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Can Blockchain contribute to the fight against corruption?

Corruption undermines our development agenda. It cleans up necessary resources outside key departments and providing essential services. Its effect could further exacerbate inequality and erode public confidence in both governments and elected leaders to serve us.

As highlighted in the Sustainable Development Goals (SDGs), there is an explicit link between corruption and just and equitable society. Its effects are not limited to emerging and developing economies. Corruption is widespread and occurs in some of the most developed nations.

To tackle corruption in the public and private sectors, many researchers have looked at the emergence of new technologies to curb this plague. A game change that has been highlighted is Blockchain.

What is Blockchain?

Blockchain is a digital database shared on a computer network. Once a record has been added to the chain, it is very difficult to change it. To ensure that all copies of the database are the same, the network performs constant checks. By using encryption to keep exchanges secure, Blockchain provides a decentralized database of transactions that everyone can see on the network. This network is essentially a chain of computers that all have to approve an exchange before it can be verified and registered.

Inside, Blockchain addresses security and data integrity. It allows us to record resources, transfer value and track transactions in a decentralized manner, ensuring transparency, integrity and data tracking ability without a central authority to authenticate information. Basically, it's a system to encrypt information. It is based on a consensus mechanism between trusted parties to certify information and validate transactions.

As such, Blockchain makes corruption more difficult because it is not based on a central database and the recorded data can not be deleted, altered or tampered with. Provides an unprecedented level of integrity, security and reliability to the information it manages. It also allows tracking and tracking transactions. This tracing of transactions can be used by law enforcement agencies and public accountants to track irregularities and eradicate corruption.

This technology has emerged in the financial sector, which allowed cryptocurrencies like Bitcoin. The researchers are positive about the disruptive potential of Blockchain in the public sector, as a mechanism to eradicate corruption.

it works?

Early research suggests that this technology must be built on the basis of solid institutions
Sweden is currently undergoing a process in the Blockchain land registry, to make the details of real estate transactions visible to all interested parties, while Georgia is registering land titles using Blockchain. Both show positive results. However, Honduras attempted, but failed to create a decentralized database of land titles using Blockchain.

Further experiments with Blockchain focus on monitoring transactions, particularly on high-risk government transactions such as public procurement (tenders) and money transfers, which seek to mitigate the risk of fraud in the outflow of funds.

While the allocation of offers is becoming increasingly digitalized through e-procurement applications, Blockchain could add an additional layer of security by including critical information along the supply chain. Therefore, information can be more easily monitored, monitored and controlled. An example of a country that has driven this is Mexico.

In order for Blockchain to work, there are a number of requirements that must be met. Existing data must be accurate, digitized records and the existence of sound institutions in the public sector. In many developing countries, this is not the case. There is therefore a paradoxical situation, as it is often perceived that the countries most in need of Blockchain, are those that do not necessarily meet the requirements for success.

Furthermore, because Blockchain is a decentralized system and "governs" itself, Michael Pisa of the Center for Global Development noted that governments should accept "that they will have virtually no control over how the system is governed". For many governments, both in developed and emerging economies, this will be an important deterrent in the adoption of Blockchain technology.

As such, Don Tapscott, founder and executive president of Blockchain Research Institute, believes that in the public sector, Blockchain technology should be partly based on permission, overseen by a set (not a single) of reliable validators. This will however allow it to be decentralized, but within the confines of the state.

Eliminating corruption

The potential of Blockchain is enormous and the possibility of eradicating corruption makes this technology something that all governments should take into consideration. Although it is still in its initial phase and the government models are still under development, the general positivity around Blockchain is justified.

However, to see high levels of success, governments specifically in developing countries, will have to invest in building strong institutions within the state and ensuring digitization. Blockchain is not a panacea, but if all the requirements were met by the countries at the time of adoption, we could reach SDG 16 – Peace, justice and strong institutions – which is hindered by corruption, sooner than we think.

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