Ten years ago, one of the worst financial crises in modern history led to a breakdown of the global financial system. The crisis showed that records and transaction ledgers sourced from a single central party like the banking industry can be manipulated, with dire consequences.
Fast forward to 2018, a digital age when innovations around cryptocurrency, Big Data, and artificial intelligence are challenging traditional business models. Among the array of disruptive technologies existing today, blockchain stands out because it facilitates a new type of interaction that drives transparency in transactions.
Blockchain technology allows for multiple-entry bookkeeping in a system that requires consensus among parties to validate each transaction. Every record is verified, encrypted, and stored permanently to ensure its immutability.
By design, blockchain is maintained by a host of different computer nodes independent from each other, but in agreement about every transactions. In the absence of a gatekeeper, blockchain inspires enough confidence for people to trust the data presented in a chain of encrypted records and distributed across a network.
The bedrock of blockchain is decentralization: control is democratized and trust is distributed. There is such tremendous interest on this technology’s potential that there now seems to be a blockchain for everything – from trading markets to supply chain management.
So, how can this technology be also applied to renew trust in government transactions? In fact, it is already happening.
Banks are testing pilots for blockchain-enabled authentication of bank records and secure data sharing. Government financial institutions are setting up trading links for commodities and stock markets that sit in blockchain technology. Recently, the Monetary Authority of Singapore and the Hong Kong Monetary Authority announced a strategic “proof-of-concept” project for the development of a cross-border platform for trade finance using distributed ledger technology.
Using blockchain in government services is an increasingly feasible way of enhancing bonds of trust with the public.
In Fiji, ADB is supporting the iTaukei Land Trust Board (TLTB) to explore a blockchain pilot for land records management. It’s an ambitious vision, given that the agency has just started to digitize its paper-based native lands records in a digital push partly triggered by ADB’s technical assistance on smart systems.
Using the classic “start small, think big” approach to building smart cities, ADB is helping TLTB ease into digital transformation and leapfrog into high-level technologies. By the end of this year, a prototype for a blockchain-ready digital land registry will have been developed, which TLTB can apply to a pilot area in Tailevu Province within the Greater Suva Area.
A blockchain platform for land registry would help to harmonize government records and diminish the risk of fraud.
Adoption of this nascent technology is becoming more widespread. Other countries developing blockchain-based solutions for their digital land registry include Brazil, Canada, Georgia, Ghana, Honduras, India, Japan, the Netherlands, Russia, Sweden, Ukraine, and the US.
Another benefit for blockchain-enabled land registry is the automation of manual processes, accelerating processing times for transactions.
Blockchain is paving the way for smart contracts in which pre-set rules for land transaction deals are coded online. As long as the data provided by both buyer and seller meets the terms of the contract already embedded in the blockchain, the deal is automatically approved.
In Sweden, for example, property transactions can now be completed entirely electronically. A deal between buyers and sellers can go through within a matter of hours; the smart contract of the transaction is automatically recorded, and then distributed on the blockchain network.
Many other decentralized applications will certainly emerge from blockchain infrastructure. Worldwide spending on blockchain solutions is forecast to reach $2.1 billion this year, more than double the $945 million spent in 2017, according to estimates from the International Data Corporation.
It’s still too early to say whether moving government services to a decentralized platform will really pay off, considering that technology is only a means and just as fallible as the people who control it. But the early signs are promising.
If the technology continues to evolve at present pace, blockchain could play a key role in eliminating mistrust in public records and government transactions. Using the best available technology to renew public trust in this increasingly digital world could accelerate growth and inclusiveness – the hallmark of smart development.