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Decentralized Government

In this chapter, we will explore how blockchain technology is being used to permeate and improve government activity around the world.

To look for beginnings of mainstream blockchain use cases in ushering a new era of a decentralized government, look no further than Europe’s own self-styled ‘CryptoPolis’ - Chiasso, Switzerland. Along with its sister city, Zug, often referred to as ‘Crypto Valley’, this community on the Swiss-Italian border has recently allowed its residents to use cryptocurrency to make small tax payments. 

The Lisk Foundation is based in Zug, Switzerland. The Lisk Foundation was one of the earliest such projects to base itself out of Zug. However, since that time many more blockchain projects have flocked to the area due to the cantons progressive attitude towards blockchain applications and cryptocurrencies.

While this option can be considered more a novelty, with mainstream currency still preferred for heavy tax lifting, Chiasso’s crypto-friendly fiscal policy provides a glimpse of how this technology can be implemented by governments in the future.

Blockchain Voting

Almost three quarters of all countries in the world can technically be considered at least partial democracies. That means they are dependent on voter consensus to elect officials and decide on nationwide referendums. Unfortunately, current voting systems are some of the most outdated, inefficient and manipulation-prone aspects of modern governance. Blockchain technology can be implemented to help encrypt and easily trace back the validity of the voting ballots of individual citizens. The decentralized ledger managing blockchain voting data also means that results are not processed by a central entity, which eliminates the risk of voting result manipulation in corrupt countries.

Another key feature of governance which will be revolutionized by blockchain uses is notarization service. Such administrative timestamps validate the exact time an action takes place in a citizen’s life; starting from events such as birth and death, but also when receiving new identity documentation, receiving certificates of education or exchange of ownership titles. Much of these processes are still done either on isolated databases or via brick-and-mortar bureaucracy, which is prone to mistakes. However, due to the encrypted nature of the data stored on a blockchain, all of these recordings will be safe and only visible to the owner or permitted parties. 

The encrypted, decentralized and agile method of information storing pioneered by a future blockchain government ledger will result in a more responsive and user-friendly governmental interaction. What is being dubbed by tech enthusiasts as “responsible open data”, will enable blockchain-backed governmental bodies to process transactions with multiple citizens at the same time, such as registering a vehicle or processing social security documents from their home with the full assurance that their interaction was certified and stored safely on an encrypted ledger. 

Using the decentralized government ledger in order to process and store such administrative procedures can help the government by improving documentation safety and processing power, while at the same time benefiting the citizens by potentially allowing them to cut down on time-wasting bureaucracy and frustrating governmental office lines.

In a lot of developing countries and emerging economies, control and distribution of social welfare can also be slow and prone to corruption. Third world governments either do not have the infrastructure to effectively handle government payments, or rely on third-party systems.

According to the Economist Intelligence Unit, M-PESA, a mobile-based payment system in East Africa, currently handles transactions totalling up to 60% of Kenya’s GDP flow.

Just as with a decentralized government ledger managing governmental procedures, voting and documentation, it is easy to apply a blockchain example with a trustless ledger that can be beneficial in fairly managing and efficiently distributing social welfare funds in countries that might not be lucky enough to afford reliable, traditional and centralized infrastructure.

While some countries and cities actively pursue many aspects of blockchain to solve their governance issues, a select few are betting on blockchain uses for a decentralized government. For example, technocratic states such as Dubai are preparing to transfer their entire governmental infrastructure and economy on a blockchain, thus making this United Arab Emirates city one of the unofficial capitals of this affluent industry. This metropolis is eager to use the technology to fully transfer and process complex government transactions on a ledger, or to use smart contracts to reduce clunky documentation of movement of goods within the state.