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Blockchain E-Government

Introduction

The state sector is a complex centralized system, very slow to react and actively resisting any change. The development level of this system defines the state regulation efficiency and the ability to adequately provide services to citizens and business.

The fragmentation of organizational structures of the state machine makes it difficult for departments to exchange information and increases the number of intermediaries between a citizen and the state. Governments are reforming public service system by integrating departments into a common system, developing and implementing various technical solutions aimed at facilitating the state-citizen communication. Blockchain platform Credits offers a fundamentally new approach with a high capacity to be implemented in e-government.

E-government Model

Today, an e-government system that exists in a number of countries mainly  represents a tool for services to citizens and business through web portals. To implement a common digital ecosystem there needs to be a register of services, a register of citizens, a mechanism of citizen identification and the system of payments for services.

The existing e-government technology is immense by scale security requirements, but trivial in by architecture: it is a huge centrally managed database and a set of applications that connect it to web interfaces. Thus, despite the modernization of  services, the fragmentation of the state machine, the large number of intermediaries, bureaucracy, and the lack of transparency remain.

Blockchain-based model

The technological paradigm of blockchain involves a public and safe storage and transmission of data. Data can be transmitted without a common centre and intermediaries but with a guarantee that parties will fulfill their obligations; data will have a programmable value as well. This is possible with the use of cryptocurrency tools and smart contracts. State document flow, the registration of companies, e-voting, public procurement, and auctions are the areas in need of reducing costs related to data exchange and unification into a common storage system. Today, many projects offer their solutions aimed at the management optimization.

E-voting:  Follow My Vote develops a platform for online voting based on blockchain technology that uses elliptic curve cryptography to ensure the accuracy and reliability results.

Civil administration:  Borderless develops a platform designed to ensure the access to legal and economic services on the basis of smart contracts.

Public procurement and auctions: e-Auction 3.0 presents itself as a service that can replace officials with blockchain. It displays the conditions, the process and the results of the auctions for the lease and sale of state property.

The blockchain technology is capable of solving the problems of security, harmonization and reconciliation of data for the state management system. A distributed ledger is a unique tool for the improvement of transparency of the budgetary process and the reduction of corruption factors. A human error is excluded as the history of transactions within the system is publicly accessible, and the system operates within the approved terms of smart contracts the performance of which serves as a basis for operations.

Credits as a basis e-government

Credits platform can provide the necessary tools to ensure blockchain-based communication between citizens and the state. All operations can be carried out using smart contracts and CS currency.

Tools for implementation:

Credits developers offer a comprehensive system with an option of creating a blockchain-based applications with self-executing smart contracts, which will be able to optimize various fields of state management, from land register to electronic voting and services. The process of interaction between citizens, business and government will not involve intermediaries will excludes data leakage and human error.

Credits platform currency (CS) can be used, for example, to conduct real estate transactions, transactions with public budget etc.

Credits is the most secure environment for the processing and transmission of data. Failure-proof and fast system which implements a unique algorithm of consensus - a combination of DPoS and BFT and advanced data encryption algorithms. All transactions are recorded in the common ledger and are available upon request. Technology implemented on the platform allows to achieve excellent network performance with the highest safety requirements, which distinguishes Credits from other projects.

Blockchain Advantages for E-government

The blockchain technology implements an immutable data storage model, which is an important advantage in the development of e-government compared to standard databases – such an approach protects data from possible fraud. That is, having recorded information about citizens, companies, property rights etc. into the state blockchain registers, it will be almost impossible to change it. Therefore, it will be possible to use information from such registers as standard legal documents as far as a record in a distributed ledger has a high level of reliability and is publicly available.

The main advantage of the blockchain technology for building e-government is the use of smart contracts. Since a distributed ledger contains legally valid information, a lot of mechanisms and procedures of interaction between citizens and the state can be implemented through smart contract. The source code eliminates the risk of unauthorized changes and ensures the uniqueness of the execution of the contract algorithm at any time and at any node of the network.

An important function of the state is keeping accurate data about individuals, organizations, assets and activities. The blockchain technology based on the principle of a chain of data blocks linked with the hash sum of the previous block as well as advanced encryption algorithms makes the distributed ledger the safest and the most convenient medium for storing and transferring data. While cryptocurrency tools and smart contracts will reduce the corruption of the state machine and the number of intermediaries between citizens and the state. Blockchain makes any transaction transparent and accessible for anyone's view.

Blockchain introduction to the public sector: requirements and restrictions

Blockchain can be used as a basis for e-government only provided some requirements will be fulfilled and some limits respected. Today, the lack of legal clarity is one of the factors that impedes on the fulfillment of the potential of the technology in the state management. Organisations dealing with legislative regulation are already being set up (e.g. RACIB). The way such organisations implement the legal basis will to a large extent define the adoption of the blockchain for the purposes of state regulation.

The digital ecosystem efficiency depends directly on the accuracy of filling in the ledgers. In case data are recorded in the state blockchain register, the technology guarantees their unchangeability but not accuracy. Therefore, the transition of the government to the blockchain platform needs a legally controlled process of translating citizens' data into a distributed ledger.

It is also necessary to study the mechanism of managing access rights to ledgers and contracts. Within the digital ecosystem of e-government, access rights should be provided not to network nodes and users, but smart contracts.

 

Global Practice

Blockchain development prospects in public sector depend directly on the interest of the first persons in this technology. In spite of static character of government administration mechanisms, governments in many countries are starting to implement blockchain technology into the public sector:

  • Nasdaq Exchange has implemented a voting system for company shareholders based on the blockchain technology;
  • Pillsbury Winthrop Shaw Pittman LLP is developing a system that will be transferring the mechanism for company registration and stock movement monitoring into the digital environment;
  • A national strategy for transferring document flow to a blockchain protocol has been approved;
  • Distributed ledger for land right registering Initiative was initially focused on fighting corruption in the industry.

Blockchain technology is also being actively implemented into health and land register areas in many European countries.

Conclusion

Implementation of the blockchain technology is a perspective trend in building an e-government. CREDITS can provide the functionality for creating a convenient and safe communication channel between the public sector and citizens. Technologies implemented on the platform are able to provide the most safe and convenient environment for data storage, processing and transfer. Using the tools of the distributed ledger, smart contracts and crypto-currencies will significantly reduce bureaucracy, exclude hard copy paperwork, minimize transaction costs, fully control officials and fight corruption. A unified ecosystem will increase the degree of citizens’ trust in their government.

 

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