More and more governments in Europe are joining those which are already using blockchain technology. The reasons behind this trend are obvious: blockchain can remedy numerous issues which plague the public sector, blockchain brings enhanced cybersecurity, process optimization, and integrated hyperconnected services while bolstering trust and accountability.
When it comes to governmental use, blockchain can be leveraged to support multiple government and public sector applications. To name just a few: digital currency/payments, land registration (more about this on our blog), identity management, supply chain traceability (more about this here and here), healthcare (additional details here), corporate registration, taxation, voting (more about this, here) and legal entities management. Used in the right context, blockchain solutions could reduce redundancy, streamline processes, decrease audit burden, increase security, and ensure data integrity.
With trust in governments and their appendages diminishing in numerous countries around the world, blockchain technology has the power to reduce bureaucracy, increase the efficiency of administrative processes and increase the level of trust in public record keeping. Besides optimizing the operational capacities of governments, blockchain also brings added value for citizens, improving lengthy or complex processes and the society, as a whole.
Advantages of using blockchain technology
Improved efficiency. Standing in long queues to pay taxes or going through multiple processes to obtain some documents are common issues in many countries. By enabling seamless access to information over a distributed database, blockchain is the perfect cure to these problems. Let’s take, for instance, Malta. Here, institutions issue and distribute academic records on blockchain. This makes it easier for the candidate to share and for employers or the government to verify his academic records.
Protecting sensitive data. Breaches of personal data have become a fact of life in today’s digital world. As the default record keeper for society, governments are large targets for hackers. But rather than accept such attacks, they could be mitigated or avoided through the responsible deployment of blockchain data structures. Such data structures harden network security by reducing single-point-of-failure risk and can make attempting a breach extremely challenging. Blockchain distributes data among participating nodes that can be located at different places across the globe, making data breach almost impossible. Moreover, by using private keys, users can take control of their important data, with enhanced privacy and peace of mind.
Transparency. There are more than a few countries where the activities of governments are hidden behind a secretive opacity and citizens don’t know, for instance, where their tax money goes and how the funds are used. When data is stored on a blockchain, every stakeholder will have direct access. In addition, it becomes tamper-proof. The advantages? Citizens have more visibility of the system and the use of blockchain significantly reduces the risks of corruption, frauds, and scams.
Building trust with citizens. An important feature of blockchain-based solutions is transparency through decentralization, allowing participating parties to see and verify data. A blockchain solution for some citizen services could allow for independent verification of governmental claims. With this in mind, the governments of Sweden, Estonia, and Georgia are experimenting with blockchain-based land registries, enabling multiple parties to securely hold copies of the registry. This model could help quickly resolve property disputes or prevent them altogether. When citizens and governments share access to records, potential for distrust decreases.
Reducing costs. By implementing blockchain in government processes the need for intermediary institutions and third parties disappears. A direct consequence of that: citizens would benefit from a significant reduction in the overall governance cost, taxes can be reduced and governments can invest in better welfare services. Moreover, this would also help restore the citizens’ trust in their governments, as using blockchain technology would make them more credible and reliable.
European governments focused on blockchain
In order to accelerate blockchain research and innovation and to help position Europe as a global leader in this field, the European Commission has launched the EU Blockchain Observatory and Forum. The EU Blockchain Observatory and Forum plays an active role in helping Europe to seize new opportunities offered by blockchain, build expertise and show leadership in the field. In addition, the European Horizon 2020 program invests up to €300 million in projects supporting blockchain projects across the European Union.
Austria – Backed by the government, the Research Institute for Cryptoeconomics supports blockchain research projects through an €8 million fund.
Denmark – The Liberal Alliance party was the first local association worldwide to perform an internal election using blockchain technology.
