Blockchain Governance
Blockchain supports the Bitcoin trade, but are there other applications where the world could benefit?
For quite some time, the cryptocurrency known as Bitcoin has been heralded as a game-changer for banking, finance, and the way we exchange money. Bitcoin was founded in 2009, and at its peak in 2013 it was valued at more than $1,200 per coin.
However, despite its still-prominent place in the media and blogosphere, Bitcoin’s future is uncertain at best. Internal struggles over its capacity and a failure to repair its reputation as a currency for illicit goods have both prevented the mainstream consumer from taking Bitcoin on board. Interestingly however, amidst Bitcoin’s apparent decline the infrastructure that underpins it—known as the blockchain—is gaining traction in unexpected and exciting ways.
The blockchain is essentially a “machine for creating trust” as The Economist put it. The decentralized and public ledger is open to all eyes, but its code can’t be altered without adherence to strict rules and regulations. Because of this fact, it allows processes that used to be shrouded in secrecy or ruled by third parties to become far more transparent.
There are numerous applications for blockchain technology outside of the finance sector. The music industry and real estate are just some of the fields that are researching its applications. However, one of the most interesting ways it could potentially be used could have a huge effect on democracy around the world. Indeed, using the blockchain to keep corrupt governments transparent and accountable for their actions is one of its most revolutionary applications to date.
As reported by Bitcoin website CoinDesk, last year the Honduran government embarked on a pilot project with decentralized record keeping startup Factom in which “Blockchain technology is to be used to run the country’s public land registry ledger, making it safer, nigh-on incorruptible and more transparent.” This has huge implications in a country where, historically, citizens have struggled to keep their government accountable for their actions and international watchdogs rate government transparency levels as being very minimal. This is especially true when it comes to areas like public land registry ledgers, as they are notoriously easy to tamper with in their analogue format. The fact that the blockchain is distributed, untamperable, and totally transparent is ideal for promoting good governance.
Indeed in developing countries—where weak governance tends to lend itself to corruption—the potential for the blockchain to replace this kind of flimsy, paper-based record keeping is the highest. Not only would it make record keeping more honest and transparent, but significantly more efficient, too. The main functionality of the technology that Factom is using in Honduras is to “monitor document versions and prove data lineage”, which means that it could be applied to a wide range of other forms of governance.
Factom’s VP of business development, Abhi Dobhal told Coindesk that a blockchain can be considered a source of truth and accountability in settings where often there is no such thing and that its applications are wide and varied.
“In large organizations and within governments, data transactions between disparate systems can contain incorrect or inappropriate data. Thus, initiating a reconciliation process and, subsequently, an audit review. As the number of systems multiplies that each have sway over some set of data, settlement becomes increasingly difficult. A shared ledger – or source of truth, if you will – could ensure that transactions and data shared with the core systems are consistent and error free.”
While Honduras is the first major governmental application of the blockchain we’ve seen, international watchdogs and good governance groups are already calling for more pilot programs to investigate its applications. It’s looking more and more likely that the biggest legacy of Bitcoin will be the blockchain itself.