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July 20, 2017
Blockchain implementation in the public sector
By: Victoria Thorpe

Over the past few years blockchain technology has been catapulted from relative obscurity to top the IT agendas of a wide range of organisations. This includes in the public sector, where interest in blockchain implementation increases by the day; driven both by government departments and industry start-ups. As a result, there’s already a wide range of visionary use cases for blockchain in the public sector. A number of these implementations have reached an advanced state. Estonia, for example, is using blockchain partnerships to develop new e-services, while Dubai’s government plans to provide all public services via blockchain by 2020.

The appeal of blockchain in the public sector comes from the fact it’s a distributed ledger technology. This means that unlike in traditional approaches, data isn’t stored in one central database; instead, it’s encrypted across a distributed network. When new transactions are recorded on the ledger, the blockchain technology validates the transactions and provides consensus across the network against a set of pre-defined rules. The blockchain ledger thereby stores a transparent and an immutable record of all transactions.

Blockchain's characteristics make it an attractive solution to help address some of the challenges faced by public service agencies, including:

  • Reducing inefficiency: By making transaction processing simpler and less prone to errors, blockchain presents a significant opportunity for public sector organisations to replace paper-based services with digital alternatives; or where the service is already digitised, to provide a simpler service. This is particularly true where blockchain implementations can support automated and AI solutions.

  • Ensuring data integrity: Blockchain is immutable, meaning it can’t be altered or removed. This characteristic means blockchain is ideally suited to creating clear audit trails, which prevents tampering and enables a more private network.

  • Reducing risk: Blockchain's cryptographic encryption provides an opportunity to help reduce instances of fraud, increase compliance and address corruption. Implementations could include, for example, the allocation of social security benefits, the management of some tax processes and the management of land registries. 

So why isn't blockchain being implemented more widely?

There seem to be two barriers holding back the more widespread implementation of blockchain:

  1. The development of legislative and regulatory structures to provide the appropriate frameworks and standards to match to traditional technology implementations.

  2. The skills and resources required to support blockchain projects and implementations.

While there’s a growing number of start-ups working with blockchain, and some interest across industry and the private sector, expertise in the technology remains minimal. This is starting to change (some universities, for example, are adding blockchain to their core curriculum), but it’s likely to be some time until there is a strong pool of talent trained in blockchain.

What should the public sector do?

The UK’s public sector continues to face some of the biggest challenges in its history, including the ever-increasing pressure on the NHS and social care services, and not forgetting the many complexities of Brexit. There’s a good opportunity here for public sector agencies to embrace blockchain implementations to find new ways to address these challenges, to support their workforce and to increase the value of the services delivered to citizens. For policy makers, this means establishing the appropriate policy frameworks and collaborating with industry to establish structures that support blockchain solutions. And, for the technology industry, this will mean providing expertise to identify the right use cases and supporting IT strategy development and implementations.

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