For state governments, the most revolutionary application of blockchain may lie in how the technology protects and handles data. With a growing need for secure data management and increased demand for transparency, the public sector presents a natural test bed for blockchain solutions.
According to Tom Coleman and Ted Kowalsky of the American Blockchain & Cryptocurrency Association, there are several obvious use cases in the public sector. “There are myriad applications: transferable licenses, land rights, tracking complex grant programs and food safety,” Coleman says.
Part of the difficulty for state agencies will be identifying areas that could benefit most from blockchain while having the lowest barriers to entry. “Some low-hanging fruit will be around cybersecurity, information integrity and auditability, and transparency,” Kowalsky says.
Blockchain’s distributed nature presents a more complex attack surface for bad actors, disseminating risk and limiting the likelihood of a single hack taking down an entire set of records. It also makes auditing records much more transparent, with every node of the system maintaining a copy of the ledger.
State Governments Experiment with Blockchain Use Cases
Kowalsky believes that this will be of huge importance for government agencies that collect data as public confidence in data security wanes. “If the 2000s were about data collection, and the 2010s were about making sense of Big Data, I feel the 2020s will be the decade of data repatriation and democratization,” he says.
State governments have begun to recognize blockchain’s potential. Colorado, Ohio, Utah and others have established various blockchain initiatives to assess use of the technology for identity management, public records, vehicle registration and more. Colorado’s Office of Information Technology has even appointed Thaddeus Batt to the newly created position of blockchain architect. His role is to “consider research, development, and implementation of distributed ledger technologies,” OIT says.
While Batt is an advocate of blockchain applications, he recognizes the importance of a measured approach when dealing with public data and serv-ices. “All use cases must first be proved through the lens of security and scalability,” he says.
Colorado Explores Blockchain for Financial Transactions, Data Security
Don’t assume, however, that Colorado doesn’t have some immediate targets in sight. “OIT’s initial areas of interest are records management, data storage and security, identity management and anything dealing with financial transactions,” Batt says.
An important consideration for states exploring blockchain will be how well their infrastructure can handle transaction volume. “Scaling chainstacks in our cloud infrastructure to accommodate applications with very high transaction rates is certainly on our radar,” Batt says. “There are a number of ways to deploy consensus nodes — directly on virtual machines, containerized or within Blockchain as a Service — and it is important for us to determine the total cost of ownership for each solution.”
By appointing Batt to the role, Colorado has made clear its commitment to utilizing blockchain. “We intend to incorporate an evaluation of blockchain applicability for all state software applications going forward,” Batt says.