How Blockchain Technology Changes Government: A Systematic Analysis of Applications

How Blockchain Technology Changes Government: A Systematic Analysis of Applications

Charalampos Alexopoulos, Yannis Charalabidis, Michalis Avgerinos Loutsaris, Zoi Lachana
DOI: 10.4018/IJPADA.20210101.oa10
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It is widely argued that Blockchain Technology (BCT) is one of the most promising trends nowadays. The most prominent characteristic of this technology is the improved sense of trust to the shared information provided by BCT applications as well as the ubiquitous access to the data ledger. At the same time governments pursue amplified trust from their citizens increasing transparency through shared information and open data. Since BCT supports this strategic goal of governments worldwide, numerous governments try to capitalize on the advances of this technology through testing the results of pilot applications in different vertical governmental sectors. Even though there are several implementations in the Government sector, there is no comprehensive study towards the analysis of the major characteristics of these developments. This paper moves towards the fulfillment of this gap by conducting a thorough analysis of e-Government pilot applications of BCT at a European level providing information to policymakers and practitioners about the grey areas of this technology.
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1. Introduction

The new recognized generation of Digital Government, e-Government 3.0 (Lachana et al., 2018) refers to the use of disruptive ICTs such as big data, blockchain technologies and artificial intelligence technologies in combination with established ICTs such as distributed technologies for data storage and service delivery and the wisdom of crowd (crowd-sourcing and co-creation) towards data- driven and evidence-based decision and policy making (Nam, T., 2015; Song I. K., 2014). Previous research conducted in the context of the Sonnets Project (2015) is mapping the disruptive technologies against their transformative capacity within the public sector. It is indicated that currently the most hyped technology is BCT. BCT is a type of Distributed Ledger Technologies (DLT) and the underlined technology behind Bitcoin, both introduced and implemented by Nakamoto (2008). Hou H. (2017) defines BCT as “…a distributed ledger that maintains a continually growing list of publicly accessible records cryptographically secured from tampering and revision”.

Zhang, F. et al. (2016) compares BCT to a creation of a persistent, immutable, and ever-growing public ledger that can be updated to represent the latest state of it. It was originally used to record historical transactions of encrypted digital currencies, such as bitcoin (Zhu H., Zhou Z. Z, 2016) and smart contract platforms like Ethereum. However, BCT is much more than enablers of crypto-currencies: a BCT can be thought of as a distributed record of any type of transactions between parties, where transactions are validated and recorded in chronological order (in a sequence of “blocks” – hence the name) by a decentralized network of peers (Antonopoulos, A.M., 2014), without need for a central/trusted/third party. The disruptive potential of BCT stems from its capability to facilitate peer-to-peer transactions without intermediaries, while at the same time validating and keeping a permanent public record of all transactions. As Zheng et. al (2016) mentioned, “Although Bitcoin is the most famous application of blockchain, blockchain can be applied into diverse applications far beyond cryptocurrencies”.

Answering to the major demand of governments for enhanced trust and transparency through its unique characteristics, BCT offer a great potential for their use in the public sector. Since any transaction can be completed without the use of any intermediary (Foroglou, G., & Tsilidou, A. L., 2015), Blockchain is a promising solution for a variety of services (Narayanan, A., et al., 2016) such as smart contracts (Ahmed Kosba et al., 2016), general public services like voting procedures and awarding subsidies (Benjamin W. Akins et al., 2013), since Blockchain can improve the security of “core government data” (Nielsen, M. M., & Krimmer, R., 2015), Internet of Things (IoT) (Zyskind, G., & Nathan, O., 2015), reputation systems (Morabito, V., 2017) and security services (Noyes, C., 2016). Blockchain is cited as a promising technology especially for public services (Mike Sharples and John Domingue, 2015) that could influence society or even businesses (Webb, A., 2015). By using a P2P network BCT is considered as the best solution so far for transactions between system’s actors (called nodes) while storage of these transactions in a distributed way is a fact (Back, A. et al., 2014). One of the most important processes is the consensus mechanism, which is an agreement by a selected number of nodes that indicates the next block that should be added (Van Valkenburgh et al., 2016). BCT constitutes a safe technology since any transaction which takes place can be stored and cannot be removed, enabling all nodes to track the history. Distributed ledger is the usage of different nodes in order to store transaction information (Ølnes, S et al., 2017). Digital signature is a combination of private key and transaction’s data (for example owner of the assets). Public keys and digital signatures are being used in order for a safe transaction to be completed (Warburg, B., 2016).

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