Are Governments becoming “Smarter”? – Blockchain and Public Administration

Blockchain is a XXI century technology with great potential in relation to several sectors. So why not use for public administration?

The term “smart government” refers to actions which creatively invest in emerging technologies paired with innovative approaches to build flexible and robust government structures and governance infrastructures. The inevitable truth is that technology has taken over several sectors and public administration should not be an exception. Public administration is highly associated with the common good of the community and its necessities. So why not use technology to achieve this goal in a faster and easier way? The use of blockchain could be a great tool for governments all around the world to accomplish their objectives.

Although blockchain dates back to 2008, it is one of the most relevant emerging technologies. On a whole, blockchains are decentralized databases which store information in data blocks linked forming a chain, hence the term blockchain.

Nowadays some countries are already developing their own blockchain implementation strategies, such as Australia, Germany, and Italy, among others. Moreover, the EU Blockchain Observatory and Forum was also created with the goal of promoting blockchain innovation and the growth of EU’s blockchain ecosystem.

Even though blockchain is highly associated with cryptocurrencies, there are a number of potential benefits and advantages connected with its use by public administration.

For instance, it could be important for improving trust[ 1] . For example, in cases where two parties want to celebrate a contract, there might be issues of mistrust between them. However, blockchain together with smart contracts technology may be able to provide a solution to this problem, since it is able to manage the contract reducing monitoring and management costs per operation.

By using blockchain, even elections could become safer and more reliable, allowing for the development of methods that blend secure digital identity management, anonymous vote-casting, individualized ballot processes and verifiable ballot casting.

Furthermore, blockchain could enable the development of repositories for public documents, which would allow for cost reduction, transparency and efficiency, combating fraud and error, since information stored on the chain cannot be subject to alterations. For instance, blockchain could be beneficial for land registries, since it allows to keep and update historical records connected with property transactions. Besides that, blockchain can have several applications in the energy sector, enabling individuals to share energy and even exchange solar energy.

Even though there are many uses of blockchain which can have a positive impact to society, there are also a number of drawbacks and challenges which should be taken into consideration.

Firstly, since blockchain technology is at its infancy, it should be better studied and understood, both from a conceptual and technological point of view. From a practical standpoint, the deployment of blockchain technology in the public sector would be hectic considering the implementation costs, as well as the lack of expertise, knowledge or skills of public workers. Another practical shortcoming of blockchain is environmental impact, since there is a high consumption of computing power and energy to run complex algorithms, that could result in environmental risks.

Furthermore, although immutability is generally considered to be a positive characteristic associated with the blockchain technology, it can also represent a challenge, especially for situations when its necessary to update and delete data regularly.  There are also challenges connected with the concentration of personal data in one location, which although promotes efficiency, it can also lead to unlawful privacy invasions, abuse by governmental authorities.

In addition, due to the fact that this emerging technology is capable of changing the societal, political and financial landscapes, general awareness should be raised. Besides that, the legal landscape will need to adapt to this upcoming reality, possibly requiring for legislative amendments, especially in relation to government regulated processes.

Consequently, the lack of a suitable regulatory framework might lead to a number of legal challenges. For instance, in case of a legal dispute surrounding the use of smart contracts, the present legal framework would most likely not be clear enough to solve issues related to jurisdiction and recognition of smart contracts.

For instance, Estonia created e-Residency, an application of blockchain technology, which allows its users to access public and private sectors services, sign documents digitally, make secure transactions and establish a company online. Although representative of a world of endless upcoming opportunities, there are several legal issues connected with it. For example, since the territorial scope of the GDPR is associated with the physical location of the data processing and not the residency, does this mean that the Estonian e-Residency would not fall under the GDPR scope? Even though there are both positive and negative aspects of the use of blockchain in relation to public administration, its adoption will keep progressing. Consequently, tackling and mitigating the possible challenges and eventual risks should constitute a priority. Nevertheless, the focus should always be on achieving and promoting the common good of the community and prioritizing the citizens’ needs. Lastly, governments should emphasise on becoming “smarter” by designing and implementing their own national strategies, not only in relation to blockchain, but also to other emerging technologies with high potential in facilitating certain processes.


 [ 1]If you keep this wording, naturally there is a correlation with the financial system, diverging the reader from the area of focus in your article.

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