Blockchain, a technology that has already largely changed financial markets with the help of cryptocurrencies, is gradually encroaching into more and more areas of our lives. We have already talked about how blockchain influenced the music industry and pop culture. And in this article, we will tell you how it can affect the management of entire countries and public institutions.

Governments around the world are already actively trying to use innovative technologies to combat bureaucracy. By staying up to date with the latest trends, citizens are also supporting the maximum digitization of public services, willingly using online apps to register certain documents. Blockchain can become an integral tool in the struggle for increasingly reliable and simplified ways of obtaining documents. Nevertheless, it is important to separate fantasy from reality and to understand what blockchain can really provide as an alternative to outdated control systems, and what will remain an unattainable dream.

Why Is Blockchain Better Than Traditional Bureaucratic Institutions?

First and foremost, blockchain offers an unprecedentedly high level of information security and record integrity, ensuring authenticity. This minimizes the possibility of falsifications and risks associated with failures in the operation of centralized hubs. This also contributes to the rapid exchange of information between state structures, virtually nullifying classical bureaucracy.

Also, the blockchain system provides a transparent and decentralized system for recording the sequence of transactions. As Zach Church, an expert at the Massachusetts Institute of Technology, notes, "Transactions are recorded in chronological order, forming an immutable chain, and can be private or anonymous, depending on the implementation of the technology." An immutable trace of the transaction can help regulators and law enforcement agencies in capturing an attacker, and this can help identify misconduct and other illegal activities.

Blockchain is also irreplaceable in the fight against corruption in asset registers and in tracking procurement transactions. With the help of a distributed ledger, it is possible to eliminate the need for intermediaries, which are one of the main factors for increasing the corruption component in transactions. State payment systems and remittances are particularly vulnerable to corruption. They are too exposed to the human factor. Limiting the physical interaction between citizens and officials will reduce the ability of officials to take bribes. In general, blockchain can become an excellent link in forming the trust of citizens towards the authorities. For example, according to the Pew Research Center, American confidence in the government is at a very low level. Only 18% of Americans involved in this study said that they can trust the government. The possibility of an independent verification of public procurement, which the crypto industry can provide, can significantly increase the trust of citizens to their authorities. Moreover, new technologies can help in the war against serious criminal offenses. "The decentralized nature and immutability of data turn the distributed registry system into a powerful tool in combating such horrendous crimes as illegal transactions, human trafficking, and money laundering," says Mariana Dahan, founder of the Worldwide Identification Network, which launched a pilot project using blockchain to prevent trafficking children in Moldova.

And in Practice?

Potentially, distributed registry technology can be used in such branches of public administration as health care, national identity management systems, monitoring of taxes and internal revenues, and banking services. Some countries have already begun using blockchain for management purposes.

United Arab Emirates (Dubai)

Technologically, Dubai is one of the most developed cities in the world with automated vehicles, flying taxis, and real "robocops.” Recently, even a Ministry for the introduction of artificial intelligence was opened in Dubai. The city authorities expect to become the first blockchain administration in history by 2020. The main objective of this project is to use distributed registries to facilitate the renewal of licenses, payment of bills, and visa applications. Thus, Dubai will be able to save a huge percentage of man hours, which are annually spent on processing about 100 million documents, thereby saving about $1.5 billion!

Estonia

In 2012, Estonia launched a project to introduce blockchain into some government enterprises. The new technology has already been launched in the branches of the legislative base, the judicial system, and security systems. And in 2002, the authorities created ID cards for managing national identities, which has already greatly facilitated the lives of ordinary citizens and significantly reduced the paperwork involved in providing public services.

United States

In the U.S. state of Illinois, a blockchain system for the registration and identification of childbirth has been launched in test mode. This system is designed to increase the level of security of identification and to minimize the possibility of fatal errors and accidental baby swaps.

At the national level, the Pentagon and DARPA are working to improve the security of classified data with the help of a blockchain system. They want to create a system that completely excludes the possibility of the interception of intelligence-related information by third parties.

In its early March report, Congress advised U.S. government agencies to use blockchain in their work. "Public institutions of all levels should consider and explore new uses of this technology that could make the government more efficient in carrying out its functions," the 2018 Joint Economic Report states. "Blockchain has the potential for providing more efficient and reliable operation of the economy."

It is worth noting that not all support the use of new developments in the management of states. Interestingly, among the skeptics is Elon Musk, well-known entrepreneur of the high tech industry, who believes that artificial intelligence can simply seize power. According to other industry experts, such as former Google CEO Eric Schmidt, Musk is mistaken about artificial intelligence, and there is absolutely nothing to worry about. In one way or another, blockchain already plays an ever greater role in our lives, and its ubiquitous arrival in the governmental sector is only a matter of time.