Using the blockchain to transform public markets


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Blockchain offers federal and state governments a powerful opportunity to reform public markets and expensive economic systems like land, water, spectrum and energy management – without the need for control central – according to experts and speakers of a recent series of national seminars on Blockchain.

Much of the public attention around the blockchain has been focused on the cryptocurrency, the bitcoin. But the seminar has felt the real interest in the government is the ability to blockchain to share reliable transactional data between agencies and jurisdictions, without any agency having to control the system. Each agency can manage its data, in a single source of truth through the government.

This happens when all governments are trying to share data between their portfolios and each other. This is determined by the need to create integrated personalized services, reform expensive and slow business systems, use multiple data sources to inform and redesign policies and programs.

In his basic blockchain it is similar to a spreadsheet, a ledger that all parts can see, giving full visibility to the information, which is then signed and locked in the block and connected in a chain as a control trail . Once blocked, everyone can trust information as a single source of truth.

Each transaction in a block can also be programmed – called smart contracts – offering government agencies a powerful mechanism for the review of complex business systems such as supply chains, stock sale, healthcare payments, food pedigree tracking and livestock and management the registers of many registers check centrally.

Decentralizing Control

The seminar has heard that the ability of the blockchain to function without central control opens up a whole world of reform.

The co-author of two reports of Data 61 on Blockchain, dr. Mark Staples, explained that the distributed blockchain approach centrally centralizes information, but administratively decentralizes control. This said that it allows any agency or jurisdiction to maintain its authority while working with others on a single source of truth.

This opens up the real possibility of state governments, for example, by creating a federated system to say self-registration without having to bring the national government to centrally manage a system.

For the main government-run resources such as land, water, spectrum, transport and energy, this offers an ability to rethink how these markets are managed. Blockchain can represent these markets digitally, which means that governments can handle the many moving parts in a much more efficient way, eliminating most of the costs and delays.

In addition, it can create new economies around these markets, opening up investments and innovation in traditionally bureaucratic, process markets and heavy systems.

Katrina Donaghy, co-founder and co-director of the blockchain start-up, Civic Ledger, told the work seminar that they had studied the 16 billion dollar Australian water markets, and how the ability of the blockchain to represent the 39; water using digital tokens and program over 16,000 offers of different business rules could reduce transaction time by nine weeks in near real time. And offers savings between $ 50 and 100 million.

The seminar heard that complex multi-party systems, such as transfer or liquidation of a property, are ready for reform, taking advantage of the distributed blockchains methodology that allows all parties to trust information without the need for lawyers, banks, governments or other intermediaries.

According to Alan Thurlow, the British leader of IBM for blockchain in the government, it is the opportunity that the blockchain offers to redesign government services in an open, collaborative and trustworthy ecosystem that offers a real possibility of not only digitize paper-based systems, but to rethink the whole approach.

"Our default when we had a lack of trust in the past is to get back to the documents," Thurlow said. "This is what we are used to."

"Where we have to go – is that blockchain will become part of that trust.That will be where we go, and we will not need to have all these documents."

"Think of land transfer. your real estate agent, all of whom have their own registration system, "he said. "All information is stored in the ledger, so you have a single version of the truth, which potentially allows us to eliminate all kinds of documentation and documents."

Focus on a clear problem

All the speakers confirmed need to focus on the business problem or the sore point that needs to be solved. Thurlow advised any agency that intends to create blockchain-based services should establish a clear purpose for an existing sore point, rather than innovating for the good including new technology.

"It makes no sense to have a blockchain if you do not have a problem," he said. "You will not see any value there and you will not have any fundamental change to make that happen."

"It is necessary to create a demonstration of the concept around the use case, and then integrate that proof of concept into a legacy system."

There was a strong consensus that the agencies should think of the blockchain as a business, not a technological decision. Technology is relatively well understood, but the challenge for governments is being organized around known weaknesses or use cases.

Thurlow said that the UK's experience with blockchain was that a solution can be implemented fairly quickly, with concept tests rolled often in weeks. Thurlow has identified over a dozen proofs of conceptual projects in which governments around the world used blockchains to remove traditional weaknesses.

These included the use of the blockchain to manage human resource systems, monitoring food supply, recording electric bikes and ensuring the authenticity of medical credentials. In the United Kingdom, the blockchain has even been used to pay actual energy units to those entitled to support for heating, rather than traditional welfare benefits.

Staples told the seminars that governments would have to use the private permit or blockchain, as opposed to the public blockchain that was popularized by bitcoins.

