Early this month, Vermont’s governor gave blockchain a big push forward, formally asking a broad coalition of stakeholders to consider whether the technology could be used to help manage state records.
Blockchain is the “digital ledger” driving bitcoin, the emerging electronic currency. It’s a decentralized record, one that is transparent to all users: a chronological transaction log that cannot be altered.
Vermont’s foray into blockchain, while still in its investigative stage, may serve as notice to other states that the technology’s potential soon may be coming to fruition.
Where could blockchain make a difference in government operations? The most prominent example is in the area of land records, which must be kept for a long time, and must be sufficiently visible that anyone with an interest can track ownership of a piece of property. Those criteria are well suited to blockchain’s capabilities.
Some advocates say blockchain could be used to ensure social services are delivered and used as intended. Others speculate that a transparent, chronological ledger could establish a definitive chain in efforts to track patents and intellectual property.
Blockchain has so far been used most prominently to manage bitcoin’s complex behind-the-scenes recordkeeping. Advocates say the technology could likewise go a long way toward simplifying government recordkeeping, while simultaneously ensuring the accuracy of vital information.
“Governments keep public records, from basic things like title registries to birth certificates, death certificates, all sorts of licenses, and right now all these important records are trapped in big filing cabinets," said Aaron Wright, a fellow at the Coin Center, a policy research and advocacy group, as well as a professor at Cardozo Law School in New York.
Blockchain changes the paradigm of security in recordkeeping. Right now a typical arrangement allots security responsibilities to a single entity: an IT shop’s security guru, or an outsourced provider managing security in the cloud, for example. Blockchain offers a different vision, with security assured through the fundamentally open nature of the ledger. The chain is transparent. If anyone were to try to alter or corrupt the flow of information, everyone else would know.
So security is one aspect of the blockchain that advocates say would come as a boon to government. Others look to the technology as a potential way to dramatically reduce the cost of government’s bureaucratic overhead.
“The government keeps a lot of records, so there are gigantic administrative and audit costs associated with any aspect of the system,” Haight said. “This may be an opportunity to reduce those transaction costs across all levels of government.”