By Kahlin Naidoo

We are still in the starting blocks when it comes to public sector use of Web3 technology

Blockchain has come a long way since the early days of Ethereum but we’ve yet to see a strong product-market fit in the real world. While there are many projects exploring use cases in gaming, payments, supply chain management, healthcare, real estate, music and more, I wanted to focus on how governments can benefit from distributed ledger technology.

We’ve seen partnerships between L1s and city governments around the world. A few notable examples include:

• Casper Labs partnered with the city of Fuzhou through the Blockchain-based Service Network (“BSN”),

• The City of Taipei partnered with the IOTA Foundation to build smart city initiatives on the IOTA DAG, and

• The VeChain Foundation partnered with the Shanghai Association of Blockchain Service Certifications to establish common standards and criteria for assessing blockchain service providers.

While it remains to be seen if any of these partnerships will bear fruit, the promise of blockchain for public services is intriguing. The ability to create trust through greater transparency in the delivery of public goods could improve trust in government which has deteriorated over several decades. Since the Great Recession, less than a quarter of Americans have expressed trust in the government to do what’s right always or most of the time. This compares to 77% in 1964.

Blockchain can improve trust where the citizenry directly meets government: Municipalities

Land Registration

Tamper-proof title deeds and transactions can reduce fraud and drastically reduce the time and cost of executing property title transfers.

Voting

While potentially controversial, bringing voting to the blockchain with a streamlined, simple UX could boost voter turnout and trust in absentee voting.

Identity Verification

Verifying a person’s identity can be costly and time-consuming. ID verification is needed to do basic things such as setting up a utility bill, renewing a driver’s license, or filing taxes. ID verification on-chain will reduce instances of document fraud and reduce the number of times verification is required, saving time and money for citizens and government departments.

Maintenance of Public Records

Important documents such as birth and death certificates are crucial for important matters such as school enrollment, marriage certification, and estate planning. On-chain record keeping will reduce the risks associated with lost documents and ensure tamper-proof records.

Healthcare Information Management

Health records are sensitive but have to be shared frequently to obtain access to emergency services, avoid redundant testing, and manage medication regimen. ZK technology allows service providers to verify certain facts about a patient without needing to reveal everything, e.g. a patient cannot take medication X because it is incompatible with another medication they are taking. The pharmacist doesn’t need to see or record the full medication history, preserving privacy. It also reduces the chance of sensitive data being leaked by eliminating unnecessary data duplication.

Realizing on-chain public services will require navigating several challenges

Implementation would require significant overhaul of existing public IT infrastructure. Aside from the technical integration with legacy systems, there needs to be significant education of stakeholders in the public sector from senior elected officials all the way down to operational staff in technical, legal, and customer facing departments. Convincing local governments to invest in new technology may be challenging without significant pressure from the electorate or lobby groups. Governments are conservative in their practices and would only want to adopt after seeing successful implementation elsewhere. The incentive to be a first mover may not be very strong. If a less efficient solution to ID verification or voting is in place, why risk a failed implementation with something so important to the public interest? Finally, given the public’s lack of trust in government, there may, ironically, be public opposition to the use of blockchain in local government. Citizen’s of Western countries are likely to be wary of CBDCs and social credit systems which are being implemented in China.

On the user experience side, abstracting away technical aspects such as private key management will be needed to onboard the masses. If we saw the elusive “killer Dapp” gain mass adoption in the private sector, this would do wonders for building public and government trust in blockchain. When adoption finally comes, most users will likely be unaware of how blockchain is creating trust and streamlining their service delivery experience. With the predominance of clunky wallet management tools such as Ledger and MetaMask, it may be some time before blockchain UX is simple enough for mass use, whether it be in the public or private sector.

Sources:

1. https://cointelegraph.com/news/casperlabs-to-become-blockchain-of-choice-for-the-city-of-fuzhou-china

2. https://www.pewresearch.org/politics/2022/06/06/public-trust-in-government-1958-2022/#:~:text=Public trust in government remains,the time” (19%25)

3. https://www.ccn.com/taiwan-smart-city-turns-to-iotas-dlt/

4. https://medium.com/vechain-foundation/vechain-helps-establish-the-shanghai-association-standards-for-blockchain-service-certification-3956e55da3b6

5. https://www.pewresearch.org/politics/2022/06/06/public-trust-in-government-1958-2022/#:~:text=Public trust in government remains,the time” (19%25)

6. https://www.fpri.org/article/2023/06/china-is-doubling-down-on-its-digital-currency/

7. https://www.businessinsider.com/china-social-credit-system-punishments-and-rewards-explained-2018-4

By Kahlin Naidoo

We are still in the starting blocks when it comes to public sector use of Web3 technology

Blockchain has come a long way since the early days of Ethereum but we’ve yet to see a strong product-market fit in the real world. While there are many projects exploring use cases in gaming, payments, supply chain management, healthcare, real estate, music and more, I wanted to focus on how governments can benefit from distributed ledger technology.

