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University records: Italy has launched a blockchain to verify the credentials of academics, exploring the technology’s potential in authenticating identity. (Photo by Marco Varisco/Wikimedia Commons).

A year ago, people got very excited about blockchain. Then the shine wore off – but David Whitehouse finds that, behind the hype, the technology is beginning to find real applications 

Over the last couple of years, endless
articles and research papers have been produced on blockchain: the ‘distributed ledger’ technology that has so excited tech publications and digital
firms’ marketing teams. But has blockchain yet found a practical application in
the real world of civil service operations and service delivery? As the concept
exits the ‘hype cycle’, does anything of substance remain?

Actually, yes. At an OECD event on
blockchain held in September, delegates heard that there are now more than 200
examples of the technology deployed in public services worldwide. The examples
provided by Marcos Bonturi, the OECD’s director for public governance, included
Mongolia’s introduction of a blockchain to authenticate medicines – some 40% of
pharmaceuticals on sale in the country are reckoned to be fake – and Italy’s
development of a system to track academic credentials.

Providing the online world with visibility
of a set of transactions – and making it impossible to alter records after
they’ve been created – blockchain technologies have proved useful in
cryptocurrencies, where they provide an incontrovertible record of ownership.
And applications are emerging in public services, said Bonturi: in Texas a blockchain is helping the homeless to access public
services, while in Ghana the government is working with private partners to
build digital land registries. A
blockchain-based land registry is already working well in Estonia, he added,
and countries including Sweden and Chile are hoping to follow the Baltic nation.

Further deployments are in the pipeline. Blockchain
has the potential to help customs agencies worldwide, according to a recent
working paper from the OECD: the State of the Art in The Use of Emerging Technologies
in the Public Sector
.
By providing much
greater transparency and traceability for the contents of trucks and ships
arriving at national borders, the paper says, blockchain could improve
security, tax revenues, record-keeping and efficiency. But there are no
examples of blockchain in operation on the world’s borders: Boris Johnson’s
talk of “technological solutions” enabling the UK and Irish regulatory regimes
to diverge without creating the need for a physical border remains firmly in
the world of science fiction.

Shine has worn off

In general, though, discussions of
blockchain’s potential have moved steadily from the fantastical to the
realistic. “There is much more scepticism than there was two to three years ago”
over blockchain’s potential, says Barbara Ubaldi, the paper’s lead author and
deputy head of reform of the public sector at the OECD in Paris. “We’ve moved
beyond the hype.”

And behind that hype, says Ubaldi,
progress on delivering blockchain applications in the public sector has been
slow. There is “no strong evidence of progression” in many areas, she believes:
central challenges include “capacity construction in the public sector” and an
“urgent need” for closer collaboration with the private sector. Other key obstacles
include a lack of high-quality data, a need for the creation of common
standards, and poor interoperability between public sector IT systems.

Risk aversion, the OECD notes, is an
important barrier. Two thirds of the countries surveyed in an OECD study said
they prioritise standardised solutions over systems built around business
needs, with many countries preferring to use proven technologies rather than
exploring untested alternatives. That’s reflected in Blockchain In Action State of the UK Market, a report published by Digital Catapult in November
2018, which finds that blockchain companies in the UK are still struggling to
find clients outside the financial-services industry. 

That risk aversion is exacerbated by
public bodies’ lack of confidence over the regulatory environment. “Regulators
are behind the curve” on setting out rules governing issues such as the use of
data and the protection of citizens’ privacy, says Bonturi, arguing that many
countries lack the kind of regulatory framework required for blockchain to
advance beyond well-meaning but small-scale pilot schemes. The countries that
can progress the fastest, Bonturi adds, will be those that offer the “path of
least resistance” in terms of regulatory obstacles.

Ways forward

Still, there are bright spots in some
countries – providing useful lessons for civil servants elsewhere. The OECD
report praises the introduction by governments including Australia, Estonia,
New Zealand and the UK of digital marketplaces, which ease the procurement of
advanced digital technologies and the commissioning of small suppliers. Since
the 2014 launch of the UK Digital Marketplace, the OECD says, it has seen over
£4.3bn (US$5.5bn) worth of contracts pass through it – with nearly half of that
going to small and medium-sized enterprises. That was followed in the UK this
year by the introduction of SPARK, an innovation marketplace that lets public
sector customers access the latest technologies.

Stronger collaboration with the private
sector could also hasten progress. Chile, Panama and Latvia are among countries
that have promoted public-private collaboration on pilot schemes testing emerging
technologies. And Estonia has provided a “sandbox” environment for technology
companies to work on applications and solutions.

To realise the full potential of blockchain’s
distributed, universally-transparent structures, though, governments may have
to accept that many blockchain applications are best led by sectoral bodies or
private companies. Many public sector blockchain experiments have followed a
centralised, government-led approach, according to a recent study by the EU Joint Research Centre,
with officials retaining most of the decision-making powers. But one of the
technology’s key strengths is its ability to provide accurate, verified
information to everyone involved in a field of activity; and if they lack the
authority to make decisions using it, much of blockchain’s potential may remain
unrealised.

Accrediting academics

The EU Joint Research Centre report gives as an
example a Maltese government project, begun in 2017, which is designed to
verify academic credentials. The ‘Blockcerts’ open standard on which it is
based allows the creation, issuing, viewing, and verification of certificates
through blockchain.

The application was first developed in 2015 by
Massachusetts Institute of Technology and the blockchain credentialing start-up
Learning Machine. It allows easy integration with existing academic
record-keeping systems, and provides a wallet giving users full ownership of
their records. And the system saves educational institutions money, removing
the need to check certificate copies or transcripts. This year, Italy began
using the similar ‘Diplome’ system on a still larger scale to verify academic
credentials.  

Blockchain
finds an identity

The centre’s report points out that this model could
be extended to authenticate other forms of identity and accreditation, noting
that Malta is exploring its use to verify the identity of refugees in public
service delivery. The main barrier to wider adoption, researchers say, is a
lack of consistency between countries’ regulatory and legislative frameworks,
which mitigates against the development of internationally-accepted blockchain
identity systems.

So blockchain is beginning to find genuine
applications in public service delivery. And these, naturally, are those that
best suit the technology’s characteristics: providing global visibility of
agreements and transactions between individuals, blockchain can provide
certainty and clarity for all those active in a sector – government bodies
among them.

Currently, says Ubaldi, blockchain’s greatest
potential lies in identity verification. A fifth of the world’s population, the
OECD says, are still without a legal or officially recognised identity. So the
opportunities are obvious – but don’t believe the hype.

(Excerpt) Read more Here | 2019-11-10 11:47:01

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