Blockchain Is More Than Business – Practical Applications in the Public Sector and Non-Governmental Organizations
The first thing that comes to mind when thinking about blockchain is bitcoin. From this point of view, we can go deeper to consider the possibilities of implementing blockchain technology in various sectors of the economy. From finance to insurance, the distributed register concept has its application in almost every type of business. There is, however, a particular field where the potential of blockchain is successfully used, but not for commercial purposes. We are talking about non-governmental organizations and the public sector.
Is it possible to successfully implement blockchain components in administration and NGOs? What are the first deployments and what directions of usage are being taken? Answers to these questions can be found in this article.
a Perfect Example of Blockchain in the Public Sector
In terms of technology, in the early 1990s Estonia was one of the most underdeveloped countries in Europe. Over half of the population did not have access to the telephone network. 25 years later, this country is often stated as an example of an astonishing technological transformation. According to Wired, Estonians are the most technologically advanced society in the world, which is confirmed by a growing number of both technology giants and start-ups.
One of the main reasons for Estonia to become a leader in the world of technology – particularly in the implementation of blockchain – were the events of 2007. That year, Estonia took a major hit when it was targeted by a large-scale hacker attack. The threat resulting from this attack forced the national decision makers to focus more broadly and more carefully on the matters of data security and transaction protection. Since then, the interest in blockchain and the possibilities opened by that technology became clearly apparent among the Estonian authorities.
In which areas is blockchain used in Estonia?
The entire digital infrastructure in Estonia is based on the so-called X-Road. It is a widely available, open-source skeleton of the Estonian digital system placed on a blockchain known as KSI Blockchain, which is occasionally used by other entities such as NATO or the US Department of Defence. The Estonian Government says: “X-Road is an invisible but crucial environment that allows various national e-services databases, both in the public and private sectors, to collaborate and act in a harmonized way to save over 800 years of work per year for both the state and its citizens.”
The key innovation of X-Road is the use of a distributed ledger, which cannot be deleted or edited. This gives Estonians more control over their data and limits interference on the part of the central authorities. For example, teachers can add academic grades into a person’s ledger, but cannot extract their medical history. There are strict filtering processes and restrictions that allow people to use X-Road. If someone views or accesses another person’s data without authorization, he or she may be brought to court under Estonian law.
The scope of services offered as part of the combination of the blockchain technology and Public Key Infrastructure is very broad. The basic services include: e-Tax Board for all kinds of settlements with the tax office, e-Business, e-Ticket, e-School, and e-Governance Academy. Estonians can vote online from anywhere in the world, digitally sign and send documents, submit tax returns, or receive digital prescriptions from their doctors.
Furthermore, Estonia uses blockchain to secure all data. Even in the case of a military takeover of the entire territory, they are capable of accessing the ledgers abroad. This accessibility and database integrity are made possible by the power of distributed ledgers.
The statistics presented by the Estonian government are impressive. Almost 100% of identity cards are digital, similarly to the percentage of online prescriptions. Over 10,000 e-resident cards were issued, of which over 450 started a business in Estonia. The savings brought by this system are immense, reaching up to 2% of GDP.
These data show that not only that this system based on blockchain fits well with the needs of the Estonian population, but it also promotes savings and stimulates economic growth.
World Food Programme (WFP)-
an Impressive Example of Blockchain Use by a Non-Governmental Organization
The Tazweed supermarket is located on the outskirts of the refugee camp, currently housing over 75,000 Syrians. On the outside, it looks just like any other market. But this is one of the most innovative places – not only in Jordan but also in the entire region. It is here that blockchain technology combines with identification via biometric data. The Tazweed is one of the first places in the world where blockchain technology is used to provide humanitarian aid.
The shopping procedure itself looks exactly the same as in the other supermarkets; the difference, however, lies in the form of payment. None of the refugees has to reach for their cash or cards – they have their irises scanned for verification by the system instead. Within a few seconds, the system checks if the particular person is listed in the United Nations databases and evaluates if he or she is eligible for free shopping. This process requires hundreds of thousands of data bits to be analyzed – including refugee registers, financial data of the organization, and WFP systems. And all these data? Of course, they are kept in the blockchain.
It was blockchain technology that spurred the Building Blocks program in 2017, whose goal is to support the WFP in distributing food among the 100 thousand Syrian refugees in Jordan. By the end of this year, the program is expected to cover almost half a million people, and if it proves successful, it will likely be adopted by other UN agencies.
Similarly, to the Estonian X-Road system, the Building Blocks program arose from the need to cut costs and streamline processes. The World Food Programme is responsible for aiding over 80 million people around the globe. Since 2009, the key principle of this Agency is to depart from the distribution of food itself and transition to financial transfers. This approach enables it to provide relief to more people, stimulate local economies and increase transparency. The problem, however, is financial liquidity, and blockchain systems are expected to help in this regard.
This technology also solves a different, and possibly more pressing problem. The difficulty of registering people who have no ID cards, bank accounts or any other documents. The UN is in the process of designing a system to solve this issue. The objective is to create a situation where every refugee who leaves the camp would be in possession of a digital wallet containing all the information about their identity and financial history. With this blockchain-based system, it would be much easier to find an employer, take out a bank loan or start a business for each person starting a new life in a new place.
The whole concept of a digital wallet is based on the idea of the so-called “self-sovereign identity”, popularized in 2016 by the American researcher Chistopher Allen. Blockchain technology serves as the axis of this idea, as it deals with multiple problems that were previously considered impossible to solve.
Storing encrypted identifiers in blockchain makes it possible to separate the data-based authentication system from the personal data itself, at the same time protecting privacy. Blockchain systems are also more secure than conventional identity records because they remove the need to use any external agents. Additionally, identifies based on distributed ledgers – as opposed to centralized data storage systems – are much easier to use, even in the face of dramatic situations such as wars or natural disasters.
The Estonian digital ecosystem and WFP programs are just a few of many initiatives aimed to implement blockchain technology outside of business. There is no doubt that the potential of this technology will be used gradually more often by global decision makers, and not only for private entrepreneurs but also for entire countries and societies will benefit from its real-world applications.
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