Taking first steps for government blockchain

Dr Raymond Khoury of Booz Allen Hamilton explains how public sector organisations can begin blockchain adoption

Tags: BlockchainBooz Allen HamiltonInnovation
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Taking first steps for government blockchain Khoury: Blockchain projects should be treated like any other new technology, with small projects to assess suitability and maturity.
By  Mark Sutton Published  April 27, 2017

Blockchain has already become one of the most talked about topics in ICT this year. The technology is being proposed as a game-changer for many different verticals, and with Smart Dubai Office launching its city-wide blockchain initiative this month, and projects to explore the potential of blockchain underway with a number of government entities, it is clear that public sector organisations are keen to be early adopters of the distributed ledger technology.

Dr Raymond Khoury, Executive Vice-President of Booz Allen Hamilton, who leads the firm’s MENA Digital business, explained that there are many different possible uses of blockchain for government, from managing financial transactions and healthcare records, to real estate permit transactions, through to broader smart city services enabled by M2M networks.

Predictions for the impact of blockchain abound — the World Economic Forum expects 10% of global GDP to be stored on blockchain by 2027, for example — and while Khoury said that some of the predictions may be bullish, they illustrate how prevalent blockchain is in current thinking, and its likely level of importance in the next ten years.

As a secure, verifiable, distributed multi-party transaction platform, blockchain could potentially replace existing systems for services such as issuing a passport or obtaining a building permit, Khoury noted. The relevant government entities could connect together in a blockchain-based solution to complete their procedures in parallel, decreasing the time for approvals and processing, and improving authentication and security. The process would also generate an indisputable ledger of transactions. Dubai Customs and Dubai Trade are already looking at blockchain for trade finance and logistics.

Other potential areas could be in smart city systems, where blockchain could be used in mesh networks of sensors for monitoring things like traffic, electricity or water supply. IoT sensors could be connected using blockchain, to instantly report their status in a secure and authenticated network. This could be deployed in areas like smart traffic monitoring. Blockchain applications could also be used to enable parking meters to take payments directly from a driver’s account without any intermediary technology, and blockchain systems could also act as repositories of smart city data, to improve the resilience of such platforms. Other possible government deployments of blockchain include managing tax systems, keeping medical records and smart contracts.

As with any technology, government organisations need to start small and have a clear strategy of what they want to achieve, he commented: “We have the philosophy of ‘think big, start small’. These new technologies need to be tested within the context of your deployment, there are lots of teething stages that one goes through to have a minimum level of maturity across people, process, technology, and governance, before you can go full deployment.”

The four key pillars of people, process, technology and governance — supported by security and operations — are part of Booz Allen Hamilton’s technology transformation model, and they are already being advanced for blockchain.

“Governments need to be very comfortable with blockchain technology. Innovations abound across the globe. Hundreds of millions, if not over a billion dollars, have been put into venture capital investments for companies in this domain, and thousands of companies are already developing new solutions using block chain technology,” Khoury said. “So you have an ecosystem developing, you have platforms, and you need to understand how these platforms operate, and then adapt them to the local context.”

Governance will require proper storage and maintenance of the public ledgers stored to ensure that if an error happens it is easily traceable and fixable, he added.

Process will require government services to be adjusted and restructured, where the service is suitable, so that the government process fits or aligns to the technology process, in the same manner as with other major technology deployments such as ERP adoption.

“Typically when new technologies are interjected, they come with built-in processes,” Khoury said. “You need to marry your thinking to their processes, versus customising their platform to your processes. Blockchain technology will have a set of processes, that governments need to use without much customisation, otherwise they will be stuck in today’s blockchain thinking, and not able to update/upgrade, and hence, become irrelevant or laggers to blockchain evolutions.”

In the domain of ‘people’, Khoury said that government will need some personnel that understand how blockchain works, and they may need to bring this understanding to shift some staff away from simple transaction processing, however, it should also be possible to design systems so that tasks can be carried out with the typical toolset, and just have blockchain processes operating in the background.

At a higher level, it will be vital for government to have enough technical staff and talent, and also to create an internal culture to support blockchain, Khoury said: “If I was advising a government, I would have the nucleus of a team, of advanced blockchain developers on my payroll, making sure that they absorb, incorporate, deploy, maintain, establish governance — so that as a government I am comfortable across the board.”

“If you go back to open source, if there is no internal open source ecosystem at an organisation, then forget open source. If it is not ingrained in the organisation, then you should adopt its use.”

There is a shortage of skills in blockchain, Khoury noted, although he expects academia to play a key role, both in developing research into the technology and creating curriculum around blockchain, to develop the trained personnel required for wide-scale roll out.

In terms of security, the utilisation of blockchain in the digital currency Bitcoin has already proven the resilience of blockchain technology, and while there have been security incidents with Bitcoin transactions, the attacks were always the result of insider action, Khoury said: “Those attacks have been the result of somebody on the inside — that is the only way that can happen. There have been no cases reported where non-human blockchain or bitcoin technology have led to any security issues. It is quite a secure platform.”

There is some work to be done in ensuring blockchain technology can scale to meet large-scale deployment, Khoury said, but there are already solutions emerging to address this issue. Government will also need to work with industry and academia to develop the regulations and legislation around blockchain, but again, there are a number of projects and consortia that are laying the groundwork for a mature blockchain environment.

The interest of the financial sector in blockchain is also bringing considerable impetus to building out the technology and the ecosystem, Khoury added, which will further benefit blockchain as a whole: “Financial institutes are already testing, analysing, and investing in this technology,” he said. “The financial sector is the natural home for bitcoin deployments across blockchain, and a good number of venture capital firms are looking to the fintech industry to advance the bitcoin deployment. In doing so, blockchain technology will laterally evolve as a medium to conduct transactions, beyond digital currency.”

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