Blockchain technology continues to gather intense interest in all industries, particularly the public sector. That being said, initial enthusiasm for blockchain has begun to dwindle, replaced with a greater sense of realism informed by better understanding of the technology.
In 2018, two-thirds of governments were actively interested in blockchain, and 10% of governments were actually applying it. Now, in 2019, that picture looks somewhat different. While investing and deploying blockchain understandably grew (from 1% to 2%), active experimentation dropped (from 9% to 5%).
The cooling of blockchain implementation by governments reflects a more measured approach. The wave of executive-leadership-directed exploration, born out of a fascination or fear of missing out, has been replaced with more deliberate and informed experimentation.
By 2025, public blockchain will provide a core interoperable foundation for global decentralised identity management, according to Gartner research. For government CIOs who are considering the use of blockchain today, there are a number of promising and practical use cases where this technology can be applied, albeit with varying levels of complexity.
Using blockchain for elections is of interest to many governments, although few have used the technology at a national level.
Various startups have conducted voting pilots and demonstrations in the US, Ukraine and Sierra Leone, among others. In practice, some of the pilots have involved a single node, undermining the blockchain claim.
All in all, none have successfully demonstrated how to resolve the challenges of authenticating voters or resolving broader issues of voter fraud and intimidation.
2. Humanitarian and social services
More effectively servicing poorly documented populations in need has been a global driver for many governments’ adoption of blockchain.
Projects include: the UN World Food Programme; the UN Development Programme; Finland’s refugee programme; the City of Austin, Texas, and its MyPass initiative; and New York City’s Department of Homeless Services.
3. Digital asset markets
Governments are also interested in using blockchain to trade purely digital assets or digital representations of physical assets.
Doing so allows them to act as the market infrastructure provider for industries, especially in regulated areas such as insurance, utilities, healthcare, fishing, agriculture, mining and water rights.
4. Efficiency gains
Efficiency-based initiatives are founded on the idea that decentralised, multiparty transactions can be streamlined using blockchain to solve transactions.
Government interests are mostly driven by their need to decrease friction in disconnected processes, interactions or transactions between a variety of government organisations or involving the broader public/private ecosystems.
A number of governments have declared plans to store and manage their records using blockchain.
For instance, the US states of Vermont and Delaware, as well as Dubai, have shown some of the most visible and ambitious efforts on the use of blockchain for organising government records.
6. Cross-entity transactions
Decentralised applications, or Dapps, are software applications that allow members of a peer-to-peer network to collaborate and transact.
Examples of cross-entity transactions are around supply chain visibility of direct government interest for regulatory purposes, advancing customs processing, or better transparency over product origins and composition.
While promising, blockchain doesn’t address some of the fundamental obstacles when it comes to ensuring tamper-proof or tamper-evident shipments.
7. Complex data
The storage restrictions in blockchain call for strategies that accommodate data-intensive transactions.
Examples include medical records, intellectual property rights, large volumes of associated unstructured data and documents, and quite commonly, real property records.
By way of example, the Swedish Lantmäteriet has created a blockchain-based service for recording real estate transactions.
8. Self-sovereign records
Self-sovereign records grant individuals greater control over their data by removing or reducing the ability of authorities to limit or impede user access. Empowered individuals (or even organisations) can collect, manage and selectively share identity information.
Testing for self-sovereign medical records has been funded by the Bill & Melinda Gates Foundation. It extends to individuals the ability to aggregate and manage their medical records from multiple sources.
While many of these use cases are still nascent, they are the closest to demonstrating some level of maturity and offer government CIOs a tangible opportunity to start small and scale up.
Importantly, when applying blockchain to these scenarios, the focus should be on the desired business outcome rather than the technology. Governments need to take time to explore blockchain in a structured and objective way, seeking out the use cases that are most relevant.