The promise of the blockchain is all over the news these days. The explosion of interest has been such that even my spell checker has finally learned the word now! I subscribe absolutely to the mantra that with blockchain we are finally going to be able to remove paper and manual processes, as well as many intermediaries, from the loop. In addition, we are witnessing the single biggest step change in trust since the start of the digital age as all transactions can be digitally recorded forever.
There are many areas of activity where these benefits can be brought to bear, financial transactions are the typical use cases discussed. However, there are myriad use cases for almost any sector of activity, for example, government or real estate. Solutions in these spaces are all about creating end to end, true digital workflows that allow for greater efficiency and make a step change in end user satisfaction. Examples of such use cases can be seen in the automation of government services towards citizens and residents.
While much discussion and action has been focused on disruption of many sectors on an international scale, the evolution of current sovereign protocols has been mainly restricted to the nascent efforts of governments to improve their internal processes. Efforts by the Japan, Estonia, Singapore, and others have concentrated on the promise that blockchain will create a permanent digital record and these governments can finally get rid of paper. Extreme cases such as the UK and Dubai have looked at creating a single government chain where all entities can transact in a trustful digital space. Services such as birth certificates, company registrations, identity issuance and vehicle registration can all benefit from the true end to end digital workflow powered by a blockchain consensus engine.
To be clear here for a moment, Blockchain is just a distributed database or application until you bring in a consensus protocol. The ability to execute a set of rules that have been agreed by the chain’s stakeholders is what makes this thing special. Hence only use cases where there is a need for trust or apportionment of responsibility are applicable. Many are not.
However, getting back to the subject, while governments are looking internally at how to leverage this tech, they should also be starting to look externally at how international collaboration can be enhanced. This is the case whatever a nation’s goals, be they enhanced trade, inward investment, selective immigration, security, resilience or other. Many cases immediately spring to mind where governments could benefit. For example, while the current drive of digitization of identities for internal use is ongoing in many countries, the logical next step will be to allow citizens to travel with that digital identity. Health records will be another case, where clinicians will be able to access trustworthy health records, with the permission of the patient, across borders. This last case highlights another case, where government and private sector data meet, which is also applicable in trade. The cases are endless and involve any situation where paper or custom signed digital communication occurs across borders.
So let’s get rid of paper, put citizens or companies more in charge of their information and able to go about their business with the most minimal of official interruption.
But how can such a wonderful promise be executed on?
Firstly we have to note that there are multiple types of blockchains:
Public: the original (and some would say the most robust) blockchain is Bitcoin. This, along with most other crypto currencies, classifies as a public blockchain as it is literally accessible to everyone and anyone can play with it if, as long as he or she follows the rules.
National: these are an evolving class, typified by the work being done in Dubai, where a government, regulator or industry set up a blockchain that is only accessible to players of that nation and may even be restricted to government agencies. In essence, this is a particular type of private blockchain
Private: often refered to as private and permissioned as players on this chain require permissions to access and play a role in the chain. These are being used in government and corporate environments and can lead consortia.
Consortium: when many players in a given ecosystem gather together to create a blockchain protocol to serve their combined needs, this can develop into a defined consortium, such as R3 and Ripple are doing for the financial industry.
Therefore multiple solutions to the inter-government blockchain present themselves:
Public: Of course the simplest thing for governments who want to collaborate is to post records or smart contracts on the Bitcoin or Etherium public blockchains and get on with it. Of course, governments will take due diligence seriously and the fact that these things have only existed for 8 years will push heavily toward the view that time may still be needed before they can be trusted for the long haul. Additionally, the security and privacy of data on the public network will be a concern, one that can be alleviated in many ways, including not storing the data there at all but hashing documents and focusing blockchain on powering transactions.
If governments became miners and generally promoted these chains, that would in itself enhance their long term reliability. The simplicity with which governments could collaborate here is perhaps suspicious to them in itself, hampering progress. However, in the case of Etherium, it really would only take a few lines of robust code to create each smart contract required for the different use cases. All nations could trust these, as they would be registered on the network’s 25,000 plus global synchronizing nodes. One or many of which could be controlled by each government involved, in the guise of audit, in this case, real time audit.
Consortia: A more likely scenario would see governments and multi national organisations setting up their own blockchains with specific consensus protocols of their own design. This would create an “air gap” type effect with the public blockchains, as banks have found necessary to do, while still allowing for broad distribution. The perceived security, resilience and specificity of such an approach could, ironically, be difficult to deliver when re-inventing the wheel at this level (as opposed to writing these rules into a public blockchain). This is because consensus will be required over more elements than if governments are just discussing the rules of a smart contract. Some of these extras include the consensus mechanism itself, node structure and location, accessibility authentication and this opens the door to many technology decisions that need not be broached on an existing public chain.
However, if this approach was allied closely with another standard, many of these concerns could evaporate. One such method would be to adopt the standard of the Hyperledger Foundation or Ethereum Enterprise Alliance as the base technology and build a consortium chain based on their technologies. This approach would have the advantage that governments or agencies could influence the base technology, while still benefiting from its development via a wider set of stakeholders. Additionally, the government consortia could focus their attentions on their specific use cases, not the backbone.
Ultimately the technical decision will be heavily influenced by the governance of digital inter-government protocols. Cross border agencies such as the United Nations, the European Union and Gulf Cooperation Council could take a leading role in establishing protocols, both technical and procedural. An example of this is the standard set out by the European union for digital signatures, which allows any company in the union to sign a legally binding document digitally.
In theory, nothing is holding back state or regional (even city) governments from acting cross borders, apart from their priorities and mandates of course. Many may find it more prudent to wait for international bodies to set standards, while innovator countries may reach out to key partners for trade or immigration. This would be similar to Estonia accepting the digital ID of Mauritius.
So to wrap up, governments could create many seamless cross border processes leveraging the blockchain. Two areas need to be developed, the technology to be used and the governance of these distributed networks. As with many human endeavours, multiple solutions will be proposed, but we look forward with anticipation to see cross border use case developing. Personally, I want to enter a country with a swipe of my phone and set up my next international move with a few keystrokes, but you may have other dreams for a seamless world. Let us all work together to achieve them.
Image Source: ChatGPT