Around the world, various governments are experimenting with Blockchain technology. The classic use case is for public records, such as property titles (e.g., the Swedish Lantmäteriet), where the blockchain serves as a cryptographically secured bulletin board.
The general use case is to make these records easy (and cheap) to access via the Internet, while maintaining the integrity of the information. In the classic case of the land registry, the government agency performs its traditional role as authenticator, certifying the record, date, and identities of the parties and assets. Blockchain replaces (more likely duplicates) other forms of records, including databases. In principle, this could be really cheap and really reliable (assuming the records are correct to begin with).
Many governments are trying similar ideas, including my local government in Illinois. (Heaven protect us from these clowns! If anyone can mess up blockchain technology, it’s the Illinois state government.)
Amy Nordrum reports in IEEE Spectrum about the different approaches in Dubai and Illinois . Both jurisdictions are looking at a variety of uses, generally involving public record keeping. One big hope is that a blockchain can be a really fast and cheap way to publish these records, redusing both public expenditure and friction on commerce.
Nordrum calls attention to the different approaches. Dubai is building a single system (using Ethereum and Fabric from Hyperledger). Illinois is floating multiple pilots, and letting the projects select what technology to use. Illinois is in a “try anything” stage, and explicitly assumes that integration can be done later with no particular cost or problems. (Does Illinois have the remotest clue what it is doing?)
What impact are these innovations likely to have?
“Robert Charette, an expert in IT risk management, doubts blockchains will prove to be more effective than a simple cloud database in most cases. “It’s kind of like solving a problem that’s already been solved,” he argues.”
First of all, the imagined benefits are pretty unambitious. They are tackling easy problems (for example, land registries have been around since Babylonia, the Lantmäteriet itself is 390 years old), and the main goal is to reduce overhead from existing systems, which maintaining or improving “transparency”. Thus, as long as a blockchain based system at least ties the performance of conventional system, and costs less for all parties, it will be called a success.
On the other hand, the problems are not only already solved, they are scarcely a choke point in the economy or everyday life. Having a property deed appear on line in 30 minutes instead of 30 days matters little to most transactions. Sure, this will make property flipping a bit easier, but why do we care about that? Why do we really want to do that?
Much will depend on how the cost accounting is done. Most governments, and Illinois for sure, will be interested in the reduction of expenses for IT infrastructure. If a blockchain based system eliminates the need for leasing servers and IT support, that would be an important advantage.
Just how much will blockchain technology reduce IT requirements?
It’s hard to predict precisely. The blockchain itself replaces a networked database, e.g., running in a cloud. That’s a good thing, because public facing databases are a significant security risk and also quite costly. Blockchain technology also uses cryptographic signatures, which is a very good thing. Of course, you could use cryptography the same way in any system, but blockchain is a quick and easy way to get this technology deployed more widely.
On the other hand, the rest of the infrastructure will still need to exist. The blockchain records themselves would be used by lots of other software—that’s the whole point. There will have to be network forms and APIs for getting data in and out of the system, and these run on conventional infrastructure with concomitant risks and costs. In fact, if the blockchain is working well, users will not know that the blockchain is there—everything else will look the same as before.
It seems to me that the blockchain replaces one cloud database and concomitant APIs. This might actually be one part of a larger centralized system. Replacing the database will mean that at least some software will have to be replaced to use the blockchain.
Note that the agency still needs to do its non-digital work, such as certifying identities, verifying records, and so on. Publishing the results in only one part of their work, and frankly, it’s the easy part.
If, as seems likely, the organization needs to keep the database (e.g., for auditing and other internal activities, or simply out of caution), then the blockchain software is actually duplicating code, not replacing it. Worse, the parallel systems have to be kept in sync, which is extra code.
However cheap blockchain may be, the cost savings could be quite complicated to assess. I’m sure that politics will simplify the assessment, providing rosy assessments.
My own guess is that the blockchain solutions will no worse than what they replace. They may be better (e.g., because they have newer technology), though they could be worse (e.g., if quality control suffers).
But I guarantee you that the governor of Illinois will declare it a success no matter what.
- Amy Nordrum, Illinois vs. Dubai: Two Experiments Bring Blockchains to Government, in IEEE Spectrum – Features. 2017. https://spectrum.ieee.org/computing/networks/illinois-vs-dubai-two-experiments-bring-blockchains-to-government