Recently, I asked blockchain expert John Palfreyman about the application of blockchain to the government sector. Since joining IBM in 1996, John has worked at a Global & European level as leader of emerging technology businesses including Pervasive Computing, Grid Computing and Open Source Services. He is a thought leader in the National Security industry, helping customers drive information superiority through commercial technology usage. John currently focuses on the business application of blockchain by working with early adopter customers and enabling IBM practitioners to sell and deliver blockchain projects. John’s interests outside work include family, swimming, cycling and music performance. Here’s my interview:
Marquis Cabrera: In layman’s terms, what is blockchain?
John Palfreyman: To understand blockchain, it’s useful to step back to realize that Business – and Governments – never operate in isolation. They are participants in a business network. Ownership of assets pass across the network in return for payments, governed by contracts. Network participants currently keep their own ledger – recording all assets they own and updated on when asset ownership changes. Whilst well tried & tested, this process is very inefficient, often piling cost on cost and is far from fit for the needs of the twenty first century!
Blockchain gives participants the ability to share a ledger -- “a record book” -- which is updated every time a transaction occurs through peer to peer replication. Privacy services ensure that participants see only the parts of the ledger that are relevant to them, and that transactions are secure, authenticated and verifiable. Blockchain also allows the contract for asset transfer to be encoded for execution with the transaction. Network participants agree how transactions are verified through a process known as consensus. Government oversight, compliance & audit can be part of the same network.
Marquis Cabrera: What is blockchain capable of doing?
John Palfreyman: Blockchain adds four important attributes to a business network: 1.Consensus: a method – agreed by all participants – by which a transaction is deemed valid; Provenance: a complete audit trail of transaction history; Immutability: once committed, a transaction cannot be tampered with; and Finality: disputes won’t happen because the business network has one agreed system of record. This in turn leads to improved efficiencies, reduced risk of fraud or cyber-attack, time savings and increased trust across the business networks.
Marquis Cabrera: Can blockchain be used to improve government and citizen services?
John Palfreyman: Oh yes! There are some really great opportunities for blockchain usage in land registry, vehicle registry, supply chain transparency and in the longer term resolving the “privacy paradox” between delivering effective identity management whilst mitigating citizen privacy concerns around “who can see what” in their identity information.
The possibilities are vast and varied, but getting the right place to start is vital. We recommend a modest use case that’s not too complex from a technology and organizational viewpoint, then learning and scaling up quickly – essentially an agile approach to blockchain projects.
Marquis Cabrera: Do you have a particular use case on how blockchain can be applied to solve a specific government problem?
John Palfreyman: Let’s back away from the component technologies you list and look at a compelling example of blockchain usage. We are currently working with a European government on the registration of electric bikes. The goal is to reduce bike thefts and streamline the insurance claims process when a bike gets stolen. The central government registers a new bike then the bike shop associates it with its remote control lock, geo-locator and owner. This information is stored in a shared ledger which is selectively accessible by the police, local government and insurance company. This is an easy to understand use case with clear and compelling benefits of improved efficiencies for all concerned. A similar process could be applied to vehicle or property, but electric bike registration is an ideal “starter” use case so all involved can get first hand awareness what benefits the new technology brings.
Marquis Cabrera: Wow! That’s a great example! Since we’re on the security topic, can blockchain help to prevent government and NGO cyber-attacks? If so, how?
John Palfreyman: Blockchain is not a cyber defense technology, but since the ledger is replicated around the participants in the business network and privacy services are at the heart of blockchain, it’s more resilient to cyber-attack (from internal or external sources), fraud and cybercrime. Since hackers tend to go for “low hanging fruit”, blockchain solutions are likely to be much less attractive to them.
Marquis Cabrera: How can government leaders interested in piloting blockchain applications, or exploring its applicability, learn more?
John Palfreyman: It’s important to cut through the hype and gobbledygook surrounding blockchain and understand what blockchain can really do. The recent IBM IBV Paper on blockchain can help with this. IBM has developed a blockchain service on the BlueMix cloud, which allows organizations to get cracking with a targeted pilot on blockchain. IBM can help governments get started with this if needed.
Disclaimer: The opinions expressed in this piece are not official IBM opinions.