How governments around the world are using blockchain

Governments in the UK, US, Estonia, Switzerland, Georgia and others are using blockchain to improve public services and create new businesses

Blockchain is best known as the foundation for cyptocurrencies, but the distributed ledger technology can be used in an array of applications that are being explored by governments around the world.

We look at some of the administrations that have launched blockchain projects.

Read next: How can governments use blockchain to build better public services?

United Kingdom

United Kingdom

In July 2018, the UK's Food Standards Agency (FSA) completed a pilot using blockchain to track the distribution of meat in a cattle slaughterhouse. The FSA claimed the trial marked the first time that distributed ledger technology has been used as a regulatory tool to ensure compliance in the food sector.

A number of other government departments are also exploring the technology.

Defra is looking into how it could enhance food traceability, HM Land Registry is investigating if it could improve the land registration and property buy-sell process using the technology, and the Department of Work and Pensions is assessing if it could help benefit claimants to manage their money.

Margot James, the former minister for digital and the creative industries, has promised further trials.

"We are starting to make some investments from my department," James revealed at the Blockchain Live conference in October 2018. "We're investing over £10 million pounds through Innovate UK and our research councils to support Blockchain projects in diverse areas like energy, voting systems and charitable giving."

Simon McKinnon, chief digital officer at the DWP, discussed in September 2019 how his department has already started to outline some potential use cases for the distributed ledger technology.

“We've looked at it in terms of how we make payments and if it would enable a better way of transferring payments into the banking system,” McKinnon told Computerworld’s sister publication, Techworld.

“We've also looked at it in terms of whether there’s a way of better managing the provenance of data as it transfers between government departments, so that we can share data with a great deal more confidence. That way we’ll know that the data is current and relevant.”

At the same conference, chief digital, data and technology officer at the Home Office, Joanna Davinson, said “everyone is very excited about blockchain at the moment,” before adding wryly that “it’s going to solve all our border problems.”

Read next: How is the UK government using blockchain?

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Uganda

Blockchain is being used to verify the distribution of counterfeit drugs in Uganda, where more than 10 percent of the medicines are fake, according to the country's National Drug Authority. 

The Ugandan government is working with UK blockchain startup MediConnect on the project, which will attempt to track the journey of a drug across the supply chain and prevent counterfeits from reaching users.

Amazon rainforest, aerial view near Manaus, the capital of the Brazilian state of Amazonas

Brazil

The "Operation Car Wash" affair in Brazil has been described as the biggest corruption scandal in the history of the world, and is the cause of the controversial imprisonment of former president Luiz Inácio Lula da Silva.

The state of the Brazilian state of Bahi has responded by rolling out a blockchain application that will monitor the process of public bidding on contracts with the government, according to a report by Cointelegraph Brazil. The "Online Bid Solution" (SOL) is designed to ensure secure and transparent deals between local agricultural associations and cooperatives secure and suppliers and workers across the country and is funded by a loan from the World Bank.

Singapore skyline at sunset
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Singapore

Singapore is testing a system that can tokenise the country's national currency across different blockchain platforms.

The trial is being conducted as part of Project Ubin, a collaboration between financial regulator Monetary Authority of Singapore (MAS) and a consortium of banks and technology companies in the island city-state. Together, they aim to create a blockchain-based payment system that can be used to exchange currencies quickly, affordably and without the need for intermediaries.

China

China

China has been embracing blockchain while spurning cryptocurrencies.

The country's efforts to become a blockchain powerhouse harness the power of public-private partnerships. Examples include Alibaba's work with the city of Changzhou to secure healthcare data over a blockchain and Tencent building a blockchain logistics platform with the China Federation of Logistics & Purchasing.

In February 2019, federal regulations for blockchain service providers were introduced to prevent them bypassing internet censorship rules, but many of the policies have been devolved to local administrations.

According to the China Internet Report, the cities of Shanghai, Shanxi, Henan, Guangzhou, Guiyang and Hangzhou have all issued programmes to encourage blockchain development, while Xiongan New Area is being developed into a blockchain innovation hub.

