Bribery is blocked: eradicate corruption with blockchain technology

In a world where all public records are stored in an immutable ledger, it would be difficult to be a corrupt government official.

Some of the main functions of government institutions include the redistribution of resources and the maintenance of official records. These are precisely the domains where blockchain technology, with its focus on facilitating secure and traceable transactions and maintaining immutable records to build trust, is well positioned to make a strong impact.

A recent report from the Danish Ministry of Foreign Affairs is the latest to highlight the potential of blockchain technology to serve as a powerful tool in the fight against government corruption. This proposal, however, is just the latest in a long series of policy proposals and analytical reports documenting the immense promise that distributed ledger technology holds for government transparency advocates, as well as the many limitations it will inevitably face. its implementation.

Technological solutions to the eternal problem

Any government is a gigantic knot of procedures, records, transactions, and human bureaucrats who enact formal rules within the limits of their jurisdiction. These bulky and convoluted organizational structures often lack transparency and are difficult and expensive for an outsider to understand, much less monitor.

Officials who directly manage resource flows or have signature authority can be incentivized to abuse their powers for monetary gain if they realize that the risk of being caught is minimal. According to one estimate, corruption in the public sector consumes between $ 1.5 trillion and $ 2 trillion globally each year, which is equivalent to approximately 2% of the world’s gross domestic product.

Many anti-corruption experts pin their hopes on various digital technologies to help make a breakthrough. The Danish Ministry of Foreign Affairs report presents an overview of several potential avenues in the fight against administrative and political corruption. One of these avenues is to make all public sector data open to all and thereby improve transparency by allowing activists and watchdog organizations to conduct independent audits and detect suspicious patterns in public spending.

The second suggested approach is to reduce the scope of corruption opportunities by expanding the scope of e-governance and moving most government services online. Within this domain, the authors envision the use of blockchains to facilitate transparent and tamper-proof data and value transactions. Yet another suggestion is to use crowdsourcing platforms to facilitate whistleblowing and complaints about petty corruption episodes.

Finally, the report’s authors suggest implementing blockchain-based solutions to ensure the integrity of public records and digitally secured rights to property and government aid. They emphasize how this can not only improve the integrity of public records, but also empower groups that do not have sufficient banking services or have limited access to government services, for example due to the lack of a state-issued identification.

Restoring trust

The enthusiasm for these and other anti-corruption uses of blockchain is not new. In a 2018 article for Stanford Social Innovation Review, Carlos Santiso, an expert at the Inter-American Development Bank, observes that a “bubble of expectations” around the potential of technology to mitigate government corruption has already been building among the public. and the tech community.

Santiso maintains that in the digital age, technology at the service of government invariably drives transparency in the public sector. In his view, blockchain technology is particularly well suited to producing this effect due to its unique ability to ensure the authenticity of records and eliminate inefficient data management practices inherent in traditional bureaucracies. By doing so, blockchain-based systems could help restore deteriorated trust in government.

Other observers argue that instead of correcting the decline in trust in authorities, blockchain can provide an entirely new mechanism for building trust. A team of analysts representing the anti-corruption nonprofit Transparency International suggests in a research note that technology can be particularly useful in countries plagued by corruption where trust in institutions is very low.

Experts from another anti-corruption think tank, Norway-based research institute U4, echo this assessment in a 2020 report, stating: “Blockchain is designed to operate in environments where trust in data / codes is higher. than trust in individuals or institutions. “

Use cases

Three key uses of blockchain technology in the fight to alleviate government corruption are constantly emerging across all expert accounts: authentication of transactions, of official records such as property rights, and identity verification.

Moving government transactions, such as public procurement contracts, to an open ledger where they can be traced could deal a decisive blow to the kind of corruption that arguably costs taxpayers more – large-scale schemes in which unscrupulous officials manipulate the process in favor of private contractors. Going one step further and encoding procurement operations in smart contracts on a distributed ledger could dramatically reduce the space for suspicious activity.

While the large scale of industries thriving on public sector contacts would make such a transition extremely difficult in the short term, development-focused organizations such as the World Economic Forum are paying much-needed attention to the notion of blockchain-enabled acquisitions.

The uses related to the registry of registries seem to be closer to being realized. The Danish Ministry of Foreign Affairs report lists examples from Kenya and Rwanda, where government records of education and land rights are migrating to distributed ledgers. In these countries and beyond, corrupt officials are finding it increasingly difficult to leverage their positions within public records systems for personal gain.

In the realm of identity management, blockchain-based IDs can be particularly useful for vulnerable groups such as refugees or people who have never had a government-issued ID in the first place. Securing their identities on a distributed ledger helps ensure fair distribution of aid and access to other essential services.

It is not a panacea

According to U4 analysts, whether blockchain becomes a valuable tool in the fight against corruption in a particular national environment depends largely on contextual factors such as “infrastructures, legal systems, and social or political environments.”

For one thing, rebuilding entire government data management systems to run on the blockchain might not fit in well with existing data privacy regulations. The immutable nature of the records entered in the general ledger is in disagreement with one of the principles of the European Law of the General Data Protection Regulation: the right to be forgotten.

Another important consideration to take into account is the “garbage in, garbage out” nature of blockchain systems – the data stored in them is exactly as good as the input. This means that there will continue to be human guards responsible for data entry, as well as the need for integrated data audits. Therefore, by design it would be impossible to completely eliminate human involvement from such a system, leaving some scope for corruption.

Much to the chagrin of decentralization absolutists, public sector blockchains are unlikely to be open and permissionless. While it would make sense to make most of the data available for external audits, it is naive to expect governments to hand over control of their databases to a distributed network of nodes potentially located in external jurisdictions.


Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.

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