We’ve seen partnerships between L1s and city governments around the world. A few notable examples include:

• Casper Labs partnered with the city of Fuzhou through the Blockchain-based Service Network (“BSN”),

• The City of Taipei partnered with the IOTA Foundation to build smart city initiatives on the IOTA DAG, and

• The VeChain Foundation partnered with the Shanghai Association of Blockchain Service Certifications to establish common standards and criteria for assessing blockchain service providers.

While it remains to be seen if any of these partnerships will bear fruit, the promise of blockchain for public services is intriguing. The ability to create trust through greater transparency in the delivery of public goods could improve trust in government which has deteriorated over several decades. Since the Great Recession, less than a quarter of Americans have expressed trust in the government to do what’s right always or most of the time. This compares to 77% in 1964.

Blockchain can improve trust where the citizenry directly meets government: Municipalities

Land Registration

Tamper-proof title deeds and transactions can reduce fraud and drastically reduce the time and cost of executing property title transfers.

Voting

While potentially controversial, bringing voting to the blockchain with a streamlined, simple UX could boost voter turnout and trust in absentee voting.

Identity Verification

Verifying a person’s identity can be costly and time-consuming. ID verification is needed to do basic things such as setting up a utility bill, renewing a driver’s license, or filing taxes. ID verification on-chain will reduce instances of document fraud and reduce the number of times verification is required, saving time and money for citizens and government departments.

Maintenance of Public Records

Important documents such as birth and death certificates are crucial for important matters such as school enrollment, marriage certification, and estate planning. On-chain record keeping will reduce the risks associated with lost documents and ensure tamper-proof records.

Healthcare Information Management

Health records are sensitive but have to be shared frequently to obtain access to emergency services, avoid redundant testing, and manage medication regimen. ZK technology allows service providers to verify certain facts about a patient without needing to reveal everything, e.g. a patient cannot take medication X because it is incompatible with another medication they are taking. The pharmacist doesn’t need to see or record the full medication history, preserving privacy. It also reduces the chance of sensitive data being leaked by eliminating unnecessary data duplication.

Realizing on-chain public services will require navigating several challenges

Implementation would require significant overhaul of existing public IT infrastructure. Aside from the technical integration with legacy systems, there needs to be significant education of stakeholders in the public sector from senior elected officials all the way down to operational staff in technical, legal, and customer facing departments. Convincing local governments to invest in new technology may be challenging without significant pressure from the electorate or lobby groups. Governments are conservative in their practices and would only want to adopt after seeing successful implementation elsewhere. The incentive to be a first mover may not be very strong. If a less efficient solution to ID verification or voting is in place, why risk a failed implementation with something so important to the public interest? Finally, given the public’s lack of trust in government, there may, ironically, be public opposition to the use of blockchain in local government. Citizen’s of Western countries are likely to be wary of CBDCs and social credit systems which are being implemented in China.

On the user experience side, abstracting away technical aspects such as private key management will be needed to onboard the masses. If we saw the elusive “killer Dapp” gain mass adoption in the private sector, this would do wonders for building public and government trust in blockchain. When adoption finally comes, most users will likely be unaware of how blockchain is creating trust and streamlining their service delivery experience. With the predominance of clunky wallet management tools such as Ledger and MetaMask, it may be some time before blockchain UX is simple enough for mass use, whether it be in the public or private sector.

Sources:

1. https://cointelegraph.com/news/casperlabs-to-become-blockchain-of-choice-for-the-city-of-fuzhou-china

2. https://www.pewresearch.org/politics/2022/06/06/public-trust-in-government-1958-2022/#:~:text=Public trust in government remains,the time” (19%25)

3. https://www.ccn.com/taiwan-smart-city-turns-to-iotas-dlt/

4. https://medium.com/vechain-foundation/vechain-helps-establish-the-shanghai-association-standards-for-blockchain-service-certification-3956e55da3b6

5. https://www.pewresearch.org/politics/2022/06/06/public-trust-in-government-1958-2022/#:~:text=Public trust in government remains,the time” (19%25)

6. https://www.fpri.org/article/2023/06/china-is-doubling-down-on-its-digital-currency/

7. https://www.businessinsider.com/china-social-credit-system-punishments-and-rewards-explained-2018-4