Can governments benefit from blockchain, the underlying technology that supports the exotic-sounding cryptocurrencies like Bitcoin?
Although blockchain is still evolving, and a significant amount of understanding still needs to occur as it develops, the technology can offer governments a number of benefits when it comes to fulfilling their missions. These benefits include trust, transparency, and greater security.
On a recent episode of Government Matters TV, I described some of the ways governments can apply blockchain to their programs. The jumping off point of our discussion was a recent announcement that the Department of the Treasury was running a blockchain pilot program to see if the technology could help their mission.
Blockchain is a distributed ledger, or decentralized database, that tracks and records transactions on a chain. As these transactions occur, they are validated, added to the chain, and then distributed among the network participants in the database. Blockchain’s cryptography makes each transaction immutable: Each transaction is tied to the previous transaction, but no one can go back in the chain back and retroactively change a transaction. It is this cryptography that ensures each transaction is what it claims to be.
The features and characteristics of blockchain open up a number of opportunities for governments to offer more secure ways to provide citizen services like registering property titles, collecting taxes, and even voting.
As governments look to modernize their technology assets, officials should consider whether blockchain technology can be applied to any of their business processes. If yes, the first step should be a pilot program, like the one the Treasury department has just launched, since the technology is still relatively new.
And while blockchain’s cryptography and immutability offer a high level of security, the technology isn’t immune from cyber threats. As we explain in KPMG’s white paper, Securing the Chain, hackers can exploit even a small oversight in the chain’s design and perpetrate a significant breach. That’s why any application of blockchain must include a risk-management framework to ensure the implementation is secure and resilient.
You can view the whole Government Matters TV segment here.