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Blockchain and government opportunities

I present this to government departments to help understand blockchain technology and how governments are using it as well as the opportunities that blockchain start-ups could have.

Blockchain and government opportunities

  1. 1. BLOCKCHAIN AND GOVERNMENT Susan Dart Business Blockchain Consultant Susan.Dart@bigpond.com 01 February 2018
  2. 2. Overview ■ What is blockchain technology? ■ What makes it brilliant and revolutionary? ■ What is blockchain’s place in society? ■ What is the reach of the technology globally? ■ How does it function and what are its benefits? ■ What types of blockchains exist? ■ Which are the significant Australian blockchain companies? ■ How is blockchain impacting government? ■ When should you use blockchain? ■ How do you implement blockchain? ■ Conclusion 01/02/2018 © Susan Dart 2
  3. 3. BLOCKCHAIN REPRESENTS ATRUST MACHINE: manufactured trust through clever software 1/31/2018 © Susan Dart 3 Blockchain is open-source technology that maintains data as a shared record distributed over many computers of people that do not know each other. Instead of having a central authority, the entire network of combined computers is responsible for the integrity of the data, and via consensus, approves changes made to that data
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  6. 6. Why is blockchain so revolutionary? 1/31/2018 © Susan Dart 6 DECENTRALISATION •Encryption •Private and public keys •Secure •Irrevocable digital identity •No central point of failure •The source of truth PEER-PEER CONSENSUS •Revolutionises the way people interact (mining, trustless transactions) •Shared consensus •Shared governance REAL-TIME TRANSPARENCY •Open source code •Audit trail •Time stamped •Immutable data •Complete provenance DEMOCRACY IN TECHNOLOGYAND DATA •Democratisation of data •Anyone can be a miner FAIRVALUE •Tokens creation •Marketplaces •Distribution of costs •Consortiums SOCIAL STABILITY •Community contributes to code •“give back” mentality •Charity of tokens •Universal access •Greater economic participation •ICOs (Initial Coin Offerings) INCENTIVISATION •Rewards •Mining •Token ecosystems •Self-sustaining system
  7. 7. Technicalities: Blocks and MerkelTree are cryptographic details in a blockchain 1/31/2018 © Susan Dart 7
  8. 8. © Susan Dart 8 New business models will largely rely on synthesized types of assets (tokens)
  9. 9. Blockchain real-time dashboard Ethereum 9
  10. 10. Blockchain solutions solve existing problems with centralised system ■ Inefficiencies (such as duplication of effort and process) ■ Inability to recognise “source of truth in real-time operations ■ Increasing risk of data and financial loss not to mention administrative overheads ■ The need to go through a third party (such as clearing house with fees) ■ Adding time to complete transactions ■ Increasing complexity of business processes ■ The ease of monopolistic behaviour by bigger corporate entities 1/31/2018 © Susan Dart 10 …and also create new value opportunities
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  12. 12. 1/31/2018 © Susan Dart 12 How users would engage with Bitcoin
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  14. 14. 1/31/2018 © Susan Dart 14 (Chain of custody)
  15. 15. There are various types of “blockchains” 1. Bitcoin: 2008 best known public $BTC cryptocurrency 2. Ethereum: 2013 Ethereum public, open-source block chain featuring smart contracts.Gas allocating the resources in proportion to the incentive provided by the request $ETH 3. Ripple: 2012 gross settlement system with company acting as validator $XRP Focussed on almost free global financial transactions of any scale without any chargeback 4. Hyperledger: 2015 permissioned open source blockchain from the Linux Foundationn community to support high-performance, standardized business transactions 5. NEO: 2014 “Ethereum of China” digital identity; smart contracts $NEO 6. IOTA: 2015 usesTangle acyclic graphs; resolves scalability challenges of existing blockchain technologies without transaction fees; geared to emerging Machine-to- Machine economy and Internet ofThings; quantum resistant $MIOTA 7. Hashgraph: 2016 future of blockchain? Faster, fairer and more secure? virtual voting; eliminates massive computation and energy needs 01/02/2018 © Susan Dart 15
