October 28, 2015 | Written by: John Palfreyman
Categorized: Tax & Revenue Management
There is much hype around Blockchain. Most of this is about the use of Blockchain to underpin the Bitcoin crypto currency. Whilst IBM are not interested in Crypto currency, we are very interested in exploring the broader application of Blockchain technology. This touches most all industries – and Government.
WHAT . . . is Blockchain?
Business – and Governments – never operate in isolation. They are participants in a business network. Ownership of assets – tangible (e.g. a car, a house) or intangible (bonds, intellectual property) pass across the network in return for payments, governed by contracts. Network participants keep their own ledger – recording all assets they own and updated on asset transfer. This process is very inefficient, often piling cost on cost and is far from fit for the needs of the twenty first century!
Figure 1 – Elements of Blockchain.
The novel Blockchain architecture gives participants the ability to share a ledger which is updated every time a transaction occurs through peer to peer replication. Cryptography is used to ensure that participants see only the parts of the ledger that are relevant to them, and that transactions are secure, authenticated and verifiable. Blockchain also allows the contract for asset transfer to be embedded in the transaction database for execution with the transaction. Network participants agree how transactions are verified through consensus or similar mechanisms. Government oversight, compliance & audit can be part of the same network.
WHY . . . Blockchain in Government?
Figure 2 – Industrial (& Government) Blockchain Benefits
The financial services sector are likely to be the early adopters of Blockchain, but the use cases for Government are most compelling. A couple of examples are:
Open Supply Chain – Dr Steiner in Business of Fashion says “Every physical object we buy comes with a story: a journey of people, places and materials. But these stories often remain hidden in sprawling, complex supply chains”. The European Union demands more information about corporate supply chains, with penalties for non-compliance. Consumers want to know where and how their products are made.
Blockchain could enable safe digital transfer of property across the end to end supply chain, offering transparency to the participants, end user and regulatory authorities.
Identity Management – otherwise referred to as resolving the “privacy paradox” between delivering effective identity management solutions cross government whilst mitigating citizen privacy concerns around “who can see what” in their identity information.
Blockchain could be used to store cryptographically signed components of a citizen’s proof of identity. Once validated by the appropriate Government body, the citizen could decide – at a component level – who in the network is able to access their proof of identity. Resiliency is achieved by the duplication of the “Proof of Identity” Blockchain across the network, which would include citizens, service providers (Government & private) and regulatory bodies.
IBM plans to advance open Blockchain technology in the same way that we have done for other open technologies including Linux, Java, Open Stack & Eclipse. We focus on the requirements arising from industry use cases, and do this together with other partners through an open source foundation.
We are also helping our customers explore then implement novel solutions that harness the power Blockchain technology – when it’s right so to do! We have developed an incremental, easy to access engagement approach which is based on our Design Thinking initiative.
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