He said that blockchain was open by nature, which meant that public blockchain would not be appropriate for moving sensitive data, such as personal information or taxes. For this reason, both Staples and Thurlow have stated that they expect the private blockchain to be used in many cases of business use.

The CTO for the digital tansformation agency, Matthew Goonan, observed that, for an emerging technology, many of the blockchain elements were derived from well-understood earlier technologies, which are in widespread production.

For example, web security certificates use a peer to peer system similar to how the blockchain works. The certificate transparency initiative used merkle trees one of the support technologies used in blockchain solutions. The registers that can be verified only in append offer the public the possibility to examine and trust SSL certificates.

Creating a case of use for blockchain

To create such a case of use, government services must treat blockchain as part of an entire ecosystem and not as a solution in itself.

Government departments should take a city-wide view of blockchain technology, Thurlow said.

"This is not just about ATO services or any agency, it's a government created with the citizen," said Thurlow. "We are going to design government services that actually fit the service and purpose we want."

This was reiterated by Donaghy: "Blockchain is not a technological decision, it is a commercial decision," he said.

In their work on the water markets Donaghy explained how Civic Ledger was able to construct a case of use for blockchain in the context of water trade in the agricultural sector. He said that attention had been on the reverse-engineering of the future state, so he decided if the blockchain had a role at any moment along that journey.

"When you look for an application, that's what you should identify – and I have not even talked about terminology like hashes, crypts, block sizes, etc."

It has also been noted that governments are often only a part of a solution and the challenge is to trace the entire interaction of citizens as part of the redesign of the service. For example, when a relative disappears, families often have to organize a whole series of services ranging from funerals, churches and catering, as well as dealing with multiple government agencies.

It was also suggested that it was important to understand the economic winners and losers resulting from decentralized control. Blockchain often removes the traditional intermediary from a process – lawyers, accountants and financial institutions – so any reform process will have to consider the economic impact of the changes and manage them accordingly.

The challenge of all government reform

Citizens often have to bear the costs and delays of expensive administrative business systems such as the dissolution of family property after divorce or separation, the movement of states or countries and the liquidation of a business.

Many of these involve multiple agencies and jurisdictions, raising the issue of who takes the lead in reform processes and mechanisms for reviewing processes often based on archaic paper.

It has been noted that central agencies are increasingly adopting a comprehensive government approach to the reform of the city service and guiding the coordination of businesses and stakeholders needed to push through these changes.

It has been noted that central agencies by their nature are very far from the frontline delivery service, which means that they have to work together strongly with large service agencies – typically service portals, roads and human service agencies.

There is also a gap around the coordination and design of services, which involve multiple jurisdictions. While COAG plays a useful policy coordination role, it has been noted that there is no central distribution agency with adequate resources that is conducting a redesign of complex services in multiple jurisdictions. Neither any strategy that gives priority to these reforms.

Establishing the rules

Governments also have an important role to play in setting industry standards and revising governance regimes. Staples said that Australia is already taking a leading role in setting standards and adopting consistent protocols to ensure interoperability.

The seminars have listened to the distributed nature of the blockchain: regulators and registrars of the register will have to change their governance and regulatory approaches, recognizing that there is no longer a central intermediary to "monitor" transactions.

Goonan noted that the government, its very nature is inherently centralized. Much of the current conception of the system confers confidence on this authority to create and sustain the rule of law and to arbitrate in case of disagreements on the interpretation of records. The use of technology such as blockchain, which allows only the addition checked to its records, effectively empowers the parties concerned to verify the behavior of these central authorities.

Another problem that needs to be addressed is the permanence of data. Blockchain is transparent and data can not be changed. This is a strong point of the blockchain, which is why it is sometimes called an "honest bureaucrat". But as noted by Staples, this also introduces problems when it is said that a court requires that information be written or removed.

Many see blockchain similar to how we have considered the Internet in the years & # 90; At a broader level, Thurlow noted that if the government took a stronger role in Internet design, then some of the security and consensus issues could have been better anticipated. The same opportunity now exists with blockchain to ensure that it is well governed and managed for a wider public interest.

The digital government is rapidly becoming a reality.

The federal government has pledged to make Australia one of the top three digital governments by 2025. The Digital Processing Agency has entered into a contract with IBM to accelerate the absorption of blockchain, artificial intelligence and quantum intelligence.

Through a specially designed toolkit for the government, The Mandarin is examining this next critical phase of transformation and the fundamental capabilities, processes and technologies that CIOs in the public sector must focus on to gain the benefits for citizens of the transition to the digital government.

Get the CIO Toolkit for the Government

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