  16. 16. Types of blockchain consensus protocols 1/31/2018 16 POW (Proof ofWork) consensus: • Works in untrusted networks but relies on high energy use and is slow to confirm transactions • Non-democratic since large mining farms dominate this • Example: Bitcoin POET (Proof of ElapsedTime) consensus: • Efficient but requires processor extensions • Put on chips to lock up power • Hardware-based (Intel) • Example: Hyperledger Sawtooth POS (Proof of Stake) consensus: • Works in untrusted networks but requires intrinsic cryptocurrency • Uses much less resources • Example: Nxt Solo/No-ops consensus: • Validators apply received transactions without consensus which is very quick but can lead to divergent chains • Example: Hyperledger FabricV1 PBFT-based (Practical Byzantine FaultTolerance) • Efficient and tolerant against malicious peers butValidators need to be known and totally connected • Example: Hyperledger FabricV0.6 Kafka/Zookeeper: • Ordering service distributes blocks to peers • Efficient, fault tolerant but does not guard against malicious activity • Example: Hyperledger FabricV1
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  18. 18. 1/31/2018 © Susan Dart 18MANY BLOCKCHAIN
  19. 19. BLOCKCHAI N IN SOCIETY 1/31/2018 © Susan Dart 19
  20. 20. 01/02/2018 © Susan Dart 20 Australia’s role in standardisation of Blockchain Australia is leading the international development of standards governing blockchain ISO committee focuses on "technical solutions including protocols and interoperability" rather than legal obligations and regulatory matters, which Standards Australia said, governments should address The committee - which includes 35 ISO members like the US, UK, Germany, Canada and Japan - will be tasked with creating a common language for "interoperability systems, privacy, security and terminology" Australian Securities Exchange is using the technology as replacement for its equities clearing and settlement system The federal Treasury and Data61 (CSIRO) are studying potential use cases Australia's biggest banks are part of an international consortium looking at using blockchain for bond trading Many blockchain start-ups are appearing and being successful globally
  21. 21. Notable Australian blockchain companies ■ Horizon State – digital ballot box protecting votes and enabling voting $HST ■ Powerledger – energy market $POWR ■ Canya – marketplace for digital workers who choose their own terms $CAN ■ Brontech – data market ■ E-Nome – genomics and pharmaceutical testing market ■ Scalamed – online prescriptions ■ Agridigital – agriculture supply chain ■ Perth Mint (coming) – gold backed cryptocurrency ■ Many incubators encouraging blockchain start-ups 01/02/2018 © Susan Dart 21
  22. 22. All governments are investigating blockchain technology in some fashion 1/31/2018 © Susan Dart 22 Estonia: everything Canada: funding projects Dubai: 20 projects USA: policy & projects Netherlands: admin legal documents Israel: Bank using digital currency Switzerland: ICO framework
  23. 23. Estonia ■ E-residency: the e-Residency program as a government startup, in which virtually anyone with access to the internet can become a “digital citizen” of Estonia.The idea is to simplify the requirements for setting up a business in Estonia. “Join the digital nation” says the e-Residency official website ■ There are already 4,272 companies registered under Estonia’s e-Residency program, with more than 27,000 applicants from over 140 countries. By taking advantage of Estonia’s online government infrastructure, non-residents can set up their businesses with ease and become part of what could be the first “borderless digital nation” with its own cryptocurrency ■ Its nationwide health system has taken 8 years to implement: – All health records from doctors and hospitals on-line (14m documents) – ePresciption (99% of prescriptions are issued electronically) – Digital images available in real-time – eReferral – eAmbulance (17.6m Ambulatory case summaries and 8.3m exam reports) – Drug-drug interaction information – Cross-sectoral services such as health declarations for driver’s licenses or sick forms (working incapacity) 01/02/2018 © Susan Dart 23
  24. 24. Illinois blockchain projects and vision ■ Vital records including birth records and issuing digital identity ■ Academic credentials onboarding and issuing ■ Driver’s license onboarding and issuing ■ Entitlements and food stamp distribution (verifies digital identity and issues benefits into wallet to buy food; healthy eating incentives via smart contracts) ■ Tokenising tax credits: solar panels garner tax credit tokens into tax wallet which consumer can subsequently sell at an exchange ■ Grant distribution in case of disaster recovery: drone scans physical damage which is analysed which in turn system automatically issues grants which are tracked ■ Waste management: smart garbage container informs of need for pick-up which is example of demand-based marketplace ■ Property deed recording ■ Health provider registries and licensing 01/02/2018 © Susan Dart 24
