The next innovation for blockchain will be in technical applications using ledgers that facilitate the storage of massive amounts of data. All it takes is one major innovation in the services sector for other governments to quickly embrace blockchain.

Originally published on the Government Experience portal on February 10, 2019 under the title ‘The Services Sector: Blockchain’s Second Coming’

By Xische Editorial, February 10, 2019

The last five years have been full of ups and downs for blockchain technology. The technology, which is essentially a digital ledger maintained by an indelible and anonymous peer-to-peer network, enables modern cryptocurrencies like Bitcoin and Ethereum. But blockchain has myriad uses beyond decentralized digital money. From land registry to the digitalization of business licenses, the possibilities for blockchain in government applications are almost endless. 

Surging in value in the first half of 2018, Bitcoin made blockchain technology mainstream. Suddenly everyone in the world believed the technology could change virtually any industry. Then the Bitcoin price collapsed and blockchain’s brightness started to fade. The collapse in Bitcoin’s value has led some to believe the underlying digital ledger technology was hyped up beyond its real value. With leading cryptocurrency prices somewhat stabilizing in 2019, it is time for blockchain technology to show its value for government applications. Blockchain’s second coming is fast approaching and it will be propelled by genuine innovation in the government space. 

Government services are characterized by the use and analysis of data. Everything from how frequently residents use a local park to the busiest hours of the day at the department of motor vehicles, data drives new innovations in the services space. With its ability to codify large amounts of data in secure and accessible ways, blockchain technology is critical. Related to its push to become a smart city, Dubai has embraced blockchain technology to streamline its systems. 

In collaboration with IBM, blockchain is being used to digitize the issuing of business licenses in Dubai. This blockchain allows for the easier exchange of information between government entities, free zones, and the private sector. In the Dubai Airport Freezone Authority, blockchain technology is used for the automation of commercial licensing and renewal. Dubai’s use of blockchain technology demonstrates how it can be used to oversee the exchange of any contract of record. 

Driving blockchain’s initial popularity was the promise of financial reward. That’s why innovations focus almost exclusively on the cryptocurrency space. As Bitcoin’s value peaked, new cryptocurrencies were being introduced seemingly by the day. But most of those currencies have lost all value with Bitcoin’s price collapse. The next innovation for blockchain will be in technical applications using ledgers that facilitate the storage of massive amounts of data. 

This is all the more reason why blockchain is ripe for a second coming. With engineers and developers focused on creating solutions for government services, the full power of the technology will come into focus. Let’s consider some creative uses for blockchain in government services. With more and more governments moving towards digital identification systems, the organization of one’s identity is perfect for a blockchain. In order to prevent hackers or nefarious actors from accessing government records, authorities can protect digital identities by storing them on a blockchain. 

This maneuver would have the added benefit of easier access across government entities. If the department of motor vehicles needed to identify information, they could have easy access to one source. The same goes for virtually any other government office linked to the blockchain. Not only would this provide a critical layer of security but it would make the delivery of services seamless and fast. 

While some governments are investing in the long-term use of blockchain, more investment is critical for the technology's second coming. Nimble, small governments are best positioned to push this innovation forward. From Baltic states like Estonia to Gulf countries like the UAE, nimble governments that can embrace blockchain’s power and invest in research will lead this new chapter in the technology's practical application in everyday life. 

All it takes is one major innovation in the services sector for other governments to quickly embrace blockchain. Just as Bitcoin’s rise gave way to the creation of many other cryptocurrencies, so too can innovation in government use of blockchain give rise to new applications in the services sector.