How to simplify the work of Governments using Blockchain technology in Developing Countries

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January 16, 2020 by
How to simplify the work of Governments using Blockchain technology in Developing Countries

Developed Western countries have been at the forefront of investment in blockchain technology. They have focused on a slew of novel applications, like using a blockchain to track vegetables from the field to store shelves. But the greatest impact of blockchain technology will be in developing countries, such as China, Nigeria, the Philippines, Malaysia and Brazil.  

Governments throughout the world are starting to understand the benefits of blockchain initiatives that are formed to solve a common problem. They also facilitate improved processes among collaborating businesses, organizations and regulatory bodies.

Every day blockchain’s potential to solve pain points, facilitate automation, create transparency, increase efficiency and promote equality and social responsibility is resulting in new government-backed projects in both developed and developing countries.  Blockchain’s benefits of security, efficiency, and speed are readily applicable to public sector organizations. Looking at the myriad of applications of the novel technology helps explain why so many government leaders are actively exploring its uses in government.

In the past five years alone, we have seen a tremendous increase in the activity of public agencies in more than a dozen countries—including Canada, the United Kingdom, Brazil, China, and India—in running pilots, tests, and trials examining both blockchain’s broad utility as a basis for government service provision and procurement and developing individual blockchain-based applications for internal use. These applications, typically unique to the particular circumstances of a country, state, or municipality, are in development around the world across an expanding range of use cases and asset classes.

In the United Arab Emirates, the government is exploring a wide range of use cases, which include application for business registration, trade, and central bank operations. Meanwhile, Estonia is piloting blockchain-based solutions for voting, identity management, and healthcare. In West Virginia the use of blockchain in the public sector reached another milestone when the state became the first to allow internet voting by blockchain in primary elections.

 

The Logical Union of Blockchain and the Public Sector

The emergence of electronic databases was a huge step up from file folders and filing cabinets as it dramatically improved the efficiency and cost of managing all public information. But it wasn’t until the digital age that the Internet unlocked the greater value by making the data more accessible and transparent. 

Governments and organizations are now dealing with an ocean of information and an exponentially rising number of transactions each year: collections, disbursements, transfers, procurement, sales, fees, fines, certifications, approvals, and many more. Wherever a transaction is involved, or could be involved, the introduction of blockchain’s decentralized ledger, can unlock a host of new opportunities.

From voting to health record management, taxation to welfare payments, the application of blockchain in government processes around the globe is virtually limitless. It’s not surprising that more and more developing countries are exploring ways to integrate it with their administration to revamp various operations.

Recently, the Singapore government announced it was exploring the use of blockchain for numerous things. It would use it; to verify a vendor’s track record on Gebiz (A one-stop e-procurement portal of the Singapore Government), track public officers’ activities, and enhance or even change the auditing processes. In addition to this, the customs authority in Singapore developed a national trade platform (NTP) powered by blockchain technology. This platform connects community systems, platforms, businesses, and government systems. 

But the country’s blockchain-based initiatives don’t stop there. The Monetary Authority of Singapore (MAS) launched the Project Ubin with the intent to conjunct various financial institutions and technology partners.

At the federal, state, and local levels , governments and regulatory bodies are discovering that blockchain technology has the capacity to ensure data integrity while reducing internal cost and friction. In terms of enhanced efficiencies, greater security, and reduced latency, blockchain emerges as part of the solution with clear use cases in which the value add is both explicit and provable.

Solving Challenges in Developing Countries with Blockchain Technology

Compared to developed countries, developing countries are far more likely to be impacted by blockchain technology. The reason for this lies in the current inefficiencies and struggles they are dealing with.

Underdeveloped countries frequently face issues related to weak institutions, corruption, low levels of social trust, high levels of poverty, and limited access to education and resources, to name a few. The lack of reliability of legal institutions and social heterogeneity becomes an obstacle for the economic growth and improvement in the living conditions of citizens. 

Another major problem for people in underdeveloped countries is the limited access to financial services, specifically bank and savings accounts. Low financial inclusion, in addition to a shortage in capital resources, harms the effectiveness of redistribution programs, places great constraints on small and medium businesses and affects capital allocation, and the cost of capital overall.

Blockchain technology can solve many of these problems developing countries face as it improves existing instruments and enables the development of new ones. Blockchain-based applications particularly have the capacity to address institutional weaknesses and enable financial inclusion because they restrict deception, corruption and uncertainties.  Altogether, blockchain can also become a development vehicle that empowers people directly by mitigating power asymmetries.

Deployment

The ways blockchain can be used in developing countries make it an ideal vehicle for improving millions of peoples’ quality of life. 

