In my previous article on distributed ledger technology (DLT), I looked at some of the challenges and opportunities that this emerging technology posed for revenue agencies. We are starting to see a few developments come into sharper focus., with government use cases moving into production. For example, the Chinese city, Foshan, is testing DLT’s usefulness in providing a more efficient way for residents to authenticate their identities and official information without filling out forms each time they need a new government service. In Japan, the government is testing a blockchain-powered platform for processing government tenders. In the Netherlands, the tax authorities are planning to pilot the use of a distributed ledger and benefits, creating the possibility of far more efficient and accurate processes for both employers and the revenue agency.
In addition, governments are defining the role they can play to encourage participation in distributed ledgers by adding back in the ‘trusted third party’ and acting as the entity that will be there if something goes wrong. Mutual benefit and some level of trust are required to ensure that investment in a distributed ledger technology will be reciprocated by the other potential participants. Government agencies can be the catalyst around which such trust and understanding can be built.
Distributed Ledger Technology can also be applied to new regulations, like the EU’s General Data Protection Regulation (GDPR) due to come into force on 25th May 2018, to make the spirit of the regulation easier to achieve. The GDPR provides a number of fundamental rights to individuals concerning their data privacy and places some key responsibilities on data owners. DLT could be part of the response to GDPR, providing greater transparency into the sharing and use of private data.
The ‘right to erasure’ is a fundamental element of the GDPR is apparently at odds with the immutable nature of blockchain records. However, recent developments to create the ability to edit information in exceptional circumstances could help address concerns about the permanent nature of blockchain records.
The potential gains from blockchain adoption include increased compliance, higher quality data, greater transparency and smarter, more efficient, processes. For example, Accenture, in partnership with Microsoft and Avanade, has developed an identity prototype based on blockchain technology – a type of database system that enables multiple parties to share identity data with an extremely high level of confidence and security.
Realising the potential gains of DLT requires agencies to liaise widely, educate themselves and define their role in a fast-developing ecosystem. And that’s going to be tough. Will it be worth the effort? For me, the resounding answer is yes and there is no choice! But I’d be very interested to hear your views and how you see blockchain’s impact for revenue agencies.
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See this post on LinkedIn: Blockchain adoption is accelerating in public service.