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Blockchain for Digital Government ELISE European Location Interoperability Solutions for E-Government ISA2 Working Group on Geospatial Solutions 1Ispra , IT - 8 July 2019 Introduction 2 Objectives of the meeting • To exchange views on future ELISE activities till the end of ISA² Programme and beyond aas a part of the transition towards the Digital Europe Programme • To provide an overview of ongoing and recently started ELISE activities • To present in more details few studies recently concluded Agenda General Overview of ELISE ongoing and planned activities Discussion • Basis for a discussion is a Background document sent to the WG members prior the meeting Blockchain for Digital Government The JRC study for ISA2 on blockchain Blockchain has a great potential for governments, yet it is hyped and current implementations are scarce and immature ? What is blockchain and what are governments currently doing with this technology? ? What benefits does it bring for Digital Governments? ? What policy actions are needed to leverage its potential? What is blockchain technology? Intermediary Bank Government Corporation Platform Uncertainties about the John counterparty Sam High transaction costs What is blockchain technology? The Blockchain Registry A chain of ‘blocks’ containing transaction details The technological characteristics of blockchain introduce a unique set of benefits and innovative enablers Technological characteristics Benefits and enablers Transactions are secure and easily Transactions are recorded on a trackable. Ledger provides single distributed ledger which shares source of truth. Complex workflows content across multiple parties involving many parties and transactions can be automated smart contracts, shared database The irrevocable ledger cannot be Blockchain updates entries in an changed - this insures data integrity append-only way and links it to accuracy and auditability previous transactions notarisation Centralized parties are no longer Transactions are verified via a peer- needed to assure transaction validity to-peer consensus mechanism which - there is a change of power towards ensures a common truthful ledger the ecosystem (e.g. citizens) disintermediation JRC project for ISA2 Motivation Value added o Blockchain: o Build on empirical evidence – - Already in the mainstream landscape analysis - Overly hyped o Focus on costs and benefits o Use structured methodologies – o Research: horizontal case study analysis - Mostly speculative - Very little on public sector Objectives o What activities blockchain can serve for in the public sector? o What benefits does blockchain bring for governments and citizens? o Which blockchain services can be scaled-up? o What policy actions are needed to fully utilise these technologies? Case Studies Sample Blockchain-Based E-ID’s (Switzerland) Property Transactions in Blockchain (Sweden) Stadjerspas Smart Vouchers Exonum Land Title (The Netherlands) Registry (Georgia) Pension Infrastructure (The Netherlands) Academic Credential Verification using Blockchain (Malta) Infrachain Governance Framework (Luxembourg) In production In pilot phase Methodology Case Study assesment framework 1. Project characteristics 2. Functionalities • Analytical scope: o Case study analysis 3. Governance o Scale-up analysis 4. Usage o Policy actions 5. Technical architecture 6. Costs 7. Benefits Example 1 Proof of originality What governments can do with blockchain? Blockcerts Academic Credentials • Characterisation: o Blockchain technology used to receive and share individual records and prove their validity to third parties o Public permissioned blockchain serves as a permanent ledger which records lifelong learning achievements o The Blockcerts app provides a wallet where the citizen has full ownership of their records o The Maltese government is exploring the expansion of the current project to also include credentials for refugees Example 1 Proof of originality Blockcerts Academic Credentials • Qualitative benefits: o Ownership of complete records o Selective disclosure o Platform agonistic, open standard • Efficiency gains and savings: o Convenient storage and quick sharing o No hard copies o No payment to issuers for accessing and verification of credentials o No waiting time for verification by issuers o Third parties can individually verify each certification using mobile app or web interface • Inhibitors to deployment: o Legality of blockchain credentials o Legality of blockchain-based validation Source: Blockcerts.org Example 2: Smart contract automation What governments can do with blockchain? Chromaway Property Transactions • Characterisation: o End to end transaction facilitation with smart contracts o Based on private permissioned blockchain technology but easily integratable with legacy systems of ecosystem participants o Land registry and banks are directly involved into workflow Example 2 Smart contract automation Chromaway Property Transactions • Benefits: o Reduce transaction time of weeks to hours (by 95%) o Removing the uncertainty of a different party intervening in the transaction o Improved mortgage handling; increased liquidity of assets o Reduced transaction costs by 90% o Quicker transfer of the title o Increased trust in high value market Main findings #1 1. Ongoing projects experiment with a full spectrum of blockchain functionalities: notarisation, shared database and workflow automation. 