Over recent months IBM has urged the government to consider the use of blockchain as a way of saving time, money and averting risk. IBM has stated that this technology needs to be seen as more than just the foundation for cryptocurrencies. IBM is amongst the growing number of companies offering Blockchain-as-a-Service (BaaS); a service that allows enterprises to pilot the technology without having to undergo huge capital expenditure in hardware and onsite development.
Blockchain has been labelled transformative. It has the potential to be used in numerous industries including, supply chain, financial services, healthcare and government. The US is currently the world leader in the development of blockchain. There have however been calls for more government efforts to promote and deploy this technology.
A current example is the Congressional Blockchain Caucus, launched in 2016. The Caucus is a platform for industry and government to come together to study and understand the implications of blockchain technology. This Caucus is working to collect information on blockchain projects that could have the potential to allow individuals to securely establish their identity, enable online payments- including tax payments- and revamp supply chains.
Government use of blockchain:
It has been argued that governments would benefit from using the technology to digitise documentation and make access to public services quicker and easier, whilst simultaneously saving time and money.
Estonia is an example of a country that has already adopted blockchain as part of its e-Estonia program. This program enables the payment of taxes online, digital ID, i-voting and also an electronic health records platform. The majority of bureaucratic processes in Estonia, with the exception of marriage and divorce, are completed online. This is reported to save Estonia approximately 2% of GDP a year.
There is a growing concern that cryptocurrency could be a threat to the global financial system, through unbridled speculation and unsecured borrowing by consumers looking to purchase the virtual money. The volatility of the cryptocurrency market has meant that may have called for tighter regulation. The overregulation of the blockchain industry has however been warned against. Whilst blockchain is the foundation of Bitcoin, this is not the sole application of this technology. Regulation should therefore be careful to not constrain the innovation and development potential surrounding blockchain.
In order for blockchain to fulfil its potential it must be open and based on non-proprietary technology. It is believed this will encourage the widespread industry adoption of the technology, by ensuring compatibility and interoperability.
More to do
As blockchain’s potential for industry change is still emerging there is a significant level of industry hype surrounding the technology. As a result, many firms are initiating projects using this technology without properly identifying a need for blockchain or accounting for the cost.
There are also still issues with blockchain that need to be fixed before this technology can be scaled out. The need for security is an on-going concern surrounding the use of blockchain. It is impossible to eliminate all people with malicious or sloppy actions. An enterprise blockchain network must therefore implement algorithms like crash and byzantine fault tolerance, which allow a network to continue to operate even in the presence of bad actors or carelessness.
Despite these issues, it has been argued that blockchain is ready for the government. Now the challenge remains to get the government ready for blockchain and adopt Blockchain-as-a-Service
For more information on Blockchain-as-a-Service check out some of our other blogs on blockchain.