Overview of blockchain-based GovTech startups and trends by Life.SREDA VC, The BB Fund and Arival bank. Article on CoinTelehraph: https://goo.gl/ea6reR
2. Blockchain for
Government
Is future something that
happens to you, or something
that you make happen?
01
By 2023, blockchain technology will be actively exploited in the
field of governmental services by leading world Powers.
According to OECD’s prognosis, 10% of world’s GDP will
be created with direct use of blockchain technology.
According to the survey of The World Economic Forum’s participants
3. Blockchain for
Government
02
What is the
problem?
Difficulties in communication of the state
and its citizens and opacity of this process
provides ground for giant industries of
middlemen to thrive: assistance in LLC
establishment, traffic police document
services etc. This signifies inefficient state
apparatus and its “parasites”.
The more middlemen out there – the more
expensive and complicated the service is.
Governmental institutional structures are
fragmented, which makes data exchange
between departments and authorities a
very difficult process.
4. Blockchain for
Government
03
Solution #1
Unified digital ID
Passports, visas and other documents. Unified
digital IDs (like the ones they have in India): no
need to fill in forms multiple times and wait for
weeks before the documents are ready. And, of
course, no need to bribe officials to accelerate
the process or get fake documents.
Significant decrease in “parasites”:
useless middlemen like officials, passport
office and Pension Fund workers…
5. Blockchain for
Government
04
Unified digital ID
Algorithms of user recognition according to his
personal gadgets connected with the system.
This enables to achieve maximum level of integrity
and operational compatibility within any infrastructure.
There is a number of projects worldwide that cover
the field of verification of authenticity and reaffirmation
of access rights: 2WAY.IO, ShoCard, Guardtime,
BlockVerify, HYPR, Onename, BAASIS ID, Civic.
Registration, confirmation of personal data.
Blockchain-based identification management.
The solution to citizens’ personal data theft issue.
Integration with fingerprint scanners, voice and iris
recognition and other personal biometric devices.
In 2016, UAE hereditary prince has approved state strategy for total conversion of state
document management to blockchain protocol by 2020.
Austrian company Neocapita has announced establishment of decentralized platform
based on private fully-permissioned blockchain Stoneblock, aimed at solving the
costliest problem of electronic government – creation of registries. Neocapita is
negotiating implementation of Stoneblock platform in Afghanistan and Papua New
Guinea.
Swiss startup Procivis in collaboration with electronic government experts from Estonia
has announced the launch of blockchain-based “app store” for electronic government
by the end of 2017.
Worldwide experience
6. Blockchain for
Government
05
Solution #2
Control over budget
spending. Transparency-as-
a-service
Every citizen has transparent access to budget
and how it is being spent. Every “dollar” can be
seen through the entire chain, clear where
it ends up.
Citizens can initiate new items of expenditure
and their voices count when the decisions
are made.
If the public service is provided poorly, smart
contract doesn’t work and the payment is
withdrawn from vendor
International experience in
public procurement
and auctions:
March 9, 2017, “e-Auction 3.0” electronic auctions service
was presented on Blockchain&Bitcoin Conference
in Tallinn. It provides transparency in conditions, process and
results of auctions for state property sales and rent. It has
shown that code can help eliminate the issue of subjective
decision and sales interventions. Big banks and Microsoft
company have helped the project’s development team.
7. Blockchain for
Government
06
Solution #3
Unified social
scoring
Connection of all personal documents with
credit history bureaus, mobile connection
operators, social networks etc.
Tracking behavior in online and offline
services, encouragement of positive
social behavior.
8. Blockchain for
Government
07
Worldwide experience
China, «system of social trust» (社会信用体系)
Xí Jìnpíng has begun his leadership in China with tough fight
against corruption in the Party, and now he aims at changing the
society. With help of digital technologies and big data, the system
analyzes data about each citizen, giving him individual score.
Technology giants like AlibabaAliPay, Tencent and Baidu has been
helping him to bring this project to life.
Project has started in 2014 with adaption of “Program of development
of Social Credit System (2014-2020)”: by 2020, not only every company,
but every citizen of mainland China will be tracked and evaluated by
this system in real time.
Trust rating is connected to internal passport. Ratings will be published
in centralized internet database in free access. Citizens will high rating
will enjoy various social and economic benefits: cheaper loans, health
care and education. Private companies provide discounts.
Citizens with low rating are not accepted to various jobs, aren’t given
loans, can’t purchase high-speed train and plane tickets, can’t hire
a car and a bicycle without bail, are restricted to leave the country.
Companies are checked for their activities to follow ecological and
juridical norms. Work conditions, workplace safety and financial
reporting is being inspected. If there are no issues, the company is
assigned high rating and enjoys privileged tax regime, good loan
conditions. It can be placed on exchange and gets simplified
administrative procedures, an “incomplete set of documents adoption”
principle.