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  26. 26. Governance and Law enforcement in general Current government systems ■ Ruled by legal code ■ Rules enforced by regulators ensuring compliance ■ Compliance costs are high Blockchain systems ■ Functions without legal rules ■ Technical code defines and enforces rules ■ Compliance costs are low due to software ■ Mining systems verify validity of transactions 01/02/2018 © Susan Dart 26  Effectively governing blockchain will require finding an optimal balance between governance, regulation, legal and technical code using a unique mix of skills and perspectives from a variety of stakeholders including lawyers, mathematicians, business experts and computer scientists  Blockchains can aid law enforcement:  Cases or transactions can be traced all the way back to the first one  unlikely to hit “third party doctrine” issues as they are public and freely accessible  blockchain is borderless so probably won’t need to seek foreign law enforcement assistance
  27. 27. Blockchain technology could help transform criminal justice system ■ Government Computing journal, by David Bicknell, published 04 July 2017 ■ Digitisation can transform the UK’s criminal justice system and put services at its heart, delivering better experiences for everyone ■ Blockchain could present a unique opportunity to increase accuracy and transparency through secure, auditable distributed records ■ Each criminal case could be logged ■ When a case is updated, changes could be reflected automatically with information being accessed by multiple institutions, which could help address issues of interoperability between justice agencies, as well as improving public access to data ■ Distributed ledgers will reduce cost, save time, and increase transparency, speed, and accuracy when processing justice system data for entire populations of prisoners across many different locations 1/31/2018 Copyright Susan Dart 27
  28. 28. 01/02/2018 © Susan Dart 28 Evidence Submitted Into CrowdJury Dispute Resolution process Voting outcome How CrowdJury blockchain app is used
  29. 29. CrowdJury: a blockchain solution for court processes of adjudication ■ CrowdJury.org is an example of a judicial system built with blockchain technology ■ Instead of lawyers, judges, and endless reams of paper, legal squabbles can be subjected to a couple of algorithms, a few expert jurors picked randomly, and some crypto-currency to pay people for their time ■ It shows the power of the blockchain to manage the records of an entire judicial system ■ The two sides put all relevant evidence (contract, emails, website, social content) into an immutable ledger on the blockchain, giving the evidence a timestamp and making it resistant to tampering by either side ■ An algorithm then searches automatically for people with certain expertise: in order to convene a 10-person jury online, who review the evidence for a set period of time and vote on the outcomeThe side with the most votes wins, with a pre-arranged settlement delivered automatically when the jury reaches a decision. Jury is rewarded with tokens 1/31/2018 Copyright Susan Dart 29
  30. 30. When do you need a blockchain i.e., a decentralised solution? ■ Need a shared database with multiple writers accessing and storing immutable data ■ Need to verify that transactions or records are valid and unchanged as part of important government or financial workflows ■ Multiple parties need to electronically view, verify and/or record actions of a given party in real-time ■ Need to share data between multiple parties via case management with automatic reconciliation ■ Want a distributed system that removes intermediaries and lower costs, simplifes process and speeds up complicated transactions ■ Need a trusted case management scenario, since no suitable intermediary currently exists for complex cases ■ Audit trail of cases is required ■ Avoidance of a cartel or monopolistic behaviour is needed ■ A balanced funding model for case management is desired 01/02/2018 © Susan Dart 30
  31. 31. Implementing blockchain A typical process for deploying a blockchain solution 1/31/2018 © Susan Dart 31
  32. 32. Conclusion ■ Blockchain (Distributed LedgerTechnology) is a transparent, foundational technology which is having a revolutionary effect on the world ■ It is a shared, global, incorruptible and therefore trusted ledger of transactions/cases and it’s controlled equally by all who wish to participate ■ There is an opportunity to apply blockchain to law enforcement projects leveraging from the efforts of the State of Illinois (USA), Estonia and CrowdJury as excellent role models for further investigations about blockchain ■ There is tremendous opportunity for blockchain start-ups in law enforcement ■ Blockchain is becoming instrumental to social change. It’s a remarkable technology that is simultaneously impacting consumers, governments, services and businesses globally at an extremely fast pace 01/02/2018 © Susan Dart 32
  33. 33. BLOCKCHAI N MARKET SPACE 1/31/2018 © Susan Dart 33

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