90% of Government Organizations Plan to Invest in Blockchain by 2018, IBM Report Says

The number of challenges government agencies face range from budgetary pressures as a result of economic stagnation and aging populations to severely constrained resources that don’t allow free access and analysis of data.

The blockchain technology can cope with these tasks as it enables free and secure sharing of information between institutions and individuals. According to the new research Building Trust in Governments made by the IBM Institute for Business Value (IBV) in cooperation with the Economist Intelligence Unit, there are governmental organizations that already leverage blockchain to promote more extensive collaboration.

“Our research revealed that government organizations are looking at how blockchain technology can positively impact operations in a number of areas. For example, nine in ten government organizations plan to invest in blockchain for use in financial transaction management, asset management, contract management and regulatory compliance by 2018. And seven in ten government executives predict blockchain will significantly disrupt the area of contract management, which is often the intersection of the public and private sectors”, says the paper.

The IBV asked 200 government leaders in 16 countries about their experiences and expectations with blockchains for the research. About 14% of surveyed respondents plan to adopt blockchain this year. Here is a list of four key areas where blockchain can provide the best benefits:

Citizen services

There are processes, mostly routine, that still remain paper-based, costly and complex, with significant risks arising from errors and fraud. Blockchain can be useful in contract management, financial transaction management and regulatory compliance making transactions secure and simple, with 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.

Regulatory compliance

The research shows that nine in ten leaders are ready to use blockchains to reduce the time, cost and risks of enforcing regulatory compliance.

Governmental organizations in North America see this sphere as the most promising in terms of blockchain use. The technology enables an immutable and transparent audit trail that guarantees timeliness and holds down the costs of managing contracts and enforcing regulations.

Identity management

The problem of legal identity absence was revealed at United Nations conference last year. An estimated 1.5 billion persons worldwide have no legal identity or proof of birth. Thus, they can’t really participate in the economy as they simply don’t have a possibility to open a bank account, get own property or access government services.

Blockchains can establish and validate an individual’s identity when traditional proofs of identity are missing. The potential of blockchains is now studied by the U.S. Postal Service and the Department of Homeland Security to provide secure identity management.

Contract management

Blockchains could allow to see more clearly the reputation and reliability of a vendor as all failures to meet a deadline or complete a task will be more immediately visible.

Transparency in contract management can result in the improved performance management. For example, citizens could register problems — such as garbage that has not been picked up — on a blockchain platform, automatically notifying the garbage collector.

Governments can adopt blockchain to explore new business models for providing services to citizens beyond the limits of current technology. The smart use of the technology can improve the efficiencies of current services and provide a basis for new services.

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