Better Global Outcomes with Blockchain

Democracy relies on a healthy backbone of civic trust in government and political institutions. For many reasons, that backbone is increasingly brittle. A global rise in populist mistrust of elite gatekeepers, opaque communications, and corruption have contributed to democratic backsliding around the world. Blockchain technology could be used to help correct this dangerous trajectory by embedding transparency and accountability into government processes.

Our democratic institutions – many designed in the 19th century – are poorly adapted for the speed and openness of the digital era. Communication is nearly instantaneous, yet, the reliability of the information that democratic societies depend upon has deteriorated. Given this dynamic, civic technologists continue to explore how harnessing distributed ledger technologies could advance democracy, governance, and civic engagement.

There are many resources available through New America, such as the Blueprint for Blockchain + Social Innovation, and other organizations that describe blockchain. We are pursuing this topic through a series of blog posts to inspire innovation, collaboration, and experimentation while prompting questions about the development of blockchain-powered solutions in the field of democratic governance. We have no interest in promoting any particular breakthrough in communication or computing – but recent history shows that wide adoption of disruptive technologies will eventually transform our politics, society, and governments. While the implications of blockchain have been considered in depth in the financial sector, there has been less investigation of the ways it may impact civil society, media, and the relationships between citizens and their governments.

Over the last decade, blockchain has earned a complicated reputation. Headlines about speculative bubbles creating wild price fluctuation, untraceable payments in cryptocurrencies, the financing of illicit activities like online black markets and cyberattacks, and the latest craze of NFTs have left many wondering what value, if any, blockchain offers to society. NFTs are particularly puzzling -- how has a seemingly niche interest in CryptoKitties grabbed the attention of so many in 2021?

Many questions remain about the lack of regulation, few established use-cases, high computational energy demands to maintain a blockchain network, and limited technical talent – particularly familiar with utilizing the tool in the civic space. However, the potential benefits associated with the features of blockchain are too compelling to ignore.

Just as the internet, artificial intelligence, and GPS can be used for benign or nefarious activity, blockchain has the potential to improve transparency and accountability across a wide range of use cases. Designed to secure and validate information on the open internet, these technologies may play a useful role in modernizing our most important political institutions for the 21st century.

Why would people working in the public sector on democracy, human rights, citizen engagement, public integrity, and government services take an interest in blockchain? In one word, immutability. Blockchains can host permanent, unalterable records that can increase transparency and accountability between government, citizens, and civil society. While laudable caution in the public sector over the novelty of blockchain technology has limited widespread use to date, the pieces are now in place for blockchain-based technology to play a useful role in reimagining government and civil society.

Democratizing data has historically had significant positive implications for open government; no other emerging technology has the same game-changing potential as blockchain on this front. As with any new technology, there are risks that must be managed. Any hastily implemented technology can erode democratic institutions in unexpected ways. Policymakers need to understand where and under what conditions blockchain could be considered in democratic processes to avoid unforeseen negative repercussions and to protect human rights and civil liberties. Blockchain is an emerging technology and the field is changing rapidly; we encourage readers to conduct their own research and move thoughtfully as they pursue blockchain powered solutions.

The list below outlines the general features and capabilities typical of blockchains, which are important for managing expectations about what blockchain can and cannot do as a tool for civic and democratic institutions.

• IMMUTABLE: Blockchain can make an original record unalterable by capturing all changes to data entries. Even the smallest edits are transparent to all participants creating accountability for those alterations.
• DECENTRALIZED: Blockchain technology is decentralized to varying degrees. There is no one central authority. Algorithms embedded into the system called “consensus mechanisms” help decentralized participants reach agreement on the legitimacy of transactions.
• SECURE: Due to the complexity of the encryption underpinning blockchains, they are incredibly difficult to hack or manipulate. The most established blockchain, Bitcoin, has never been hacked or compromised.
• PSEUDO-ANONYMISED: Blockchain users are “pseudo-anonymised” in most circumstances. This means that users are identified by a unique ID or “pseudonym” not directly tied to their real-world identity.
• NOTARY: Blockchain can be used to notarize a record or data, validating its authenticity in a specific form at a particular time.
• USEFUL FOR ANY TYPE OF DATA: Blockchain can move or secure any form of data, not just cryptocurrency. Anything that can be translated into a digital certificate or token can be managed on a blockchain.
• SMART CONTRACTS: Some blockchains can automate a digital process with “smart contracts” – actions which execute automatically when certain data conditions are met. For example, a blockchain can be used to securely and automatically transfer a property deed from seller to buyer only after all financial obligations and inspection requirements have been met.

For a more nuanced look into what the technology was designed to do and how it can be harnessed for social innovation, please refer to the Understanding the Technology section of our Blueprint for Blockchain + Social Innovation.

Can Blockchain Be Harnessed for Public Sector Solutions?

Yes, but like any technology, blockchain is not a complete solution, it is a tool. A thoughtful approach to technology, especially one like blockchain, must fully consider how any given approach would address the problem. Consider how you might attempt to implement it both with and without a blockchain; new approaches should not be applied indiscriminately to political or governance challenges without weighing the pros and cons. There are many considerations for any civic tech project, particularly when using an emerging technology like blockchain. Less readily-available expertise in novel technologies, unclear government regulation, and fewer proven best practices all raise the risk of unintended consequences and botched rollouts.

A few key recommendations and considerations can help civic innovators move in the right direction.

• Emphasize digital identity: Blockchains in government applications typically manage data about citizens. Identifying all participants and determining how to express and safeguard identities are crucial in a fair and effective blockchain-based solution.
• Work with high quality data: Inaccurate data undermines the purpose of blockchain as an immutable record-keeping system. To prevent a “garbage in, garbage forever” situation, ensure only high quality digital data enters the blockchain.
• Prioritize security and privacy: Tools need to be designed for security, especially with citizen information at stake. Security failures and unauthorized access to personal data can harm citizens and exacerbate distrust in public institutions.
• Be transparent: Procurement processes need to be open and legitimate. Where possible, use open source software and open standards to avoid dependence on vendors and promote a sustainable ecosystem. Proactive communication with and inclusive participation from the public throughout the project will also build trust and credibility.
• Use human-centered design principles: Technology relies on the users to function effectively. Understanding why and how users engage with a digital tool can help designers identify technical and non-technical changes required to make the solution work properly.
• Consider the ethical implications: Technology architects make choices that determine whether digital tools will help or harm communities. Use ethical design frameworks to avoid unintentionally endangering vulnerable groups.
• Include marginalized communities: Not all citizens have internet access – and often the most socially marginalized and vulnerable have the lowest levels of connectivity. Make digital inclusion a design priority.
• Test and Scale: Real-world experimentation with participation from informed citizens will demonstrate points of confusion, improve user experience, and expose weaknesses before they become too costly to fix.
• Plan for delays and costs: Effective solutions require coordination with many stakeholders, and may not lead to immediate cost savings. Be generous with time frames and include user research, public education, and long-term support in cost estimates.