What is Blockchain? Blockchain is the buzz word of the moment, with it’s current debut in the public sector, several countries are running tests and trials examining both the technologies’ broad utility as a basis for government service delivery and developing individual applications for internal use.
The technology’s potentials – of security, efficiency, and speed – are readily applicable to public sector organisations and can completely revolutionise the ways that people interact with government and other public sector institutions.
However, there are still several questions remaining on feasibility, benefits and security of the implementation in the public sector.
To help answer these questions and more we sat down with the chair for our upcoming training course Helen Disney to get her take on what Blockchain is really all about:
What is blockchain?
A blockchain is a way of securely keeping track – in chronological order – of all the transactions happening on a decentralised network.
This network may be distributed in multiple places yet all the people involved in the network can see the same copy of the database (or ledger) at the same time so that everyone agrees what’s happened. Participants all have access to an identical, shared history of events that cannot subsequently be changed or edited.
Is there a difference between blockchain and distributed ledger?
Yes, blockchain is one type of distributed ledger where the transactions are grouped into blocks (because this is faster and more efficient) and those blocks are then linked together in a chronological chain so you can’t go back in time and change the audit trail of what has happened.
Hence the name ‘blockchain’. The real innovation of blockchain technology is that it is more than just a database. Using smart contracts, blockchains can also set rules about transactions that are tied to the transaction itself not to the whole system so you can, for example, ask the system to only execute a payment to a participant when certain other conditions have been met.
Blockchains can be public (so-called permissionless, like Bitcoin or Ethereum) or private (permissioned – ie where the actors are known and given permission to be in the network). Some argue that private blockchains are not technically blockchains, which has led to wider use of the term distributed ledger technology.
There are also other types of distributed ledgers that can be implemented without blockchain. New types of distributed systems like IOTA or hashgraph have some similar properties to public blockchains but are based on a different type of technology called a DAG (directed acyclic graph). One of the main differences is that these systems work much more quickly than current blockchains and can be scaled faster.
Is there a future for blockchain in public sector?
There are already hundreds of public sector blockchain projects being trialled by governments around the world – including e-voting, land registry, medical records and delivery of welfare services. I think the future will depend on successful pilots and on the ability to convince decision makers to invest in implementing both a technological and, perhaps more importantly, a fundamental cultural change in the way the public sector is organised.
What are the benefits of implementing blockchain technology and are there any drawbacks?
Blockchain technology has many benefits – it allows us to transact and share information much more securely and efficiently than we do at present. It allows us to cut down on a lot of expensive and tiresome bureaucracy and paperwork. It can potentially allow for a much more ‘joined up’ approach to offering government services. Blockchain creates a kind of ‘trust layer’ where governments and citizens can interact more directly and keep track of the status of key activities – be they financial transactions or other important public documents. The aspects that still require thought are creation of an online government ID, the ability of citizens to get used to using such a system (which is often not that user-friendly) and the importance of security when it comes to sharing sensitive personal data. I wouldn’t call these drawbacks necessarily but there are aspects which need careful consideration and a good understanding of the technology to make sure things don’t go badly wrong.
Is blockchain the miracle cure? Can it be implemented across public sector?
I am always hesitant to call anything a miracle cure and I don’t think blockchain is necessarily suitable for all public sector activities – there will be circumstances where another IT solution may be better or cheaper or just easier to implement. However, I do think blockchain can make significant efficiency savings in the public sector and also improve the quality of many government services, be it filing tax returns, managing official documents or receiving medical test results.
If blockchain pilots prove their worth on a smaller scale, then I think the public sector will embrace it more widely and the longer-term benefits to taxpayers and users of government services could be enormous.
How can we help?
Our Blockchain Fundamentals course provides you with an introduction to blockchain. Learn how blockchain could potentially be used to safeguard your data and transactions, and make efficiency savings for your organisation.
In a small and supportive environment, have your questions answered and gain an understanding of how blockchain could be used within your organisation.
Now over to you…
Do you have any experience with Blockchain? Have you got any thoughts on how it could help or hinder the Public Sector? Are there any other crucial aspects that you would like to share? Tweet us using #UMGTraining @UModernGov, we always love to hear from you.
Do you have a team of staff at your organisation who would benefit from Blockchain Fundamentals? We also offer this course as a highly flexible In-House training session, delivered direct to your organisation on a date to suit you. Contact our In-House Training team on firstname.lastname@example.org to find out more.