further to all data of the Austrian Open Government Data portal . Going forward, we anticipate that IT companies and the City of Vienna could collaborate to promote Vienna as a smart city and a hotspot for digital industries.”

The platform was built over a period of four months by developers from the city of Vienna. EY supervised and helped to manage the project, and integrated the blockchain networks into the municipal Open Government platform.

Further examples

Vienna isn’t the only place where blockchain is being used with success. In the US, states are leveraging the technology for a number of purposes. Illinois, for example, is attempting to provide an environment that is very welcoming to bitcoin — and blockchain-based start-ups. Meanwhile, in Delaware, its Blockchain Initiative aims to create an appropriate legal infrastructure for distributed ledger shares to increase efficiency and speed of incorporation services. This is important, given that half of all publicly traded companies in the US and 65% of the Fortune 500 are incorporated in the state.

The key here is that it really has the potential to improve government services. While many will view blockchain as a cryptocurrency, it’s important to look beyond this and see the benefits it brings in terms of validating the exact time an action takes place. This action or event could be the birth or death of a person, the exchange of a property title, the bestowal of an academic degree or nearly anything else where a timestamp is critical to the proof of action.

Blockchain in the UK?

With the above in mind, can we expect to see Blockchain in use within the UK public sector? The answer is yes – if current indications are anything to go by.

Matt Hancock, while still culture secretary, told a Law Society event that blockchain had “real potential”. “Blockchain technology holds real potential to make government services more efficient,” he said. “Its multi-faceted nature means we all stand to benefit. This technology could help us solve some of the great global social challenges of our time. There is wide interest across government in deploying blockchain to tackle a wide range of issues.”

Hancock named the Department for Environment, Food & Rural Affairs, the Ministry of Justice, the Department for International Development, HM Revenue & Customs and the Department for Business, Energy & Industrial Strategy as among those interested.

Blockchain could also give “users more transparency about their data”, he added, and there was an “opportunity for users of government services to be able to control access to their personal records and know who has accessed them.”

Saving money

Crucially, and perhaps the strongest reason why blockchain will make into the UK public sector digital mix is that it has potential to save taxpayers big money.

Hancock said: “Digitising government services here in the UK has already saved billions for taxpayers. And governments who embrace emerging technologies, such as blockchain, are the ones who will thrive in the decades ahead.”

The government has already invested over £10m through its arm’s-length body Innovate UK and research council to support blockchain projects in areas such as energy, voting systems and charity donations. Meanwhile, the Law Commission is now reviewing the implications of blockchain for data protection.

Leading example

One final example that the UK government may well look to for blockchain inspiration is Estonia where blockchain provides the backbone of the renowned e-Estonia programme, which connects government services in a single digital platform.

The project integrates a vast quantity of sensitive data from healthcare, the judiciary, legislature, security and commercial code registries, which are stored on a blockchain ledger to protect them from corruption and misuse.

Estonia began testing distributed ledger technology in 2008, before the Bitcoin white paper that first coined the term “blockchain” had been published. Estonia dubbed the technology “hash-linked time-stamping” at the time.

The Baltic state went on to develop a blockchain technology called KSI, which secures the country’s networks, systems and data. The KSI system provides a formally verifiable security system for the government that can function even under constant cyber attack, and is now available in more than 180 countries. That has to be a positive!

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