Every official’s personal data analysis: system compares data about the
official and his family members’ incomes with their data of real estate
and luxury items purchases. This approach enables to predict official’s
behavior and reveal potential corrupters in a much more efficient way.
9. Blockchain for
Government
08
Solution #4
Services for
entrepreneurs
Establishment of legal entities, tax reporting,
connections between companies and employees
(vacations, employment records), contracts
(agreements, invoices) among companies (and
their enforcement) – everything can be tokenized
for automatic record of enforcement, transparency
enhancement and elimination of bureaucracy
and corruption.
Today there is already a number of successful projects for
“cloud business” establishment (and getting bank account for it
along with other financial services:
- E-Residence in Estonia (bank account from Holvi 2 or Paywall 3)
- “Atlas” product from Stripe 4 (registration of company in USA
from any othercountry + account from SVB + acquiring from Stripe)
In 2017 state of Delaware in USA in partnership with Symbiont startup and Pillsbury
Winthrop Shaw Pittman LLP technology company presented the initiative to automatize
juridical and operational activities of companies: the system digitizes process of company
registrations, tracking of stocks movement and communication management of
stockholders.
Registration of companies and document circulation for business: for this purpose, there
are such blockchain-services as Otonomos, BoardRoom and Colony.
Worldwide experience
10. Blockchain for
Government
09
Solution #5
Healthcare and
insurance
Healthcare plans, medical prescriptions,
account of drugs can be tokenized in
a unified registry, accessible to everyone:
other doctors, other insurance companies.
With help of blockchain technology,
unauthorized change, access and use of
citizens’ data becomes impossible, because
any information of these actions is recorded
in the system.
In 2016, Netherlands-based company Prescrypt in collaboration
with SNS Bank NV and Deloitte developed a blockchain-based
app that makes medical services more accessible for chronic
patients.
In Estonia in first half of 2016 the government agreed with
Guardtime company to transfer data of more than 1 million
state citizens’ medical cards to blockchain database.
In 2016 USA-based startup BitHealth began to use blockchain
to give their patients additional payment opportunities with
their insurance companies.
Worldwide experience
11. Blockchain for
Government
10
EducationSolution #6
Main characteristics of blockchain – accessibility
and consistency of information that enable
to implement it into education field. It will help
verify factual qualification of school graduates
or students.
Issuance/ accounting of diplomas, grades and
school cards, dissertations, academic degrees
in unified tokenized space
No unified state examinations – there is a unified
database of accumulated and confirmed knowledge
and achievements of students. There is no formal
approach to education as the necessity to “pass
the state exam”, but a transparent reflection of
student’s accumulated knowledge. No university
entry bribes.
If educational institutions register issue graduation
diplomas or certificates in blockchain, potential
employer won’t have any difficulties checking that
you really studied in this university or courses.
This data in open access can be used by investors,
who are looking for perspective thesis, and universities
who need to make a decision for accepting credits
for previously studied disciplines, when the student
changes the place of living.
12. Blockchain for
Government
11
Pensions and
financial support
Solution #7
Current opacity of pensions calculations, dependency
on some official’s signature to retire –these are the
problems of the past. When a citizen is born, he makes
a smart-contract with the society – in the course of his
life, he accumulates social capital, and when certain
conditions appear (age of incapacity for work, disability,
large families), smart contract enters into force
automatically.
Your accumulated social capital is your stake share
from society’s accumulated welfare. This also increases
general responsibility – we can only spend as much as
we have saved together. Minimum salary and pension
is no longer a subjective decision of officials.
13. Blockchain for
Government
12
Land cadaster and
real estate registry
Solution #8
Unified tokenized land cadaster and real estate registry.
Instant transparency of rights and change in ownership.
No “hidden apartments” of officials and corrupters.
No “wait bribe” for housing registries.
In developing countries, lands ownership rights are still
badly documented, that’s why legal owners often can’t
sell their property, take loans against collateral and
conduct other land-related operations. People suffer
from misconduct of related departments’ employees.
Developed countries perfect operational processes,
reducing time of transaction, which often takes up to
several months, reduce the risk of fraud and mistakes in
documents and transactions (change in rights ownership).
This makes the process and the entire system more
reliable.
Worldwide experience
In the beginning of 2016, Sweden’s State land service has
announced its successful collaboration with blockchain-startup
ChromaWay, Kairos Future consulting company and Telia mobile
services provider. They have developed a solution for buyers and
sellers, and results of their work have been tested with
participation of third-party banks.
