Analysis Expert Blog

Blockchain and the State – Together or Instead?

It is known that the state was and remains the richest and most reliable client for the IT business. The state is interested in digitalization for solving difficult problems of harmonious and equitable regulation of the relationship between society and the individual. The possibilities that the blockchain provides seem to be fully consistent with these tasks. Blockchain can finally offer the best solution. But the attitude of the state-customer to it is like a double-edged razor, like the poor cat in the adage. It is understandable. Indeed, blockchain can become a killer of the state.

Evolution: OGAS, Social Credit, Blockchain

A “redundant” improvement of the state mechanism through IT has already been practiced. In the USSR, back in the 1960s, an extensive program was developed to automate government control of the economy and society based on the OGAS mainframe network (the National Automated System for Accounting and Information Processing). But the Soviet bureaucracy successfully killed the project, rightly fearing for their benefits and well-being. Otherwise, it is still unknown what the Cold War would have ended and on what path the development of civilization would have gone.

The People’s Republic of China offered its version of state digitization. The social credit program has already been implemented since 2014 and is calculated until 2020. This is a reputation system that implements the “Nudge theory” developed in the West. As a result, there can be built very fair – from the point of view of the Chinese Communist Party – monolithic society and a powerful state. OK, we’ll see.

Blockchain is an even more powerful and radical system. A public registry with immutable data puts an end to all forms of corruption, due to which government officials thrive in some countries to the detriment of society. The blockchain replaces modern bloated to unbelievable sizes system of state regulation and practically makes unemployed those even honest bureaucrats who have nothing to do, and those who cynically and impudently use the state apparatus for personal gain.

Cases

The state is a static and conservative structure. But it seems that right now there has been a “pumping” of the blockchain theme on a global scale, and many states are forced to reckon with this. The logical and correct approach is to reform the system of public services. Governments are already applying distributed registry technology in health care, in land and other property management, and in document management.

Estonia. In this former Soviet republic, the IT sector in the public sector is developing extremely rapidly. Their state project of a single state electronic system is one of the most successful in the world. A decentralized open system has been created that connects various services and databases. Embedding new services is simple, and the transfer to the blockchain is going at the lowest cost. As a result, back in 2016 in Estonia: 94% of citizens had an electronic ID; 2% of the country’s GDP was saved on paperless state work; 4000+ services are provided electronically; Estonia is the number 1 country in the world in terms of tax collection and e-Economy Index. In addition, the blockchain project in health care is being successfully implemented. Guardtime company, on the order of the government, has transferred data of electronic medical records of more than 1 million citizens onto a blockchain basis. As a result of cooperation with the Nasdaq exchange, an electronic voting system on the blockchain-based (e-voting) was created.

Holland. Prescrypt company, on the order of the government, in collaboration with SNS Bank NV and Deloitte, has developed a blockchain application that makes medical services available for chronically ill patients. The concept uses the Idin-online authentication service provided by banks as a means to connect to the blockchain. Idin provides the same security and convenience as Internet banking. Sweden. The National Land Service announced successful work with the blockchain startup ChromaWay (Coinstelegram gave an overview of it), consulting firm Kairos Future and telephone service provider Telia. A solution was developed for buyers and sellers. The process involved five parties: the buyer, the seller, the real estate agent, the bank, and the state cadastral registration service.

Ghana (Africa). The Bitland project, based on the Graphene platform, received official permission from the Ghanaian government to compile a land registry based on the Bitshares blockchain and released CADASTRAL, the basic tokens. With their help, you can register land rights, resolve disputed land tenure issues, sell and buy land. Bitland plans to distribute it to other African countries. Top of the list are Nigeria and Kenya. Special hopes have been placed on Kenya because of the higher level of education of the population and the prevalence of the Internet. In developing countries, the ownership of land is still poorly documented, as a result of which the owners cannot sell it, take loans on security, and carry out other operations with land. People suffer from abuse by employees of relevant departments. Blockchain solution eliminates all these problems. Perhaps the blockchain will give impetus to the development of the African continent.

UAE. The country’s leadership (crown prince) approved the state strategy on transferring state document circulation to the blockchain protocol by 2020. The ultimate goal of the government is to launch a blockchain platform around the world. Emirates ambitions extend to set a single standard for smart cities around the world. In Dubai, by 2020, government agencies using blockchain technology will be included in the Smart Dubai project. All documentation, such as visa applications, payment of bills, renewal of licenses, which account for more than 100 million documents per year, will be kept in digital form. The blockchain technology will redistribute up to 25.1M of working hours spent on processing paper documents and will save about 5.5 billion dirhams, which is equal to the cost of the famous Burj Khalifa.

UK plans to use blockchain to manage the distribution of grants. Since monitoring and use of subsidies is too complicated, the process is subject to fraud and abuse, blockchain is the best way to solve this problem.

In general, in the field of public administration, the most effective use of blockchain technologies may be the following areas:

  • formation of a single registry containing the history of the placement of the state, municipal order, as well as the procurement of corporations with state participation and / or control;
  • registers of documents (diplomas, certificates, lost and disavowed passports, insurance policies of movable and immovable property, health, etc.);
  • database of court decisions and enforcement proceedings;
  • portals of public participation of citizens in the affairs of the country.

Conclusion: 2019th? Or 1984?

According to the prophecy of George Orwell, in 1984, humanity had to approach the absolute triumph of autocracy – as he wrote in a dystopia “Nineteen Eighty-Four” (“1984”). It is possible that the 2019th will be a milestone in that humanity, on the contrary, will move away from autocracy as far as possible – towards self-organization, due to decentralization and the blockchain. Although it is more like utopia. It is unlikely that the state centralized organism will easily give up its authority. We still have to fight!