Blah blah blockchain

Anchor

Blockchain may be the hottest technology but it won’t change the world, at least not for government.

The IT industry has been talking about blockchain in glowing terms for some time. Much of the excitement is driven by Bitcoin, an application that relies on blockchain to create digital currency particularly loved by hackers and other ne’er-do-wells. But the question remains: Is blockchain really blockbuster news or just so much blah, blah, blah? At the risk of being contrarian, I suggest it’s mostly blah, blah, blah.

What, exactly, is blockchain? Blockchain is a technical implementation of a distributed ledger — essentially an asset database that can be shared across a network of parties regardless of geography. All parties in the network have their own identical copy of the ledger. Any changes to the ledger are reflected in all copies in minutes, or seconds. The assets can be financial, legal, physical or electronic.

The point of a distributed ledger is to use transparency (public visibility) to anchor trust where it might not otherwise exist between a large number of parties separated in time and space. Trust is a risk judgement between two or more parties. For example, if you’re a consumer or sole proprietor doing business in eBay, you need a trust anchor. That’s why eBay has the five-star system of ratings and reviews. It tells you who you can trust.

Identity ecosystems provide trust

However, if you already have a trust anchor then you don’t really need blockchain. Anywhere that there’s an existing identity ecosystem there will be existing trust anchors for that identity ecosystem. And who establishes the most fundamental identity ecosystems? Government does. In fact, as important as public trust is to government’s credibility, government itself doesn’t operate on trust itself. Government operates on legislative, regulatory and legal frameworks, documented by audit trails of identities and asset ownership, and enforced by the guns, badges and lawyers. Trust doesn’t enter into it. And without significant legislative and regulatory reform, distributed trust ledgers like blockchain probably won’t create much value for government.

But reconsider blockchain as a distributed transaction ledger — database technology — and the prognosis changes. Distributed ledgers have the potential to be radically disruptive. Their processing capability is near real time, strongly tamper-resistant and increasingly low-cost. They can enable other innovations such as smart contracts and the Internet of Things. With its wide range of stakeholders, services and roles, the government has a multitude of different operations. Some distribute value rather than create it, and others create and maintain effective regulatory regimes. Many of these activities will be enhanced by distributed transaction ledgers.

So what’s next for blockchain in government? The ideal next step is to identify the use cases and other selection criteria for the government use of distributed transaction ledgers, as well as any adjustments that might be needed to legislative, regulatory and legal frameworks. DXC Technology is participating in an ACT-IAC Institute for Innovation working group with this end in mind. Watch this space.

In the meantime, here are two links to interesting insight into government thinking for leveraging distributed ledger technology for delivery of government services.

First the UK:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/492972/gs-16-1-distributed-ledger-technology.pdf

Then Estonia:

http://www.bbc.co.uk/news/technology-36276673

 

RELATED LINKS

Blockchain’s identity problem

B is for blockchain

Comments

  1. Ronald Sonntag says:

    I love contrarian views because they force you to think critically. Just a quick comment regarding government not needing blockchain (ledger transactions or otherwise): The single most important event in any democratic government is the election process. Numerous articles have been written and news anchors opined about the potential interference in our elections by outside governments / groups. More significantly, outside election watch groups have, for decades now, evaluated US elections as not even complying with the most basic international standards for free and unaltered voting.

    The blockchain offers an easy method to ensure fair, open, and verifiable elections, something that is the absolute bedrock of any democracy. Voting machines can and have been hacked. Blockchain has not been hacked. It is encrypted but still provides anonymous trust capability that is perfectly suited to ending the confirmed election (not voter) fraud that has been eating away at our trust in government and supporting institutions.

    I believe it is a potential cornerstone for finally providing an equal and enduring voice for all Americans in choosing their government.

    Like

    • Ronald – Thanks for your insightful comments and observations. You’ve inspired me to clarify. I wasn’t saying government has no use for blockchain. I was saying government has no (or little) use for trust ledgers, which happen to be a common implementation of blockchain. I think government will in fact use blockchain as a database technology and eventually as a data fabric.

      Separately, let me also offer one addition to your statement “Blockchain has not been hacked.” My addition is “…yet”.

      Like

  2. Ronald: Thanks for your thoughtful observations. Let me just offer one addition to your statement “Blockchain has not been hacked.” My addition is “…yet.” Everything gets hacked sooner or later. Cheers.

    Like

  3. Ronald Sonntag says:

    True. But, in terms of the damage that can be caused by a hack, a given transaction may eventually be hacked. Unlike back-doors, where ALL transactions are laid bare, block chain hacks only affect that transaction. If it takes too long to perform a hack, then wide-spread intentional interference through hacking becomes next to impossible.

    Like

  4. Great article, Michael. We are approaching the peak of the hype cycle curve on blockchain – all the more reason for clearly articulated and well-vetted government use cases to emerge. I am the Industry Chair of the ACT-IAC Emerging Technology Community of Interest and we have just launched a Blockchain Working Group. We are planning an October Blockchain Forum and it would be great to have your team’s voice in the mix. Please reach out if you would like to get more information on the Emerging Technology COI or our BWG.
    thager(at)macrosolutions(dot)com

    Like

  5. Digital Currencies traditionally done through the Bitcoin network, payment systems will probably remain the main use of the blockchain applications for a few more years. With the introduction of better blockchains such as the Ethereum (which also supports payment systems), distributed digital payments are increasingly made easier, faster and cheaper.

    Like

  6. Michael very interesting view point that points out the nuances and benefits that blockchain can or cannot offer for federal, state or local governments. I think there is a lot of hype, but I also think there are several initiatives in states enacting laws around the use of blockchain to solve real problems. I am including a link to a Bloomberg article highlighting some of the states engaged in blockchain activities and some of their challenges: https://www.bna.com/tech-giants-eye-n73014463697/?promocode=LIPP101AA&utm_source=LinkedIn&utm_medium=compcontent&utm_campaign=BloombergLaw

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

%d bloggers like this: