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Why Governments Should Be Using Blockchain


Cryptocurrency has had a lot to answer for in recent years. Bitcoin, Ethereum et al have hardly been out of the headlines since their inception, culminating in ‘the Crypto Crash’ of 2018 that shocked die-hard fans and investors  - but the real victim in all the ensuing chaos was blockchain. As the foundational technology behind cryptocurrencies, blockchain was immediately equated with them, and when public sentiment for cryptos tanked blockchain went with it.

Blockchain, however, is far more than just cryptocurrency, and renewed (or continued) interest in the technology could help prove its worth beyond the crypto bubble. With real-world examples hard to come by, governments, corporations and those wielding the most influence must collaborate to bring blockchain out of the cryptocurrency doldrums. But can proponents of the technology strike the perfect balance and give blockchain a new life?

Hacking out a solution

Bringing out the best of blockchain might not be as easy as AI or 3D printing, which can be easily discerned by most people as a powerful tool for change. Many people in the know, however, see blockchain as the next ‘completely neutral, public digital infrastructure, like the internet or email’ - Rutger van Zuidam, founder of the Odyssey hackathon, is one of those people firmly behind blockchain. An energetic and impassioned character, it is easy to see van Zuidam’s energy reflected in the Odyssey hackathon, which aims to solve the world’s most complex issues by bringing innovators together on neutral territory. ‘Collaboration is the only way to overcome a lot of these challenges - whether societal, organizational or environmental - and that is where blockchain comes in,’ asserts van Zuidam.

These challenges, separated into trackssuch as ‘Fossil Free Future’, ‘Crisis and Disaster Management’ and ‘Digital Citizenship’, are certainly not trivial issues. Bringing together ‘big corporations, governments, regulators, as well as SMEs and startups’ Odyssey is nevertheless framed like a playground for innovation - ‘it turns out solving really, really complex challenges is actually a lot of fun for people’ - but this atmosphere of coming together to prototype a solution yields impressive results. Teams work together to build a prototype over 48 hours alongside other maker teams and industry experts. Immediately after the event itself, Odyssey’s role as ‘an incubator of ecosystems’ kicks in as Odyssey Ignite. ‘The stakeholders meet the winning teams and see a solution that is only one day old, and now they can engage with that team and our partners to find out how such a solution would work,’ explains van Zuidam.

Using blockchain in this way - as both a stimulant for collaborative innovation and a neutral infrastructure from which to address global challenges - shows the technology in a more nascent light. As van Zuidam states, ‘the biggest challenges for blockchain are adoption and governance, it’s not the technology.’ While adoption so far has been fixated on the (supposedly) unlimited growth potential of cryptocurrencies, increasing interest in the versatility of blockchainsuggests a bright future. ‘Governments and corporations understand that they do not own [this infrastructure] but they do want to be a part of it, they can help it evolve and grow,’ says van Zuidam, ‘ultimately, blockchain is not an IT solution, it’s an organizational solution.’

E-Estonia: A case study

One of the most exciting and comprehensive uses of blockchain can be found in Estonia’s government services: e-voting, online tax returns, digital cabinet meetings, and now e-residency are all linked across one digital platform. Using blockchain as the backbone for an astonishing level of digitization (currently, 99% of all Estonian government services are online), services function on mandatory ID cards that use a public key infrastructure (PKI) system, whereby users authenticate themselves with one PIN number and confirm with another. Estonian citizens only ever have to submit data once and it is then stored in an indelible blockchain. The government can then merely consult distributed and connected databases to check anything, without bothering their citizens, and any new services are ‘digital by default’ so that nothing needs to be retrofitted into this automated service hub.

Digitizing these processes so efficiently shows just what can be achieved under the right conditions: Estonia gained independence from the crumbling Soviet Union in 1991, and by 1997 had 97% of its schools online. This rapid digitization became more than a way of separating Estonia from its neighbors, it also became a means of showing the Estonian people that - through increased accessibility and engagement with their government - they could affect significant and meaningful change.

What is a government to do?

Governmental involvement with tech, and blockchain in particular, is a difficult line to tread. Without the kind of blank slate and public support afforded in Estonia, nation states can find themselves pandering to private interests. As Kieran Brown, Senior Management Consultant at Berkeley Research Group (BRG) points out, ‘it’s really important to understand the mindset shift that’s required, the approach by government and regulators has [so far] been very reactionary.’ Brown argues that successful implementations in Estonia and Dubai were able to thrive because ‘they don't struggle with getting the right mindset around engaging with entrepreneurs,’ and that for blockchain and any advanced technology to serve the public good, ‘governments need to actively co-lead policy frameworks with entrepreneurs, and focus on actively shaping the market outcome for advanced tech.’

This kind of collaboration sounds remarkably similar to van Zuidam’s vision, and indeed Brown agrees that blockchain ‘absolutely needs to be seen as an infrastructure… it has many hallmarks of a future general purpose technology.’ For governments to properly explore and benefit from blockchain, Brown, like van Zuidam, feels that it needs to be addressed towards ‘the grand challenges’ facing all of society: ‘Blockchain hasn’t yet found a politically relevant, socially legitimate mission to support. Mission orientated policy frameworks like those developed by Prof. Mariana Mazzucato of UCL could help shift the discussion, and others like it, in the right direction.’ The potential of blockchain to really change our society - to ‘open new paradigms’ in the words of van Zuidam - depends on the way governments and policymakers act now. ‘Not many governments have actually said this is our policy on blockchain, these are the challenges and the risks and this is how we want to see it governed, mostly because they’re not competent in the technology,’ says Brown. For this to change, policymakers need to ‘grow jurisdictional competence’ of how blockchain works, they need to ‘become alive to the fact that this will happen very quickly… and then look outward to how policy can form a basis for effective and efficient adoption.’

Future first

Brown is clear that the benefits of blockchain are not to be passed over, ‘the passive attitude is not acceptable when it comes to blockchain and advanced technology,’ and makes very clear that collaboration with entrepreneurs and innovators is non-negotiable if blockchain is to be used for the common public good: ‘Do governments and regulators want to be architects of the future, or victims of it?’ He asks. Initiatives like Odyssey are providing a stage for this kind of mutually beneficial cooperation, and showing investors and governments that blockchain can be a foundation from which to tackle global challenges.

Cases like Estonia are proof that with a stable basis for growth, blockchain can be put to astonishing use. Getting governments up to speed with the technology, and ‘investing in foresight’ in Brown’s words, are the next steps towards getting blockchain off the ground. With the right impetus, blockchain might soon be free of its crypto anchor - the only question then will be: What should blockchain tackle first?


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