The adoption of blockchain technology by governments serves as a testament to its transformative potential, spotlighting its capacity to tackle pivotal challenges outlined in this blog. As the adoption rate soars, with almost 90% of companies already implementing blockchain into their operations, its indisputable role in shaping future innovation becomes evident. Beyond cryptocurrencies, the question emerges: what can blockchain technology be used for?
Vote recording: Blockchain technology employs a decentralised ledger, storing data across multiple devices. This distribution makes data manipulation exceptionally hard, as each copy of the ledger will have to be altered for any changes to occur. Harnessing this innovation to document vote counts in elections imbues a high degree of resistance to tampering.
Vote verification: The application of blockchain technology can also help verify each voter to make sure they’re only casting one vote.
Auditing: The transparency inherent in blockchain allows anyone to scrutinise election outcomes by examining the ledger.
The examples above show that blockchain technology can help implement a more secure way for countries to carry out voting processes. Pioneering this approach, Sierra Leone adopted blockchain auditing for its presidential election in 2018, employing the Agora platform.
Similarly, in 2018, West Virginia leveraged blockchain technology through the Voatz app, seamlessly recording 144 votes from military personnel stationed across 24 countries. Interestingly, no security breaches interfered with this process, showing the power of blockchain immutability.
These compelling examples provide an understanding of how blockchain technology can be harnessed to build trust within government institutions.
Recording land ownership: The emergence of blockchain technology presents an opportunity to mitigate fraudulent activities and elevate the efficiency of land ownership record-keeping.
Simplifying land transactions: Leveraging blockchain technology can streamline land transactions, including sales and mortgages. In 2018, Lantmäteriet, a Swedish land-ownership authority used blockchain technology to conduct payments. The process was carried out with the aim for payments to take a few hours rather than months.
Enhanced transparency: Through the implementation of a public ledger, such as blockchain, transparency in the land registry is enhanced, allowing anyone to access the data on the ledger. Such an approach fosters an atmosphere promoting a sense of fairness and equity in land ownership.
Tracking the movement of goods and improving traceability: Blockchain technology can be used to track the movement of goods across a supply chain. By tracking the goods using their origin, destination, and current location, it is easier to identify potential problems during their journey. Other things to trace are ingredients, manufacturing processes etc., this can make it easier to identify other problems such as safety issues.
Big institutions such as IBM use blockchain technology for supply chain management. IBM Food Trust uses a blockchain-based platform to track their food products throughout their whole journey from the farm to the table. The system is trusted by food companies such as Walmart, Dole, and Tyson Foods.
Reducing fraud: Using a tamper-proof method, like blockchain technology, means that goods are hard to steal from a supply chain as there is concrete proof of record. During the first 20 weeks of 2023, criminal activity within the supply chain, such as theft and fraud rose by 41%. With the supply chain market size set to reach $19.3 billion by 2028, it is imperative that large institutions start to protect themselves against these crimes.
Improving efficiency: Blockchain can help streamline business processes in a supply chain. It can also help enable a faster and more cost-efficient delivery of products by reducing paperwork and administrative costs.
Other government applications, such as identity management, social welfare, and healthcare could and do benefit from blockchain technology. For example following cyber-attacks in 2007, Estonia realised the need for more scalable blockchain technology to help store data. The KSI blockchain technology was designed in Estonia to help retain 100% data privacy. With this, Estonia created and distributed digital ID cards for all citizens.
In parallel to the way governments and institutions benefit and interact with blockchain technology, the healthcare sector stands poised for substantial advancements. For example, data security and privacy, cost savings and payments.
Many governments are still unaware or have a lack of understanding of the potential benefits of using blockchain technology. At the same time, institutions are hesitant to implement blockchain technology due to regulatory uncertainty from Governments about the use of blockchains. Meanwhile, The Bank of Americaanticipates blockchain technology to transform financial markets within a span of five to 15 years. They expressed concerns that an excessive regulatory focus, such as recent activities between the SEC, Ripple and BlackRock’s Spot Bitcoin ETF, might detract from the broader and more positive developments occurring in the blockchain technology sector.
The transaction validation process within a blockchain network demands a significant amount of computer power, leading to substantial consumption of energy resources. Different types of blockchain networks use different mechanisms. A popular mechanism called Proof-of-Work (PoW) validates transactions through miners solving complex mathematical problems to add blocks onto the chain. Bitcoin uses a PoW mechanism and is estimated to use 127 terawatt hours (TWh) of energy a year, to put it in perspective, that’s more than Norway’s total energy consumption for one year.
Solving this challenge could require institutions to use Proof-of-Stake (PoS) mechanisms as they require less energy because it doesn’t require miners to compete with each other to solve complex mathematical problems.
In recent years, there has been an increase in the sophistication of cybercriminals who look to exploit vulnerabilities in blockchain technology. During the first quarter of 2023, there were over 40 cyberattacks. In June, a loss of $656 million had been recorded from crypto hacks, scams and rug pulls. Seeing regular news about cyberattacks on blockchain technology could paint the wrong picture to institutions. If large institutions and governments are going to more widely adopt this new technology they will need to address these issues with protection solutions.
The landscape of blockchain technology is posed for remarkable growth in 2023, with a current valuation of approximately $17.57 billion. Astonishing predictions forecast astonishing growth to $469.49 billion. The market prepares to undergo exponential transformation over the next seven years, underscored by the resounding adoption of this technology by governments and major institutions already implementing the technology. It becomes abundantly evident that alongside this monumental expansion must emerge an even more robust framework of blockchain protection measures.
A dive into the increased adoption of blockchain proves the need for blockchain for a secure and fairer future. A notable theme throughout this research shows that the transparency of blockchain technology serves as an important characteristic of its need in the future for large institutions and even governments.