Cryptocurrency businesses have not received the same support. China was becoming a leader in crypto mining until the government banned cryptocurrency exchanges and initial coin offerings (ICOs) in September 2017, sparking a crackdown that led a number of digital currency businesses to relocate.

The next year, all financial institutions were ordered to stop funding anything related to cryptocurrencies and all overseas websites relating to cyptocurrency trading and ICOs were blocked.

Isle of Man

Isle of Man

The Isle of Man is promoting itself as a global hub for blockchain and has rolled out a series of schemes to attract businesses using the technology to the island.

In February 2019, the British Crown dependency announced the formation of a Blockchain Office and the Blockchain Sandbox to guide blockchain businesses through regulatory landscapes.

The Blockchain Office will facilitate dialogue between businesses and regulators, help companies design their concepts in accordance with relevant legislation and regulation, and provide businesses with expertise, guidance, and marketing support.

The Blockchain Sandbox will provide successful applicants with an environment in which they can develop and test their platforms.

The island is also using blockchain to protect its thriving e-gaming sector from fraud. In August 2017, it granted the world's first reputable licence for a blockchain lottery to gambling company Qanta, which will operate a system built on Ethereum technology. The lottery will be drawn using a decentralised number generator. Tickets will be sold through smart contracts and prizes paid out in cryptocurency

Brian Donegan, head of e-business operations for the Isle of Man Government, told Computerworld UK that blockchain will reduce the risk of fraud in the sector.

"The immutability and the censorship resistance that is offered by blockchain technology is such that we can use blockchain to keep crime out and protect the consumer," he said.

Venezuela

Venezuela

Venezuela has turned to blockchain to revive the country's collapsing economy.

In October 2018, Venezuelan President Nicolas Maduro launched the Petro, the world's first digital currency issued by a federal government. The objective is to provide an alternative to the country's revamped currency, the Bolivar Sobernao, curb the black market and circumvent sanctions on financial transactions.

The government claims that the Petro is backed by the country's iron, diamond, gold and enormous oil resources, which could reduce the excessive money printing that has devalued the fiat currency. The value of the Bolivar Sobernao will be pegged to the Petro.

A government white paper revealed that the Petro uses the X11 Proof-of-Work (PoW) mining algorithm, the same function used by open source cryptocurrency Dash. Ethereum developer Joey Zhou tweeted that the system is "a blatant Dash clone", pointing to an image in the white paper that is an exact replica of one in Dash's Github repository.

Venezuelans are already among the world's most crypto-savvy citizens, with many converting their savings into bitcoin to preserve their value through the country's soaring hyperinflation, but have been slow to embrace the Petro. Critics claim that the initiative is a fundraising stunt and an attempt to illegally borrow money against the country's oil reserves.

To boost the uptake of the Petro, all government institutions have been ordered to accept the cryptocurrency. Venezuelan passports must be paid for in Petros and Maduro plans to introduce the token for oil sales in 2019.

The European Union

The European Union

The European Union Intellectual Property Office (EUIPO) is investigating how blockchain could combat counterfeiting, which costs the EU €60 billion (£53.5 billion) each year according to the agency's research.

In June, the EUIPO and the European Commision organised a "Blockathon" competition in Brussels, where 11 teams of coders created a series of anti-counterfeiting blockchain solutions, drawing on support from specialists in law, IP and anti-counterfeiting.

Team Cryptomice won the overall prize for creating a "virtual twin" that cannot be copied and is sent to consumers for verification before they receive the connected physical product, which is registered on a blockchain.

EUIPO spokesperson and former IP lawyer Luis Berenguer Giménez told Computerworld UK that the agency was now in negotiations with private sector companies to turn the ideas into working products.

"The overall objective is to have a good app or product based on blockchain that can stop or at least diminish the amount of counterfeited products that we have nowadays in the EU," he said.