2. Services leveraging blockchain notarization are relatively more mature, while more disruptive services still face challenges. 3. Projects with a higher level of maturity tend to have less stakeholder complexity and more centralized governance. 4. Blockchain-based services that are already in operation respond to the clear business needs. They also have active public actors and strong technological partners. 5. Blockchain implementations are predominantly based on open source software. Main findings #2 6. Private data is always stored off-chain. 7. Transaction throughput does not appear to be a major bottleneck. 8. Blockchain technology does not pose a threat of disintermediation of existing public institutions. 9. Blockchain-based designs generate specific cost items, yet overall deployment costs should not be higher than for centralised designs. 10. Blockchain-based services promise a range of benefits to the ecosystem: efficiency gains, transparency, reliability, elimination of hard copies, reduction of operating costs for administration Benefits of technology Project Quantitative benefits Qualitative benefits 1. Exonum Land 400 times faster registration of extract; Improved transparency; higher fault-tolerance; Title Registry reduction of operational costs (over 90%). increased reliability of data 2. Blockcerts Citizens' ownership of data, convenient storage; quick and selective sharing; identity and privacy Academic Lower operation cost; efficiency gains; protected; no hard copies; elimination of fake lower integration cost. Credentials certificates. 3. Chromaway Est. €100M/annum; reduced transaction Increased trust; higher liquidity of assets; time (over 95%); reduced transaction cost Property improved market operation; improved resilience (90%); faster registration and transfer of to record modification and fraud. Transactions land title. 4. Uport Lower administration cost; lower storage Decentralised cost; lower infrastructure cost; efficiency Citizens' ownership of data; reduced risk of gains for administration; efficiency gains cyberattacks. Identity for citizens. 5. Infrachain Increased reliability and resilience; increased Governance Not applicable. transparency and flexibility. Framework 6. Pension Est. €500M/annum; lower storage cost; efficiency gains for pension funds; Increased transparency; increased security of Infrastructure efficiency gains for administration; lower data; improved regulatory oversight. transaction costs for citizens. Lower administration cost; efficiency gains 7. Stadjerspas Effective redistribution; improved auditability of for administration; lower transaction costs public funds. Smart Vouchers for citizens. Scaling-up exploration #1 Factors of scaling potential: Options for scaling: Additional benefits & externalities Replication Economies of scale Coordinated implementation Tech maturity Assessment: • Contribution to the Priority for policy (DSM) scaling potential • Recommendation for Institutional and legal scaling compliance Scaling-up exploration #2 Two services for top-down implementation Conclusions • Blockchain has a clear potential for digital governments: Smart contracts and a shared ledger reduce red tape Blockchain-based services generate efficiency gains and reduce administration costs Increase in transparency, auditability and automation of administrative processes Blockchain-based services provide convenient interface and self-sovereignty Enlarge trust of citizens and companies in governmental processes and recordkeeping Conclusions But… blockchain has not yet demonstrated to be transformative innovation for governments as it is sometimes portrayed, for a number of reasons: Transformative Immature Conclusions Policy actions to enable innovation and utilize the potential of blockchain 4. EU 5. Use Case- 1. Guidance 2. Focused Blockchain Based and 3. Standards Pilot Connection Dedicated Knowledge Definition Development Building Infra- Sharing Blocks structures Expertise building Development of high Framing guidelines Creation of building Creating dedicated value pilots blocks that connect infrastructures for services using use case type blockchain Goal technologies
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