How Blockchain Technology Could Impact Government's Relationship with Citizens


Our democratic systems of today were designed hundreds of years ago, in a time when letters were drafted in quill and ink, and then sent hundreds of miles over horseback to be shared between individuals. Governing institutions required closed-door offices in order to handle and organize the massive number of documents required by their agencies. This data module made sense because it was the most efficient option afforded to that era.

With the advent of the internet, the ability to share information has changed so fundamentally that it is hardly comparable to the methods used during the 18th century. This decisive evolution of human communications has begun to shape our conception of government as well. E-democracy, also known as digital democracy, is the term drafted to describe the influence that communication technologies are having on democratic governments. Some examples of digital democracy are electronic voting and online government services.

Even with such developments, the model of governance we use today is still all too similar to the ones used hundreds of years ago. Though information has gone from a written substrate to a digital one, and the speed at which information is shared has increased exponentially, the general relationship between the government and the public is the same. Information is stored in centralized databases that citizens can query for information. A trust relationship between citizenry and the government exists at the core of this model, as it did hundreds of years ago. Blockchain technology finally introduces the ability to replace trust in government offices with trust in a protocol based upon the impartiality of mathematics and cryptography. The immediate benefits of using distributed, not centralized, systems in government are efficiency, integrity and security; the long term benefits are a more involved and empowered citizenry.

Though the majority of new financial blockchain projects are being led for private-sector businesses, public-sector finance is also beginning to experience ripples of the blockchain revolution. For example, the U.K. Department for Work and Pensions is trialing blockchain tech for use in tracking and distributing welfare and pensions. Another project in the Republic of Georgia is piloting a blockchain-based land registry. Chief executive Valery Vavilov of BitFury, the company heading the project, explains the concept as an incorruptible yet transparent notary service that would allow for real-time audits, “not once per year, but every 10 minutes.”

These exact characteristics could potentially advance the realm of taxes as well, which is why U.K.-based organization DigitalCatapult, a catapult center meant to innovate the digital economy, is entertaining discussions on the topic. Moving tax information and accounting records onto a public blockchain system would inherently provide “more useful information and more certainty” to everyone with a stake in a nation — not just tax agencies, but also citizens, business tycoons and government officials alike. As a result of storing a nation’s wealth on a public blockchain, real-time data could be used to increase organizational efficiency and cut down on waste within large organizations — which governments are — where inefficiency and disarray are endemic.

Opacity within government fiscal policy also distances the citizenry, discouraging citizens from researching matters and forming opinions. The increased visibility and inherently uncompromising transparency of blockchain-based systems would help make government budgets and spending more clear, thus lessening the barrier between government and the citizenry, and ultimately encouraging more involvement in democratic processes.

The characteristics which make blockchain technology incredibly valuable extend beyond the realm of finances and the tracking of assets. For example, democratic countries could benefit by using the ability to track transfers of value on a public yet incorruptible ledger system to fundamentally change election processes.

Though different forms of electronic voting are used around the world, the functions and results are nearly identical to, albeit simply more efficient than, physical ballot voting. Ballots go into a black box and election results come out. This method has advantages, but it has drawbacks as well. This system is based on a trust relationship with the third party or government collecting and counting ballots, meaning common citizens have absolutely no way to guarantee that their votes were counted correctly, or that no election fraud was carried out behind the scenes. It’s no wonder voters have little faith in the system, and that countries suffer from low voter turnout and a politically apathetic populace.

Blockchain solutions for the problem of centralized elections have been proposed by the Follow My Vote project, which has designed open source election software based on blockchain technology. The system would represent transfers of value on the blockchain not as currency, but as a voter’s ballot. The transparency of the system would not only allow voters to verify that their individual votes were counted correctly, but also allow citizens to conduct an independent “audit [of] the ballot box” by scanning the blockchain where all votes are cast. The system would also sport strong security against both external cyber attacks and internal election fraud through the immutable and distributed ledger.

While these different applications just begin to scratch the surface, it's clear that blockchain technology could profoundly affect the relationship between governments and citizens by increasing transparency and information sharing.