Part 5 of the Evolving Government series with Dcode42
According to the Pew Institute, trust in government has been on a downward trend since the 1960s. In part, this decline can be attributed to increased transparency into the inner workings of government. While transparency in government is critical, we’ve pulled away the curtain and we are not happy with what we are seeing.
Accountability and quality are two important factors that must go hand in hand with transparency. Yet, this has not been the case. The Department of Defense has been unable to participate in Government Accountability Office financial audits for over 20 years because they cannot reconcile transactions or prepare consolidated financial statements. Meanwhile, between 2003 and 2011, the Army lost track of $5.8 billion of supplies. Or take the Office of Personnel Management data breach in 2015, when it allowed the personal information of over 21.5 million people to be stolen.
It is no surprise the public has grown disillusioned with government. Unfortunately, citizen trust in government is incredibly important to economic development and makes government decisions more effective. Trust increases compliance with tax systems and encourages corporations to continue to invest in future developments driving spending. In addition, it helps government to be able to recruit talented human capital.
We can see from the commercial world that trust through transparency and security will continue to be important to consumers and citizens. Millennials are demanding more and more transparency into the products and brands they are buying.
Can Blockchain improve trust?
Introducing blockchain solutions into the government may increase citizen trust in government by increasing transparency while also increasing accountability through better auditability and security. If the promise of distributed ledger bears true, it will allow for any transaction, transfer of ownership and payment to be completely trustable.
Auditability of all transactions on blockchain reduces fraud and allows for better tracking. All transactions are timestamped and widely available on blockchain. Take the Army waste example from earlier; blockchain could be a solution by increasing trust in supply chains. It would enable the Army to track the origin and increase the quality of production and distribution for goods as each part in the equipment can be easily traced.
For DOD budgeting, from appropriations to the soldier’s wallet, every transaction could be transparent and accounted for. Blockchain could enable the government to execute things that are currently out of reach given political arguments against it, such as electronic voting. The benefits are obvious, making it easier for citizens to vote and allow everyone to confirm their vote was cast and counted. Blockchain could allow each vote to be completely private and auditable.
Blockchain can increase trust through improving security. Since blockchain solutions are distributed with multiple instances and leverage public-key cryptography, it is very hard to hack these solutions. For example, Medicare and Medicaid programs have a multitude of personally identifiable information and are a high risk for bad actors looking to steal medical information. These medical records can be used to obtain prescriptions and controlled drugs for resale. Putting medical information onto blockchain would improve security and patient’s ability to own their information. The government has been experimenting with using sensors for everything from monitoring traffic on highways to ensuring that equipment does not need maintenance. As the Internet of Things becomes more pervasive, government will need a way to securely transfer the peer-to-peer data from one device to another. Blockchain can also be a solution for this by becoming a “ledger for everything.”
Blockchain has the potential to further pull away the curtain while maintaining accountability and in some cases improve quality of information and services. There is a positive feedback loop for trust in government. The more citizens trust government, the more they will be engaged. The more they are engaged, the more they will contribute to government and the value of government spending will go up.
To bring blockchain applications into government, Dcode42 is launching a Fintech and Blockchain program focused on supporting the public sector go-to-market for companies building fintech and blockchain products. The three month program selects six to 10 of the most promising companies in this space and prepares them to break into the market and change the way the government runs. Learn more about the program here.