There are several areas in the public sector where the application of blockchain technology will produce immediate benefits:

More Transparent Polling and Governance:

Corruption and voter fraud are common issues in developing countries. At a time when elections—even in first-world economies—are tainted with allegations of fraud or outside influence, use of blockchain technology can eliminate rigging. For blockchain to be a viable option for conducting elections, certain challenges must be overcome. Blockchain is transparent and shows clear signs of tampering the moment that it’s been modified. Unlike other electronic means, blockchain technology cannot be tampered with without signals being given off. As a result, it would be a clear-cut way to guarantee that elections are held in a fair manner.

 

Blockchains can also address the most pressing needs of developing-world governments: the modernization and digitization of government functions.  Systems that store digital documents can improve people’s lives substantially. A ledger where basic legal documents such as identity documents (IDs), driver’s licenses, birth certificates or marriage documents can be registered based on the blockchain can provide an extra layer of security and trust.

A Fairer Economy:

A great deal of the population of developing countries is unbanked. Due to the state of the economy and people’s limited access to financial services, many of them simply don’t have a bank account, credit or debit cards. Blockchain technology can be used by developing countries as a way to circumnavigate the issue of underbanking. Decentralized currencies and decentralized wallets could help people that don’t have access to traditional banking institutions store wealth safely and securely. 

Blockchain has the capacity to increase financial inclusion. Low registration barriers where no identification is mandatory make it possible for everyone to use crypto currencies, which is an advantage over the administrative efforts of opening a bank account. Furthermore, crypto currencies can protect people against inflation. Many people are currently hurt by drops in national currencies and a rise in inflation rates as they are unable to transfer their capital to safer currencies.

Using blockchain in developing countries is a suitable way to provide people with a saving and investment tool. Furthermore, a peer-to-peer banking platform based on the blockchain can expand common services with insurance and hedging mechanisms.

 

Secure Property Recordkeeping:

A blockchain-based property registry can provide a public ledger where all real estate can be legally registered and documented. Making property records publically accessible and transparent will enable people to prove their ownership and incentivize them to invest in their property. This will have a huge impact on living conditions and reduce household sizes and overcrowding, which will lead to a better quality of life.

Although property registries already exist in many countries, the blockchain can solve several implementation and adoption problems of the existing solutions. The absence of control panels makes it easy for local agents in underdeveloped countries to corrupt registries much easier than in developed countries. A blockchain-based solution is transparent and secure and does not allow local agents or government officials to alter the registry once the property is documented. This is a problem Domineum.io is solving in the developing Countries. 

 

Greater Access to Energy:

Blockchain technology has the potential to play a significant and potentially game-changing role in the energy sector as well. It may lead to reduced costs of utility bills and/or reduced transactions costs in wholesale market for gas or electricity. As a result, this can limit the need for working capital.

Storing customer data on the ledger can also unlock new communication possibilities among energy devices (water heaters, electric vehicles, batteries, solar PV installations, etc.) and with the grid operator (smart grids). This can lead to lower costs due to more information for utilities and grid operators for the integration of volatile renewable energy capacity into the grid.

 

As more governments turn towards cleaner energy alternatives , blockchain technology can become the basis for a new marketplace where information on the provenance of renewable electricity generated, with clear details of source type, time, location and CO2 emissions is recorded and stored. This provides a universal dashboard tracking the energy consumption of whole countries.

Improved Healthcare:

The medical field is where blockchain can be used in a super-beneficial way. Multiple blockchain startups in the healthcare field are already underway. There are projects that are building national and global networks that store patient information, get more accurate billing, and prevent insurance fraud.

Storing medical records on blockchain allows healthcare groups to cut costs immensely on both the insurance and provider sides. For developing countries, lower healthcare costs could prevent thousands of bankruptcies every year. What’s even more – having a clear picture into each patient’s medical history will result in faster and better healthcare, saving precious time in finding the right treatment.

 

And these are just a few of the ways that blockchain’s transformative powers can immensely benefit developing countries, bringing them online. It will give them the tools to promote rapid innovation and adaptation of cutting-edge tech that has made former developing countries like China into a world power today.

A Blockchain Step into a Global Future

Blockchain technology can be used (and potentially developed) on any device. This makes it more accessible than prior tech. 

The approach countries like the UAE is taking to blockchain adoption is a fine example of fast adaption with the central government providing services on the blockchain as a way to spur innovation. This could set a trend for developing countries looking to jumpstart their economic growth by establishing standards of integrity in fundamental systems of trade — especially in places where exports require strong evidence about the origins of goods, like precious stones, agricultural products, timber and coffee.

Blockchain is becoming the preferred instrument for trade facilitation, building on core concepts in the commerce space. The technology has the capacity to support agreement or transaction and thus create a new digitized space where: global trade, local regulation, and interpersonal agreements are efficiently recorded, stored and managed on an immutable ledger. The implications of such a system on the transaction costs of economic activity in developing countries are tremendous. 

The new technology would not only open world markets and create wealth in places that desperately need it, but it can vastly improve the lives of billions of people in some of the poorest and most underdeveloped regions on the planet.

 

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