IDB: Low adoption of blockchains in governments is due to low technology maturity.
The Inter-American Development Bank (IDB) published a study this month on the adoption of blockchains-based solutions by government entities. According to the international organization, few governments worldwide have implemented pilot projects that use blockchains in public administration.
The 96-page study, which was called Blockchain in public administration: ¿Much noise and few blocks?, explores the current situation of technology adoption by governments in Latin America and the Caribbean. It also explains that it seeks to provide a guide to facilitate the understanding of the topic and the identification of use cases for the public sector in the region.
The IDB found that, although several Latin American governments are beginning to explore the adoption of blockchain-based solutions, few projects go “to a stage of scale deployment.” According to the report, the low adoption could be due to the fact that this technology is still in an incipient state.
“It is possible that due to the low level of maturity of the technology most of the reviewed projects have raised the question: can this be done with blockchain? However, the question to ask when thinking about an implementation designed to scale is: what is the best technology that can help me solve this problem?.”
The IDB maintains that several of the Latin American experiences of adopting blockchain networks in the public sector consist of pilots implemented in isolation. That is to say, projects separated from the rest of the institutions and public policies of the State.
However, the international financial entity believes that some of these pilots have stimulated innovation in public administration. “Under certain conditions blockchain technology can add value to solve public problems,” explains the IDB.
The document states that governments could get rid of some functions through the use of blockchain networks. Tasks such as vehicle and real estate records, check the payment of taxes or grant education credentials, could be done using smart contracts, programmed on a blockchain.
To that end, they would have to face organizational challenges such as designing process governance, and consensus mechanisms, the type of blockchain to use (public, private, permissive, open), among other considerations. The IDB explained that several of the cases analyzed in Latin America have begun to build networks based on the governance model of the Alastria network, developed in Spain.
Among other challenges, the report cites those of a technological nature, such as the digitization of all information, the automation of processes, the implementation of data storage solutions, among others.
“To implement a blockchain-based solution, governments must have the right combination of hardware, software, security policies and procedures to perform electronic transactions safely,” says the report.
Additionally, public entities will have to solve the regulatory aspects. In this regard, the IDB said that the requirements of the governmental legal framework could complicate the use of blockchain networks or prevent the solution from being scalable.
Blockchains for the public function
The IDB report identifies four spaces where the implementation of blockchain solutions could make public administration more effective. Among them, the disintermediation of information, the tokenization of assets, the automation of processes and the interoperability of institutions.
To advance in these areas, the report recommends a group of actions. Stimulate experimentation with new technologies, such as solutions that use blockchains, design scalable models and train talent within the public administration, are among the recommendations of the international organization.
The IDB also suggests revising the Digital Principles, recently adopted by the institution, as a general guide to the use of technology in development projects, such as the implementation of blockchain in public administration.
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