Estonia – The country’s government has been testing blockchain since 2008, being the first country in the world to use blockchain on a national level. Since 2012, blockchain has been in operational use in Estonia’s registries, including judicial, national health, commercial code systems. The government-created e-Estonia program boasts 99% of services held online, 44% of Estonians use online voting, 98% of tax declarations are filed online, and 98% of Estonias have a digital ID, with 700+ million digital signatures. 99% of health data is digitized and stored on a blockchain.
Georgia – The country prides itself with launching the first-ever blockchain-land registry system. Currently, there are over 1.5 million land titles registered.
Germany – A “Blockchain Lab” established by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH to leverage the potential of blockchain and related technologies.
Ireland – The government has announced the creation of an internal working group that looks into regulatory approaches to cryptocurrencies in other jurisdictions. Partly funded by the government, Blockchain Ireland promotes and shares information on blockchain in Ireland. Also, BlockAthon Ireland aims to identify and analyze potential real-life use cases in public services.
Italy – After joining the European Blockchain Association, Italy has amended regulations to define the concepts “blockchain technology” and “smart contracts”.
Latvia, Estonia and Lithuania have published a Memorandum of Understanding (MoU) aimed at “supporting the development of capital market innovations and new technologies with a consideration for regional FinTech solutions such as distributed ledger technology.”
Luxembourg – Supported by the government, INFRACHAIN is a blockchain community, non-profit organization, committed to create an on-top governance framework allowing blockchain applications to become operational in the current regulatory environment.
Malta – The country’s government piloted a blockchain-based credentials program that instantly verifies academic credentials. Moreover, in an effort to increase efficiency and modernize business processes, the Malta Business Registry will adopt blockchain technology.
Netherlands – Many exploratory initiatives surrounding blockchain are being realised in the Netherlands within industry, the government and institutions. Several initiatives are already approaching the prototype phase and are expected to be operational within several years. The Dutch Blockchain Coalition brings these initiatives together to create the conditions for reliable and socially acceptable applications.
Spain – The port of Valencia has been integrated into the TradeLens project, a technological solution developed by IBM and Maersk, to apply the blockchain technology to the global supply chain. The use of TradeLens allows the reduction of the transit time of shipments by 40%. The TradeLens ecosystem currently includes more than 20 port operators and terminals around the world, representing approximately 234 seaports on five continents.
Slovenia – The Slovenian Digital Coalition intends to harmonize the digital transformation of Slovenia adopted in the Digital Slovenia 2020 strategic framework, in collaboration with stakeholders from trade and industry, research and development, civil society and the public sector. The Slovenian Digital Coalition is focused on attaining cross-sector multiplier impact that accelerates the development of the digital society and exploits opportunities for development of ICT and the Internet.
Sweden – Lantmäteriet, the official Swedish Land Registry, together with partners, began to explore potential blockchain applications for real estate in Sweden, quickly identifying property purchase and land transfer as a compelling use case. The consortium developed a prototype, in which real estate transactions would be put on the blockchain the moment an agreement to sell is reached and remain until the land title is transferred. The prototype sought to limit information asymmetries by allowing all parties (banks, land registry, brokers, buyers, and sellers) to monitor the progress of the transaction, and potentially produce cost savings of more than €100m / year.
Switzerland – Leading the list of Europe’s top 10 most blockchain friendly countries, Switzerland is known as a crypto-friendly nation due to both its establishment of a virtual currency hub – Zug “crypto valley” – and its status as a tax-free haven for crypto investors.
Ukraine – In 2017, Ukraine’s Justice Ministry carried out trial auctions using blockchain technology, part of an effort to improve transparency in government transactions. The Justice Ministry has started using the technology for auctioning seized assets and plans to transfer state property and land registries to the platform.
United Kingdom – The U.K.’s Food Standards Agency (FSA) completed a pilot to track the distribution of meat in a cattle slaughterhouse using blockchain. This trial marked the first time that blockchain technology has been used as a regulatory tool to ensure compliance in the food industry. Furthermore, the largest port operator in the United Kingdom – Associated British Ports (ABP) – is testing the use of blockchain to facilitate trade through its marine terminals.