On March 14, German Gref, the head of Sberbank, the largest Russian bank whose controlling stake is owned by the state, pointed out the main obstacle that hinders the development of the country: “The lack of an effective system of government. This is the main thing. If this problem is solved, all the others will be overcome automatically. I am deeply convinced of this, you just don’t need to go into the rest.” Earlier, Gref singled out the role of blockchain in improving the work of the state apparatus, in particular, countering corruption. The fact that blockchain is seen as the future in this direction is already becoming a trend. A little earlier, on March 12, Kevin McCarthy, the Republican Leader of the United States House of Representatives, gave a speech in which he argued for the need to introduce blockchain into the legislative branch of government. Patrick Byrne, the head of Overstock, also noted that he is negotiating with the U.S. authorities on the introduction of blockchain, as this technology will reduce corruption and improve the efficiency of officials. DeCenter analyzed how it might work out.
American Blockchain Dream: The Security and Defense of the United States Are Increasingly Being Based on Blockchain
The use of blockchain in public administration is perhaps not so noticeable to an outside observer, but there are practical changes. Moreover, certain secrecy in such processes is most likely caused not by the fact that any authorities fear some accusation of “being on the hype,” but by more pragmatic reasoning. Blockchain gives an advantage in competition between the political systems of the world. And if previously, there was competition between capitalism and socialism, now this division is no longer relevant, and the dividing line between countries that are making significant progress in consistently improving the standard of living of the majority and those who fail to do so already lies in how susceptible their governments are to blockchain. And in the case of financial issues, this relates to cryptocurrencies.
Notable successes in this regard are being achieved by the United States, which are gradually moving to present to the world a new version of the American Dream, or the American Blockchain Dream. Blockchain is not just technology for any one purpose; it is an innovation that has a fantastic potential for consolidating society. The first steps in this direction in the Fiscal Service of one of the counties of Florida, Seminole, led the head of the department, Joel Greenberg, to the idea that, firstly, all public services can be transferred to the blockchain, and secondly, “all the counties would be in a giant system. This would allow for a better flow of communication and reduce redundancies.” At the federal level, the introduction of blockchain in the USA has also begun. Sikina Hasham, a program manager at U.S. Customs and Border Protection, said on March 20, “Blockchain is relatively new for us, we have trialed some blockchain technology in the trade space… in the travel space, we are still working on figuring out how industry stakeholders in the technology space will help us get a better sense of [the uses of blockchain]…” At the same time, Hasham already has an idea of where the blockchain will be very useful, namely recognizing the identity of a person crossing the border according to biometric parameters.
Blockchain is in high demand in the field of American security. Funds have already been allocated to a project aimed at ensuring more effective interaction of departments in the event of an emergency. The Defense Logistics Agency (DLA), which is part of the country’s Department of Defense, is directly involved in this project.
Work on the blockchain is gradually becoming a prerequisite for receiving an order from the Pentagon. It is no coincidence that six of the seven largest aviation and military industrial companies in the United States intend to switch to using this technology in the next three years. As noted in the study, “Visibility into the digital supply chain will not only address flexibility but will also improve cost savings and quality by utilizing secure data exchange technologies such as blockchain. The success of digital ecosystem collaboration rests on optimizing products over their entire lifecycle.”
The U.S. is not the only one aware of the benefits of the blockchain. The fact that Europeans need to start introducing blockchain into the security sector of the European Union was announced in early March by representatives of the think-tank on this technology in Brussels. This technology is a serious phenomenon, and it was symbolically confirmed by the fact that on March 20, the former NATO Secretary General Anders Fogh Rasmussen joined the Swiss blockchain-based company Concordium Network. At the same time, the former head of the most powerful military-political bloc in the world rightly remarked: “I believe we have only begun to see the benefits of blockchain—including in democratic processes.” At the new place of work, he will study the possibilities of practical use of blockchain in the process of voting. Interest in this aspect of using the technology is also shown by election commissions in the U.S. and Russia.
Digitalization and Blockchain Go Hand in Hand
It is worth noting that often the use of blockchain is tied to general digitalization as is the case, for example, in Denmark, where 90% of all public services have already been transferred into “digital” sources. Initially, the digitalization strategy adopted in 2016 did not even contain the word “blockchain”; however, this technology became an integral part of it later, in practice, and the document was updated twice, in October 2017 and January 2018. The latest version has already noted that Denmark became the first country in the world to transfer state registration of ships in ports to the blockchain. The government of Singapore is introducing blockchain in the field of maritime logistics, and in France, the judicial system started “moving” to these innovative “rails.”
The introduction of the blockchain in Sweden, neighboring Denmark, is based on an analytical document prepared in 2016 by the Vinnova agency and devoted entirely to this technology. In 2017, the state agency Lantmäteriet began to register real estate transactions on distributed ledgers. In June 2018, the first results of the project were summed up. The time to complete such transactions was reduced from an average of four months to several days. The project began to develop with the inclusion of an even larger number of participants, including banks. Similar work—however, in test mode—is also being conducted by Lantmäteriet’s colleagues in Russia in the Federal Registration Service.
The introduction of the blockchain takes place in state-owned companies, which ultimately aims to ensure greater transparency of all transactions, as well as reduce the need for subsidizing. In Russia, this technology will be introduced by Russian Railways (RZhD): the company is currently looking for a contractor for the project. The estimated investment amount is 40 million rubles, which will be spent on developing a service for monitoring freight traffic based on the blockchain. Transport communications in Chinese Shenzhen are also being transferred to a new basis.
Blockchain: Essential Help in Improving the Quality of Human Life
The new technology is becoming closer to ordinary people. For example, in the Russian city of Belgorod, the results of a two-year experiment to stimulate non-cash payments of citizens using the blockchain were summed up, and as a result of the effectiveness found, it was decided to continue it. In Estonia, all electronic patient care in the healthcare sector has been transferred to the blockchain.
Of course, blockchain is a technology that, even if it starts working for a specific task, still shows its comprehensive nature. Taking into account the savings that a consumer can receive with the help of the blockchain when paying for housing and communal services, as well as significantly save on spending on consumer goods in the future, then the popular concept of a “smart city” is becoming more and more social.
The Blockchain Orwell Never Sleeps
If we talk about the blockchain, it seems as if the cryptocurrency component is “missing,” but it is not so. Modern digital assets “live” on the blockchain. Of course, there is a risk that the blockchain in some countries will lead society to a dystopia in the spirit of George Orwell’s “1984” novel. On the one hand, Dan Berkowitz, Commissioner for the U.S. Commodity Futures Trading Commission (CFTC), declares that “blockchain can ensure huge savings on expenses for both government agencies and businesses.” On the other hand, his boss, Christopher Giancarlo, cherishes a very different hope, and that is to start exercising total control over any actions of Wall Street participants with the help of blockchain.
In the case of the Orwellian scenario, decentralized value communication will have to look for another technology for it to work. So far, such risks do not manifest themselves, which means that by developing blockchains, the states of the world will eventually meet with cryptocurrencies soon, which are becoming more common. Thus, the “blockchain, but not cryptocurrency” approach is simply not viable. Meanwhile, the speed of transition of political systems to blockchain maturity will be a determining factor for the nature of the development of many countries in the next 100 years. At least the states that have been in the “catching up” mode now have a unique opportunity to become world leaders. Whether they will have time to take advantage of this technological “window of opportunity” will be known shortly.