Report Offers Options For Effectively Using Blockchain in Government

Among the many emerging technologies getting buzz, blockchain might be among the buzziest. Critics of the technology say it is more hype than substance, but a report from IDC offers eight examples of how governments are effectively using blockchain today.

During Oct. 11 testimony before the Senate Committee on Banking, Housing and Urban Affairs, New York University professor Nouriel Roubini called blockchain “the most over-hyped—and least useful—technology in human history.”

“In practice,” he said, the technology for creating a distributed, immutable ledger “is nothing better than a glorified spreadsheet or database.”

However, there are times when a glorified spreadsheet or database is exactly what is needed.

“Blockchain has the potential to disrupt current best practices for asset management, supply chain security and smart contracts,” according to Shawn McCarthy, research director for IDC Government Insights.

In the IDC report, McCarthy says smart contracts will be the first use to permeate federal agencies, with asset management and land registry “close behind.” Further down the line, he sees the potential to use blockchain to “solve international challenges such as e-voting and refugee identification.”

McCarthy looks to the refugee crisis for the first use case, citing a United Nations program called ID2020.

“In many countries, you can’t establish a bank account or find a full-time job without a proper government-issued ID,” something most refugees don’t have, he said.

At a refugee camp in Jordan, a nearby supermarket is using iris scan technology to connect to an international database. Purchases at the store are then logged—using blockchain—to create a transaction and credit history.

“Eventually, any government that may wish to grant citizenship to refugees can check such histories to find blockchain-supported evidence to help support their decisions,” McCarthy wrote.

For federal agency use cases, McCarthy points to the Health and Human Services Department, which is using blockchain in a number of ways. The IDC report highlights the HHS Accelerate program, which uses a distributed ledger to track acquisitions “with detailed, real-time information, including pricing and terms, on multiple types of purchases that take place across HHS.”

By using a blockchain system, the department will eventually be able to tie all of its acquisition activities together, enabling different components to compare pricing and service delivery, as well as automatically resolving chains for transactions that have broader effects.

“Blockchain is becoming a very powerful tool for software designers and systems integrators. But, as with any tool, it must be used in the correct way,” McCarthy said. “In reality, solutions built with a blockchain element are no better or worse than the people who design and use them. And the promise of blockchain will not be realized if systems integrators don’t tie them into larger agencywide business processes.”