Peter Loop is associate vice president and principal technology architect at Infosys, a next-generation IT services provider.
In this CoinDesk opinion piece, Loop discusses his company’s big-picture vision for the non-monetary applications of blockchain technology.
Blockchain’s ability to ensure trust and transparency in financial transactions and to establish smart contracts is well understood.
But its true potential goes well beyond the merely transactional. Because of its unique ability to secure trust between parties that don’t know, or even trust, one another, blockchain tech could be used to tackle some of the trickiest and most stubborn issues that exist in every society.
In fact, if designed well, blockchain could serve as a medium for civic participation in the 21st century, and as a mechanism of protection within fundamental democratic institutions by reducing corruption and fraud.
It’s possible that the public sector could be one of blockchain’s biggest beneficiaries.
Here are four potential opportunities in which blockchain could improve public processes:
Digital identities
Not everyone will agree a ‘digital identity’ is necessary or desirable.
Nonetheless, blockchain tech can prove a useful tool for the public sector by operating as a reliable means of identification.
Any modifications to a blockchain must conform to specific rules. Nodes, which are spread across the network, confirm these rules were met and that the two parties to the transaction can proceed. Once the transaction is complete, the public ledger is permanently updated with the transaction’s record incorporated through a hash – an unmodifiable string of data.
Applying this technology as a form of digital identification, while simple in theory, is a complex task. The best solution is to marry a person’s digital ID with biometric data. By linking this ID with a unique trait, such as an iris scan, one can confirm if a digital ID corresponds to a person’s hashed biometric information. There can be no two nodes with the same biometric information.
This could simplify a number of dealings between the citizen and institutions.
Personal data such as driver’s license information and medical records could be easily and securely shared. With blockchain, the more transactions using the information, the more secure it becomes.
Let’s say a student wants to transfer his or her transcripts to a graduate school. Normally, this would require the student’s undergrad college and the graduate school to communicate and share data through a complicated backend system.
With a blockchain, the student need only share his or her hashed information – the personal information generated during undergraduate college – for approval. The graduate school can then approve or deny candidacy based on the first school’s data and criteria.
Doing so also adds another block to the chain, improving the chain’s trustworthiness.
Taxes
Blockchain can also help cut down tax evasion and misallocation of tax funds, and radically transform tax transparency.
For example, smart contracts can ensure tax funds are only transferred after a detailed and approved grant is issued. The blockchain could also lock up tax funds so they’re only spent on what they’re allocated for.
Any transactions would be immediately verified and documented.
This benefits both the taxpayer and the tax collector: collectors can easily use the public ledger to confirm if a citizen (partially anonymized) has paid their taxes, while qualifying taxpayers can ensure only they receive their tax returns.
Not only would this drastically reduce instances of tax fraud, it would allow government auditors to monitor transactions and ensure collected taxes are allocated and spent appropriately.
Elections
Election fraud could be nearly eliminated by blockchain, simply because it removes the opportunity commit fraud in the first place. For this, we can again thank the fundamental nature of blockchain.
With a blockchain-based voting system in place, all a voter needs to do is cast their digital ballot. As ‘blocks’, the voter’s choices will go directly to their preferred candidate’s digital ledger, which would grow as a result.
The candidate with the larger blockchain with verified votes wins. There is no intermediary and the information needed to verify the authenticity of the voter is incorporated into the chain.
This removes almost any opportunity for a human to tamper with the voting system.
Political donations
Finally, there’s the always thorny issue of money in politics.
Political funding has always inspired debate, and there seems to be no single system that will satisfy all citizens, political parties or candidates. Blockchain technology won’t end that. It could, however, provide clarity into political donations from a wide network of people – no matter how small the donation.
When regulations exist that require limits on funding by a single individual or organization, loopholes may still be abused, such as donating in smaller amounts repeatedly.
The blockchain could put an end to this in a peer-to-peer network, as it contains all the information relevant to a donation, no matter the amount. Everyone is clearly identified and all transactions appear on the ledger. This system could be augmented with smart contracts prohibiting certain organizations or people from issuing donations after a pre-determined limit is reached.
Potential issues
There is, however, a caveat to these theoretical scenarios: following a token through the blockchain once it’s traded is not yet possible due to blockchain’s use of cryptographic hashes. Developing a method to track traded data over blockchains is an area of opportunity for those in the community – and a necessary requirement for some of the above scenarios.
To be certain, there is no such thing as a fool-proof system. Any implementation of blockchain in any of these settings will need thorough vetting. They will still need to be monitored for abuse, and weaknesses in their design will need to be addressed as they pop up.
But these potential shortcomings are dwarfed by the potential for blockchain to improve how these processes currently function.
Voting image via Shutterstock