In Georgia in the middle of 2016 BitFury company, National agency
for public registry of Georgia, and economist Ernando de Soto
announced the launch of pilot project for cadaster registration
based on blockchain.
In the beginning of 2016 in Ghana a project called Bitland based
on Graphene platform received official permission from Ghana
government to create a land cadaster based on Bitshares
blockchain and issued CADASTRAL – basic tokens. With its help,
it will be possible to register land ownership rights, solve conflicts,
sell and buy land.
In 2016, Honduras government in collaboration with Factom
company decided to exploit distributed registry for land rights
registration, to fight fraud.
14. Blockchain for
Government
13
Registration
of author’s and
intellectual
rights
Worldwide experience
Solution #9
Ascribe helps artists and creative people to confirm and
maintain author’s rights with help of blockchain. Ascribe
enables to create digital editions with help of unique
identifications and digital certificates for authorship and
authenticity confirmation. Also, there is an established
mechanism of transfer of rights from artist/author to
buyer/collector, including its juridical aspects.
Other examples of services in this field: Bitproof, Blockai,
Stampery, Verisart, Monegraph, Crypto-Copyrightcrypto -
copyright.com, Proof of Existence.
15. Blockchain for
Government
14
Commodities
markets and
Securities
markets
Worldwide experience
Solution #10
Operations with commodities and raw materials: Uphold is
a platform for moving, converting, transactions and storage
of any sort of commodities and raw materials.
In 2017, as the result of 1,5 years’ work of Estonia government
and Nasdaq stock exchange on blockchain-based system for
company’s shareholders’ voting, it was announced that the
experiment was successful and its scope of application would
be expanded. Prior to the e-voting system launch in Estonia,
blockchain platform Linq for private capital market was r
eleased. First deal was made with Chain company’s stocks.
16. Blockchain for
Government
15
Electricity
Worldwide experience
Solution #10
Energy Blockchain Labs is an enterprise which’s activity is dedicated to full circle creation of
added value in energy industry, implementing projects in the field of energy generation and
consumption, its trade, management etc.
Grid Singularity – decentralized platform for information exchange in the field that provides a
number of applications that simplify data analysis and tests, management of intellectual energy
systems, work with “green certificates” etc.
TransActive Grid project by LO3 Energy enables to measure level of energy generation
and consumption and several other rates in real time. First demonstrative installation is
currently working in New York’s Brooklyn district.
17. Blockchain for
Government
16
Implementation of
non-cash payments,
emission of electronic
money
Worldwide experience
Solution #11
There is a lot of small talk about innovations, fintech
and blockchain – but just take a look at how efficiently
Sweden fights with cash! Government has simply started to
prohibit usage of cash, pushing fintech-startups for
further development.
Decrease of cash in circulation and gradual
transition from real to digital money emission.
The result: no conversion commissions, no
underground economy and hidden oligarch
money. Decrease in domestic crime, related
to theft and robbery.
Total transparency on the level of banking
system – transparency in deposited assets,
lack of holes and deceived depositors.
18. Blockchain for
Government
17
NEW monetary policy
“Helicopter money” term was offered by Nobel
prize laureate in economics Milton Friedman in 1969
in his work “Optimal quantity of money”. Its essence
is the following: you can raise inflation and stimulate
economic activity by giving money directly to households,
who, having more money, will spend them more actively.
President of European Central Bank Mario Draghi stated
in March, 2016 that although “helicopter money” has never
been discussed in the European regulator seriously, “this
is a very interesting idea”. A little later, ECB’s executive board
member and chief economist Peter Praet similarly said in his
interview that in theory, any state bank can issue money
and give them to the people.
In 2002 Chairman of the U.S. Federal Reserve Ben Bernanke
said that this method could “most sure” be an effective
stimulus to consumption and, respectively, decline in prices.
“Helicopter money” principle is a basis for experiments
in a number of countries to implement “universal basic
income”.
“Helicopter money” can turn from hypothetical to
real instrument to stimulate the economy,
according to Citigroup, HSBC and Commerzbank
Earlier, Bridgewater investment fund founder
and one of the most successful investors in the
USA Ray Dalio commented on the topic.
The investor specified, that in this phase
of development state banks will start
financing state expenditures from digital
money and channel money directly
to households.
19. Blockchain for
Government
18
VotingSolution #12
Federal and municipal elections. No rigging of
votes or hackers’ intervention. No Low voter
turnout problem, no situation where minority
choses for majority. Every vote is transparently
counted.
Referendums for socio-economic questions,
population ensus – these projects don’t need
agitation and advertising, polling station expenses,
video control etc.
Decisions on neighborhood scale – every citizen
connects his token to his place of residence and
participates in decision making process with
everyone. Citizen seen the expenditures, can
initiate repair and maintenance works.
