Four Ways Blockchain Could Aid
By David Zaharchuk, Global Industry Research Leader, IBM Institute for
January 30, 2017
around the world are facing challenges that range from budgetary
pressures arising from economic stagnation to aging populations. Many
have severely constrained resources, including the ability to access and
analyze data to create greater economies.
By making it easier to securely share data between institutions and
individuals, blockchain technology could help relieve some of those
pressures. Our new blockchain study, Building Trust in Governments, by
the IBM Institute for Business Value (IBV) in conjunction with the
Economist Intelligence Unit, found that a number of governmental
organizations are embracing blockchain technology to promote more
The study surveyed 200 government leaders in 16 countries about their
experiences and expectations with blockchains. Nine out of 10
governmental organizations plan to invest in blockchain for use in
financial transaction management, asset management, contract management
and regulatory compliance by 2018. And seven out of 10 government
executives predict blockchain will significantly disrupt the area of
contract management, which is often at the intersection of the public
and private sector.
While virtually all governmental organizations surveyed intend to invest
in blockchain by 2018, we discovered a small group of pioneers that are
setting a fast pace and new direction with blockchains today.
These leaders, who make up 14 percent of our survey respondents, expect
to have blockchains in production and use this year. Together they
identified four areas where blockchain would provide the best benefits:
1. Citizen services: Despite modernization efforts, routine processes
such as contract management, financial transaction management and
regulatory compliance remain largely paper-based, costly and complex,
with significant risks arising from errors and fraud.
From voting to tax collection to land registration, many citizen
services are likely to be highly dependent on identity management and
unlikely to scale significantly without it. Because participants in a
transaction on blockchains have access to the same records, there is no
need for third-party intermediaries to validate transactions or verify
identities or ownership. Business licenses, property titles, vehicle
registrations and other records could all be shifted to blockchains.
2. Regulatory compliance: Nine in ten leaders believe blockchains can
reduce the time, cost and risks of enforcing regulatory compliance.
Governmental organizations in North America are particularly focused on
these applications. They ranked regulatory compliance number one in
terms of blockchain benefits. Blockchains establish an immutable and
transparent audit trail that assures timeliness and curbs the costs of
managing contracts and enforcing regulations.
3. Identity management: An estimated 1.5 billion persons worldwide have
no legal identity or proof of birth, according a United Nations
conference last year. Unable to open a bank account, own property or
access government services, many are shut out of full participation in
the economy and the creation of wealth, according to the website GovHack
Blockchains that securely compile, cross-reference and verify multiple
data sources, events and transactions could establish and validate an
individual’s identity when traditional proofs of identity are missing.
In the United States, the U.S. Postal Service and the Department of
Homeland Security are researching the potential for blockchains to
establish secure identity management.
4. Contract management: By using blockchains for contract management,
issues such as the failure of any party to meet a deadline or complete a
task, for example, could be more immediately visible. Over time, a
vendor’s history captured on blockchains could be used to validate its
reputation and trustworthiness.
derived from contract management on blockchains could improve
performance management. For example, in the area of waste management,
citizens and companies could register problems — such as garbage that
has not been picked up — on a blockchain platform, automatically
notifying the garbage collector.
In addition to enabling a more timely and efficient response to
problems, this process could establish a system that reliably tracks the
performance of vendors. Smart contracts could automatically penalize
subcontractors with a history of repeat offenses.
Governments will be able to use blockchains to explore new business
models for providing services to citizens beyond the limits of current
technology. These models can be used to improve the efficiencies of
current services, while expanding the ability to provide new services.