Understanding Blockchain for Government

Blockchain offers a number of benefits for the public sector. Get started efficiently with Kaleido's blockchain and digital asset platform.

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Benefits of Blockchain for Government

Accountability, stability, and undisputed record keeping. The aims of a government and the blockchain are aligned. This makes powering a digital government with blockchain an attractive idea. Most public sector institutions want to cut waste, eliminate fraud, and increase transparency.

The charitable applications are clear too. Imagine a nonprofit that can cut overhead, accurately raise and distribute money, and automatically generate appropriate tax statements for donors. Also, a distributed ledger makes it nearly impossible for bad actors to bring down systems. With no single points of failure, the technology acts as a notary on all transactions, votes, and announcements—securing the paperless push.

Of course, it’s easier said than done. Enterprise development in a matrixed organization requires a partner who can help you quickly prove concepts and navigate diverse stakeholders. As we look at the benefits of blockchain for government and relevant use cases, we’ll also talk about mitigating challenges along the way.

Increase Trust

Governments around the world hold enormous amounts of data—voting records, tax information, and property details. Securing data and protecting against cyber hacks is one of the core values of blockchain technology. But security isn’t enough. Transactions occur and records change. The blockchain allows governments to create irrefutable logs all parties can trust.

Reduce Risk

The ability to verify transactions, track funds, and create a single source of truth is driving the public sector toward blockchain technology to cut waste and stop corruption. Decentralization also removes single points of failure and makes it harder for bad actors to obtain valuable information or interrupt valuable services.

Increase Auditability

Spending money with accountability is a classic challenge that governments face. One study found a third of government assets were tied to federal entities unable to issue audited statements. This lack of accountability leads to misuse of funds. The distributed ledger creates a public record that is traceable and transparent.

Cut Overhead

The U.S. government, according to the Center on Budget and Policy Priorities, spends $18.4 billion annually on administrative costs. Some charitable organizations spend as much as 35 percent of funds on administration. What public good is possible if less money is spent on the maintenance of files and more on real programs? With blockchain, the public sector gains irrefutable traceability and removes human error.

Government Use Cases

A distributed ledger can help governments manage payments, deeds and transactions, personal data, and more. It offers a new way to maintain records and build trust with the public. Next, we’re going to dive a little deeper into some specific use cases.

Public Health & Safety

We’ve talked about the benefits of blockchain in healthcare and how it can help modernize supply chains. These same principles apply to public health. Imagine more efficient aid distribution, digital birth certificates and vaccination records, and undisputed voter registries. Blockchain technology is a tool that can help build trust via consensus, then efficiently deliver immutable information to citizens.

Tax & Customs

Blockchain-powered tax documents give authorities and collectors a shared source of truth, while citizens get a simply accessible log of their financial history. How many fraudsters might the government foil if rebates always landed in the correct account? In one year alone, the government sent $30 billion dollars in rebates to scammers—then deployed agents to reclaim every wrong check. Ledgered payments create accountability—accountability that in a globalized world works across borders and along generations.

Education

Much like with health records, the blockchain allows students to own and transfer personal records between institutions, maintaining their academic identity. Similarly, the qualifications of a teacher, established and verified by a board in one state, can be shared across systems. Grants and loans may be accurately allocated, then monitored and made accountable, as a distributed ledger brings traceability to our school systems.

Transactions & Payments

Proof of ownership is a key function of government. Deeds, documentation, and historical transactions used to be paper artifacts. Digital copies are easier to store, but introduce points of failure. Moving proof of ownership and financial transactions to the blockchain allows a local government to create and share vital records with discretion. Unemployment benefits distributed via the blockchain may eliminate waste and abuse. Patents can be issued and shared. The list goes on.
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Challenges Facing the Public Sector

Imagine a world where every public institution acted with transparency, accountability, and never lost a dollar of taxpayer money to fraud, waste, or human error. What sounds like some utopian dream is the full potential of a blockchain-powered digital government that mitigates challenges of financial oversight, verified identities, and common truth.

Simple, right?

The truth is blockchain development can be hard. In the public sector, with multiple stakeholders and a public to educate about any new initiative, technology can be a barrier as much as it’s a solution. There are skill sets to hire, approvals to navigate, and by the time a web product is live (maybe years down the road) the core tech has evolved away from your use case.

That’s where Kaleido comes in. Our blockchain infrastructure and modular services help governments stand up concepts early. This means more time is spent on education and iteration—creating faster feedback cycles with citizen users.

If you’re ready to talk to an expert about how blockchain can apply to your problem, review the product summary below and reach out!

Why the Public Sector Chooses Kaleido

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FAQs

How can blockchain be used in government?

A government can use blockchain technology to protect sensitive information, reduce costs, and build trust with citizens. The idea of a shared truth is the key here. It may relate to policy, financial transactions, or simple record keeping, but a distributed ledger becomes a source of irrefutable truth and notarizes all changes to this common knowledge.

Who should use blockchain in government?

Law enforcement, health officials, county officials—the applications of blockchain for government are endless. The key becomes stakeholder buy-in. How can an obvious use case be developed, tested, and shared in a way that gains approval in complex organizations? The answer is often quickly designed applications that can be shared within an agency.

Can blockchain replace the government?

There are blockchain evangelists on the web espousing a corruption-free society that lives exclusively on-chain. The truth is, the immediate applications of blockchain for the government are more tactical. The blockchain will digitally transform how we keep records, submit our taxes, and fight corruption. It can make public money more accountable and voting results clear and indisputable. While we can still aim for a world without politicians, what we really need is institutional support for all these real-world applications.

How can blockchain stop corruption?

An IRS probe found nearly $2 billion in funds were lost, stolen, or misspent during the government efforts to assist with the coronavirus pandemic. Would this happen if funds were distributed via blockchain? Verified identities tied to traceable transactions will one day make it easier to eliminate public fraud and waste.

How can blockchain improve elections and protect privacy?

Blockchain technology makes it possible to secure elections. With immutable record keeping, the government can ensure one vote per person. But what about privacy? A record can be created and encrypted off-chain then called on and verified by a simple API. This allows for proof of transaction without exposing vital information.