Worldwide experience
Remote voting technology based on the blockchain:
www.boule.one. Deck: https://dl.dropboxusercontent.com/
u/21890242/life/sreda/ICO/decks/Boule.pdf
Follow My Vote develops safe and transparent blockchain-based
platform for unanimous online-voting
Advocate – platform for enhancing communications of citizens
with state authorities, aimed at helping both average citizens
and candidates for positions in local governmental authorities.
Borderless – civil management platform, positioned as a
coalition of worldwide accessible juridical (marriages, legal
entity establishment, notary) and economic services
(basic income, financial operations) based on smart
contracts and Expanse blockchain.
20. Blockchain for
Government
19
Estonia is one of the first countries to
start implementing blockchain
on state level
In Estonia in first half of 2016 the government agreed
with Guardtime company to transfer data of more
than 1 million state citizens’ medical cards to blockchain
database.
94% of citizens have electronic ID that enables them
to use the system. 2% of countries GDP is saved on
no-paperwork governmental system; 4000+ services
are provided digitally; Estonia is the №1 country in the
world by tax collection and Digital Economy Index.
Estonian state project of unified electronic system is one
of the most successful implemented projects in the world.
Decentralized open system connects different services
and databases. Because of this structure, it is easy to
implement new services and applications to this system,
and their transition to blockchain system is fast and easy.
“Cloud business” project in form of a e-Residence project
was fulfilled.
In 2017, as the result of 1,5 years’ work of Estonia
government and Nasdaq stock exchange on blockchain-
based system for company’s shareholders’ voting.
21. Blockchain for
Government
20
Estonia is a country without borders,
where residents soon can become
country’s stakeholders
Estonia is a country without borders, where residents soon can become country’s stakeholders.
Companies come to Estonia, attracted by digital infrastructure and government’s views on new
technologies. It’s not surprising that a logical continuation to this process will be a government-
supported ICO to give many people a share in their country’s future. Within such an ICO,
ESTCOIN can be issued.
Although this idea still exists only on the level of official state blog, country offering has caused
incredible buzz and community support. It has been supported by leading crypto experts,
politics, entrepreneurs and economists. For example, Ethereum founder Vitalik Buterin believes
that these tokens can be used to stimulate investors to support country’s success.
Acquired funds can be managed through public-private partnership with a goal to help Estonia
create a brand new digital nation through investments in new technologies and innovations for
government, from smart contracts to artificial intelligence, and make it technically scaled for
more people around the world to benefit it. Then Estonia will serve an example of how societies
of the future can be used in the era of new technologies.
22. Blockchain for
Government
21
Small but successful Malta creates
blockchain strategy
In July 2017, Prime Minister of Malta Joseph Muscat stated
that Malta is going to become one of the first European c
ountries to use blockchain technology in governmental
sphere. First step will be the transfer of land registry and
health-care sector on blockchain.
“We have to be on the front line of blockchain and bitcoin
revolution… we have to be the ones others will want to copy”,
Prime Minister said, being the leader of the country.
Muscat called upon EU countries’ leaders to adopt and use
cryptocurrencies’ potential at the full scale. He also asked
regulating authorities not to be afraid of this technology,
which’s development is inevitable.
Today Malta government develops nationwide blockchain
strategy which will accelerate implementation of bitcoin
and blockchain in a large number of services. Strategy’s
first variants are already accepted.
Silvio Schembri, Parliamentary Secretary for Financial
Services, said that his dream is to make Malta «the Silicon
Valley of Europe» through establishment of world’s best
conditions for development and commercialization of
Fintech projects and innovations.
“Government must provide suitable regulatory framework,
right tax system and best infrastructure on Malta…”
“Prohibition and barriers lead only to the growth of black
market operations. It’s not in the best interests of society
and sector on the whole. It’s best to establish transparent
regulation to raise trust to the system”.
23. Blockchain for
Government
22
Japan – a conservative nation that
understands benefits of cryptocurrencies
legalization
During the last couple of years’ Japanese government has consistently approved draft laws that
have led to bitcoin’s status as official currency and legal payment method for goods and services.
As a result, a number of points of sale where you can officially pay with bitcoin has grown 5x
times from 900 in 205 to 4200 in 2016, with trade turnover nearing 2 billion dollars.
By the end of 2017, the number of companies that officially accept payment in bitcoins can
exceed 200 thousand.
At the same time, Japan preserves control over cryptocurrencies turnover. According to the new
rules, implemented by Tokyo this year, any bitcoin or “alternative coin” fall under the oversight
of Japan Financial Services Agency. It shows that the market is ready to operate in legal
framework and follow AML / KYC in full extent, and the government can introduce changes if it
has enough will.