Estonia

Estonia

Blockchain provides the backbone of the renowned e-Estonia programme, which connects government services in a single digital platform. The project integrates a vast quantity of sensitive data from healthcare, the judiciary, legislature, security and commercial code registries, which are stored on a blockchain ledger to protect them from corruption and misuse.

Estonia began testing distributed ledger technology in 2008, before the Bitcoin white paper that first coined the term "blockchain" had been published. Estonia dubbed the technology "hash-linked time-stamping" at the time.

The Baltic state went on to develop a blockchain technology called KSI, which secures the country's networks, systems and data. The KSI system provides a formally verifiable security system for the government that can function even under constant cyber-attack, and is now available in more than 180 countries.

USA

USA

The USA is exploring a number of distributed ledger applications. In January 2017, the Food and Drug Administration (FDA) announced it had signed a two-year joint-development agreement with IBM Watson Health to explore using blockchain to securely share patient data. The collaboration aims to address the lack of transparency and security in health data processing and began with a trial on oncology-related data.

Then, in June 2018, the Trump government announced a very different blockchain trial. The Department of Homeland Security (DHS) awarded a grant of $192,380 to a startup called Factom to test the capability of blockchain to protect data collected by Border Patrol cameras and sensors.

Denmark

Denmark

In 2014, the Liberal Alliance became the first major political party in the world to vote using blockchain technology.

The party currently forms part of a three-party coalition government in Denmark, and continues to use blockchain to power the internal election it holds at its annual meeting in a suburb of Copenhagen.

Dubai

Dubai

By 2020, Dubai wants to become the first government in the world to conduct all of its transactions using blockchain.

The emirate estimates that adding visa applications, bill payments, license renewals and other documents to a blockchain could save 5.5 billion dirham (£1.1 billion) annually in document processing alone. It could also cut CO2 emissions by up to 114 MTons due to trip reductions and redistribute up to 25.1 million hours of economic productivity.

Switzerland

Switzerland

The Swiss city of Zug is one of Europe's leading supporters of blockchain. Zug already accepts cryptocurrency as payment for public services, has digitised ID registrations built on the blockchain, and recently completed an e-voting trial.

Zug partnered with Lucerne University of Applied Sciences and software company Luxoft to create the customisable blockchain-based e-Vote system, which is integrated with Zug’s Ethereum-based digital ID registration application. Votes are anonymised and tamper-proof, and the system is deployed in three different data centres, which distributes security and data loss risks geographically.

Luxoft will open source the platform and is establishing a Blockchain for Government Alliance to promote blockchain use cases in public institutions.

Georgia

Georgia

Georgia's government has experimented with blockchain in a land registry project developed with the Bitfury Group, dubbed the National Agency of Public Registry (NAPR).

"The Bitfury Group and NAPR implemented a custom-designed blockchain system that is now integrated into the digital records system of NAPR," Willem-Jan Bruin, the director for Western European blockchain-based solutions at BitFury Group, told Computerworld UK.

"This private, permissioned blockchain is anchored to the Bitcoin blockchain through a distributed digital timestamping service. Distributed digital timestamping allows NAPR to verify and sign a document containing a citizen's essential information and proof of ownership of property.

"The importance and disruptive potential of the project lies in its ability to make land titles - and, in general, property rights - available to billions of people who are currently unable to legally register their property. Blockchain technology also permits significant time and cost savings in the registration process. Therefore, the blockchain land-titling project could have a big global impact beyond Georgia."

Gibraltar

Gibraltar

Gibraltar launched Europe's first regulated bitcoin product in 2016, when the Gibraltar Stock Exchange (GSX) unveiled a cryptocurrency called BitcoinETI. The British overseas territory has also introduced a bespoke license for fintech firms using blockchain, and created a blockchain subsidiary of its stock exchange.

In February 2018, the Gibraltar Blockchain Exchange (GBX) announced the completion of its first token sale, which was issued in the Rock Token (RKT) cryptocurrency. A total of 60 million RKT was distributed in the public token sale, the equivalent of £4.5 billion.

Copyright © 2019 IDG Communications, Inc.