How Governments Can Unlock Blockchain’s Potential

Government CIOs must look beyond the hype and evaluate blockchain based on innovative and emerging real-life use cases.

Blockchain technology continues to be the subject of intense interest, especially for governments. However, while hype around blockchain is high, much of the technology remains immature and untested and best practices are hard to come by. Gartner’s survey of CIOs in government indicates that while 66% are interested in blockchain, only 20% have any action planned.

Fear of missing out on blockchain’s potential, at least in the very near term, is overblown. In fact, Gartner predicts that, through 2022, only 10% of organizations will achieve any radical transformation with the use of blockchain technologies.

Take time to explore blockchain in a structured and objective way, seeking out the use cases that are most relevant to you.

Gartner research director Rick Holgate believes much of the unfocused enthusiasm surrounding blockchain is symptomatic of a technology in search of a problem.

“Government CIOs transitioning to digital government and considering use of blockchain should look beyond the hype to the incentives for participation,” says Holgate. “Without a clear view of the motivation for blockchain adoption, a promising technical solution may well end up failing due to a lack of users.”

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Holgate has identified a number of promising and practical blockchain use cases that show evidence of broad government interest. They include:

Voting

Using blockchain for voting capabilities is of interest to many governments. Although few governments have used the technology for elections at a national level, Sierra Leone being the first, Ukraine conducted a few blockchain pilots for regional elections. And Brazil intends to conduct national referenda using blockchain-enabled voting.

Complex data (records)

Many governments have announced an intent to store and manage government records on blockchain. The U.S. states of Vermont and Delaware, as well as the city of Dubai, have shown some of the most visible and ambitious efforts on the use of blockchain for government records – primarily property ownership records but also utility bills and permits. The Republic of Georgia’s initiative with Bitfury is just one of several efforts aimed at creating blockchain-based land-registry services.

Connected identities

Blockchain-enabled identity and access management (IAM) applications introduce alternative methods to establish trust and resiliency with little reliance on centralized infrastructure. The U.S. Department of Homeland Security (DHS) has experimented with a digital identity network, effectively delivering a “single sign-on” experience.

Social/humanitarian assistance

Delivering services more effectively to poorly documented populations in need has been a global motivator for many governments. Projects include: the U.N. World Food Programme; the U.N. Development Program; the U.K. Department for Work and Pensions; and New York City’s Department of Homeless Services.

While many of these use cases are still nascent, they are the closest to demonstrating some level of maturity

In the latter two examples, GovCoin and Fummi Change Coin effectively offer a cryptocurrency for assistance. This is a way to accumulate and spend credits for social or humanitarian services, with the promise of more securely and reliably administering assistance and benefit programs while counteracting fraud, theft or loss.

Asset markets

Governments have shown interest in facilitating and encouraging exchange of non-monetary assets — including carbon credits and energy consumption or production —  as a way of achieving societal benefits, enabling and inspiring desired behaviors, or reducing friction.

Automated acquisition

The ability to derive process efficiency from automated acquisition involves the creative application of smart contracts in government. The U.S. General Services Administration (GSA) has announced acquisition proofs of concept using smart contracts to streamline simplified contracting activities.

Self-sovereign “wallets”

Software-based wallets allow users to create, store, exchange or manage transactions or data held in blockchain-based platforms. Early offerings seek to give individuals greater control over their data by removing or reducing the ability of authorities to limit or impede users’ access.

Cross-entity transaction efficiencies

Decentralized applications, or Dapps, are software applications that enable members of a peer-to-peer network to collaborate and transact. The U.S. Food and Drug Administration has conducted pilots that allow clinical trial medical records to be securely and efficiently exchanged with hospitals.

Cross-entity reconciliation

In large, federated government enterprises, consolidating and reconciling a single version of truth around finances, human resources or supplies can be daunting. Blockchain could be a more cost-effective alternative to more disruptive and intrusive technologies.

“Instead of getting caught up in the hype, take time to explore blockchain in a structured and objective way, seeking out the use cases that are most relevant to you,” Holgate advises. “While many of the use cases are still nascent, they are the closest to demonstrating some level of maturity and offer government CIOs a tangible opportunity to start small and scale up.”

Gartner clients can read more in “Promising, Practical Blockchain Use Cases for Governments” by Rick Holgate et al. Additional information on blockchain trends can be found in the Gartner Special Report “Blockchain-based Transformation.”  This collection of research highlights the scope of blockchain’s transformation, how it impacts various industries, and the current state and evolution of these technologies.

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