Face-to-Face

Satya N. Gupta, Chairman – Blockchain For Productivity Forum in conversation with Raj Kapoor, Founder, India Blockchain Alliance (IBA)

SG: Dear Raj, before we delve deep into an exploration of how blockchain technology can redefine governmental operations, steering nations toward a future replete with transparency, security, and efficiency, could you please introduce yourself and provide our learned readers a brief about this wonder technology?
Raj: My name is Raj Kapoor, the founder of India Blockchain Alliance, a specialist in blockchain technology with a focus on governmental applications. In simple terms, blockchain is a decentralized, distributed digital ledger, used to record transactions across many computers in a way that ensures the security and immutability of the data recorded. This technology has evolved since its inception in 2008, and now it’s not just the backbone of cryptocurrencies but a tool that promises to revolutionize several sectors, including government operations, which would be the focus of our conversation today. In fact, the future of government is going to be fueled by blockchain.

SG: Intriguing! What is the current status of blockchain technology globally, and how are governments aligning with this disruptive technological shift?
Raj: Blockchain technology has been embraced globally with various degrees of integration in both private and public sectors. Governments are taking note of the immense potential that blockchain holds. Nations like Estonia have made significant strides, integrating blockchain in public services, including healthcare and judicial systems.

Elsewhere, we see governments using blockchain to augment the security of their digital infrastructures (DPI), enhancing transparency and reducing frauds and failures. It is indeed an exciting era, with governments becoming increasingly proactive in fostering blockchain ecosystems through enabling regulations and investments in blockchain projects. In fact, over the last few years, India too has made significant advances in this domain with over 70 projects across the nation being piloted or implemented.

SG: Let’s delve into the potential impacts on government infrastructure. How can blockchain technology revolutionize government administrative processes?
Raj: Absolutely, government infrastructures stand to benefit immensely from blockchain integration. Firstly, we have record-keeping, a fundamental government function that can be revamped through blockchain. By utilizing this technology, governments can create immutable and secure records of essential documents, enhancing trust and reducing the chances of fraud.

Moreover, asset management can be streamlined through tokenization, where assets are represented as tokens on a blockchain. This can facilitate the seamless and secure transfer of assets, reducing bureaucratic delays and fostering efficiency.

Even procurement processes, often laden with delays and vulnerabilities to corruption, can be transformed, creating a system that is both transparent and secure, which ensures that government procurement is conducted fairly and efficiently.

But it is my opinion that there are five key application areas that will transform the way governments function. Here are my top three recommendations.

The first, self-sovereign identity (SSI), is paving the way for a broader range of blockchain-powered citizen services to follow. Governments are beginning to capitalize on the apps and wallets that have begun to infiltrate individual citizens’ comfort zones by building on pioneering self-sovereign digital identification programs (such as Covid-related health passports). These dispersed, data-driven citizen services cover a broader range of government functions, including social security services and the purchase/registration of significant consumer assets (such as land and autos). As part of its digital decade (techade) ambition to modernize public services more broadly, the EU, for example, proposes that 80 percent of its inhabitants would use a digital identity by 2030.

The second would be pre-approved government blockchain network settings running on government-approved cloud services. These are required to make it easier for public sector initiatives, who wish to use blockchain technology to do so without having to face the same difficulties over and over again. A government-approved blockchain service running on a government-approved cloud would make it considerably easier for government organizations to build up distributed applications. Because many of the nonfunctional needs like security, dependability, and so on will have previously been handled, the technology will be much more easily accepted as part of the common enterprise architecture context for such efforts. However, there is a can’t-use-this-because-it’s-not-approved-yet loop that must be broken first. A high-profile government project is required to get things started in the first place, attracting serious attention and serving as a model for wider government blockchain initiatives.

Thirdly, during the pandemic, several government programs have effectively come to a halt in order to acquire the data they require and have thus yet to fully focus on the benefits that nascent blockchain networks might deliver. Governments have been eager to get access to the data they require, both to promote more digital transformation in the citizen services arena and to provide the insights needed to make more educated decisions about public expenditure priorities. However, many people found it difficult to accomplish this during Covid because of fragmented supply chains, poorly linked data ecosystems, and so on, let alone shifting gears to collect more data and gain service influence via membership in permissioned blockchain networks. However, as Covid’s immediate crisis innovation priorities shift to longer-term horizon aims, there is a rising interest in how blockchain networks might drive the development of a new generation of citizen services, enhance opportunities to learn about what is required, and how it is used.

SG: Shifting gears slightly, how might blockchain foster transparency and act as an anti-corruption tool in governmental operations?
Raj: Blockchain, by its very nature, promotes transparency and can be a potent tool in anti-corruption efforts. Governments can track public funds in real time, offering a transparent view of how funds are being allocated and spent. This kind of transparency fosters accountability and reduces the chances of misappropriation of funds. Furthermore, contracts and tenders can be executed using smart contracts on a blockchain, which automatically execute when predefined conditions are met, creating a system that is both transparent and immune to manipulation. Thus, blockchain can play a pivotal role in fostering a governance system that is transparent, accountable, and largely corruption-free. The economic ramifications of blockchain integration are truly vast and transformative.

If I were to cite four major areas of sector interest today, they would be:

• Citizen services – Ranging from the current interest in health passports to further combinations of identity and data around wider social security services. These capitalize on self-sovereign identity’s pioneering moves, as well as the reality that many people already have apps, wallets, and behaviors in place.
• Treasury – Enabling smart tax collection, for example, by deploying blockchain to digitize processes and assets as goods pass through ports; facilitating the growth of new financial services that use tokens and CBDCs.
• Trade – Making it easier to do business, especially where the government (through its agencies) owns the supply chain or tracks payments within it.
• Governance – Where good governance contributes to good government, such as ensuring the integrity of environmental social responsibility (ESG) data. This was previously considered a secondary need but has now been instilled with a renewed sense of purpose in the aftermath of Cop26. It is also frequently bolted on to current blockchain solutions for trusted data sharing procedures.

SG: What steps should the government be taking to hasten blockchain adoption?
In reaction to perceived outside threats, digital transformation agendas are frequently inwardly focused, focusing on change within the organization, often modernizing own structures and ways of working, etc. However, organizations cannot operate in isolation; they are all part of an ecosystem or supply chain. Government organizations are equally included.

One question that must be posed in order to create and reinforce a business case for blockchain is what key outcomes cannot be achieved by the government? This leads to an understanding of the concept that each department must contribute to generating a return for the ecosystem as a whole to acquire what it requires individually (to accomplish its own goals). As a result, the business case must be built to demonstrate a return on investment for both the participant organization’s own aims and the overall network’s sustainability.

In a business setting, the spirit of competition that supports partnerships among participants in blockchain consortia might be difficult to sell if concrete selfish gains are not also on the table. In the public sector, however, a desire to raise the tide and float the boats of all ecosystem stakeholders for the greater good of citizens is a more commonly acceptable (and even sought after) consequence.

Creating awareness is the need of the hour, so citizens may understand the benefits blockchain technologies bring to the table. More importantly, blockchain as a strategy should be adopted across the board by governments and see the bigger picture and not just silos to make it happen.