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Blockchain is going to be very important for the public sector next year

2016 has very much been the year of blockchain, with a number of the world’s biggest banks – including HSBC, RBS and Barclays – completing joint trials of this technology to test its use in global financial markets. And as of last week, the Royal Mint declared it is putting Gold Bullion on to the blockchain in the new year – trading Royal Mint Gold (RMG) tokens that each equate to a gram of gold. With over a thousand years of experience, the fact that the Mint itself is turning to blockchain very much points to this technology’s potential as a trading tool.

While commodities and currencies are the biggest entities associated with blockchain, the possibilities of this technology span far beyond the financial services sector. Put simply, it’s not just financial information that can be held on the blockchain, but data that relates to citizens, properties and healthcare – in fact, anything and everything you can think of – and it’s set to impact how the public sector operates in a very big way.

Blockchain: why it matters

Most people have heard of the cryptocurrency, bitcoin, but some aren’t as familiar with the blockchain that underpins it. Blockchain is a tamper-proof, publicly distributed ledger which stores records called ‘blocks’ that are visible for all to see. Each block of data is linked to the next block in the chain, and a block cannot be altered without being transcribed in the ledger for all to see – it’s self-policing, so to speak. Blockchain is decentralised, so the data isn’t held in a central repository.

Particular rules can be applied to blockchain environments, too. Some transactions cannot be made until others have been made before it, enabling an automated chain of exchanges, or in some cases, particular transactions might require the consent of two or more before they take place. By implementing bespoke rules, particular processes can be put in place to fit a number of unique demands.

The secure, decentralised nature of the blockchain is the reason why so many financial institutions are in the first phases of implementing this technology, and the public sector is no different. But how can it be used?

A new way to vote

Let’s look to electoral voting as a place to start. 2016 was the year of the London Mayoral Election, the EU Referendum, and by-elections for some. All of these events involve a trip to the polling station, or the post-box at the very least.  It is thought that adverse weather can impact electoral turnouts, and it’s no surprise – when all other aspects of our lives are digitised, why shouldn’t voting be?

The obvious accompanying cybersecurity risk is the main forebear, as well as the costs associated with managing an overload of traffic and subsequent data generated by it. But, blockchain can help side step these issues.

Estonia is leading the way when it comes to eGovernment services, implementing an e-residency programme that’s facilitated by blockchain. Digital ID cards have a cryptographic key that’s stored on the blockchain – citizens can use these to securely vote in general elections online, and they have been doing since 2005. The transparent, tamper-proof nature of blockchain means that the results can be fully trusted. In theory, the convenient nature of online voting means that more citizens have their say on election day – its popularity certainly grows year upon year in Estonia, with 30.5% of participants using this method in the general election in 2015.

Converging digital identities

Estonia’s Digital ID cards aren’t just used for online voting; they’re used for signing a whole host of public facing records. Whether it be government forms, healthcare information, tax returns or land ownership records, having these digital identities stored online removes the need for any physical signatures, and they can be processed entirely online. These digital signatures can speed up often cumbersome processes; ensure more security for the individual in question; and they can have a constant track of where these documents are at any moment in time.

These online identities can be converged, pooled and shared on blockchain too, which makes it a very appealing prospect for public sector bodies that are incredibly reliant on the data from businesses and citizens alike. It might be insurance numbers, credit histories, healthcare data or simply an address – no matter what the data is, we’ve all felt that frustration when we share the same details with different public sector organisations over and over again.

A blockchain ledger can also connect databases across all areas of the government, so that business and citizen data can be shared between them. It means that all government departments are connected to the same source of information, and individuals don’t have to keep sending information over.

Imagine how this might play out for a tax-office? For example, citizens could potentially grant the office permission to access their bank account data on the blockchain so that their tax return could be automated. Of course, citizens could opt in or out of putting their data on the blockchain database. But this is why it becomes so brilliant, because this model would give the public democracy over their data, as they can choose which institution or department can see what. This system would create a relationship in which individuals are in possession of their own data, and in control of it also.

A decentralisation shift

When it comes to digital infrastructure, and the costs associated with it, public sector bodies can spend a lot of money. Look at tax returns as an example – so many citizens offload data onto the government at the end of the financial year, which puts a lot of strain on its central system.

As blockchain is said to be decentralised, it vastly eases the pressure off of centrally held infrastructures, and can save money, too. Look at the Royal Mint for example, it charges between 0.5% to 1% of the value of a customer’s holdings for a vault. But putting Gold Bullion on the blockchain removes these storage costs and management fees, as spot trading gold on the blockchain means it can become digitised.

The future of government services

There are palpable benefits of blockchain technology, what with its ability to streamline government processes, give citizens the rights to their own data, and save organisations time and money.

Shifting such a large amount of important public data to the blockchain will be no easy feat. Such technological transformations are accompanied by cultural shifts too, with change management policies needing to be implemented for all public sector staff operating on the blockchain.

However, this technology has got off to a promising start. Public sector bodies in places such as Estonia and the Isle of Man are already starting to offer a number of digitised blockchain services.  The UK is following their lead, with its digitised Gold Bullion, and it’s Blockchain-as-a service offering that’s available on the Government Digital Services’ Digital Marketplace. The path is very much being paved for various public sector bodies across the UK, and 2017 looks set to be a year in which businesses and citizens are able to benefit from having transparent, eGovernment services as a result of blockchain technology.

Adele Every is public sector innovation champion at Capgemini