Town Hall Square in Talinn, Estonia, a country known for being the “blockchain nation”

David A. Johnston, an early blockchain investor and entrepreneur, famously said:

Everything that can be decentralised will be decentralised.

Johnston is actively advocating that in the nearest future all the economic activity and knowledge exchanges between humans will occur without any an overview from some central “authority” or the government. And he is not alone in this thoughts.

The idea of “decentralised direct democracy” governing model has been gaining traction in the past few years thanks to the rising popularity of the blockchain. This technology represents a “shift from trusting people to trusting math,” – a paradigm considered to be superior when it comes to managing all sorts of governmental processes. And some governments already took notice.

Governments on Blockchain: Successful Experiments

The Monetary Authority of Singapore has been working on a KYC (Know Your Customer) blockchain-based utility that will improve the verification procedures for those applying for fintech licensing.

Additionally, distributed ledgers are being tested for a variety of financial operations, including interbank payments, trade finance invoice reconciliation, auditing, and protection against money laundering.

The transparent and immutable nature of blockchain allows governments to gain more visibility into matters, without deploying additional admin resources and regulate only those activities that indeed require close attention. Blockchain also eliminates the need for a central authority to approve all those transactions, making them faster and less prone to corruption.

Estonia, the pioneering blockchain government, has already created a robust infrastructure of public services on the blockchain. Legal affairs have been placed on blockchain since 2015. The e-Court system allows for filing initial cases online, submission of evidence and related documents to reduce the chance of fraud. Even a large percentage of hearings are now held electronically. As the countries official website states, 800 years of working time has been saved after the implementation of blockchain-based solutions.

The Benefits of Blockchain-Based Governance

The mentioned examples illustrate how governments benefit from using blockchain to facilitate certain operations. But is it a good idea to replace the entire State with some code?

Also read: Why SEA governments should adopt blockchain

Marcella Atzori, a European Parliament blockchain advisor, outlines the next layering principles for possible blockchain-based governance models:

State as a single point of failure

Top-down centralised and hierarchical organisations tend to lack flexibility and capacity to evolve. Also, if the entity’s structure isn’t optimal, the entire system and its participants will be negatively impacted by it. Decentralisation helps to reduce or prevent the concentration of authority in one hand, thus reducing the risk of failure.

For instance, if the national tax authority employees go on strike, thousands of citizens are instantly affected because they cannot file their taxes on time or deal with other matters. Decentralising this process means that no authority could become an operational bottleneck.

Code is law

The blockchain technology has enabled humans to reach P2P consensus without relying on an intermediary. The blockchain is an open-source technology — not owned or controlled by anyone in particular. The code always remains “neutral”, the consensus is distributed and any transaction is easy-to-audit. These features of the blockchain help to improve the decision-making process within centralised organisations and eliminate such issues as corruption, data tampering, lack of transparency, and coercion.

For example, Daostack has recently deployed an Ethereum-based decision-making platform that allows anyone to create a decentralised autonomous organisation (DAO) – a scalable, self-organising entity that is operated by smart contracts on the blockchain. Such organisations can be leveraged to create a proposal-based governance system where each stakeholder can vote yes/no on the proposals and the execution of those will happen automatically with the help of blockchain. DAOs have no single point of control and the cooperation between the participants is indirect and triggered by code.

Personalised government services

Blockchain technology enables the delivery of more granular public services. For example, a distributed ledger can be used to store a person’s legal documents such as ID and even code them in a “digital identity” that would eliminate the necessity for each service provider to store the citizen’s credentials. Also, digital IDs will give a person the opportunity to share or withhold any personal information – something of major use for those who have to be present online legally.

Blockchain can also remove the government’s monopoly on providing certain services e.g. registering land or giving marriage license. Bitnation, for example, has already proposed a solution to create do-it-yourself governance apps – a utility that can help you create a smart contract, notarise a will, or incorporate a company with a few taps.

Conclusion

Historically governments have been designed to facilitate reaching consensus and coordination between distant groups of people. Blockchain technological capabilities reduce the need for such mediation and enable private networks of individuals to manage certain policies and government services directly. While we may no longer be close to a fully decentralised government, we are making quick advances in that direction.

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