This document provides an introduction to blockchain technology and discusses its potential applications for government. It defines blockchain as a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a verifiable way. The document outlines the key characteristics of blockchain, such as transparency, security, and the ability to automate processes through smart contracts. It then discusses various state initiatives and potential uses for blockchain in areas like identity management, record keeping, voting, and food safety tracking. The document aims to build understanding of this emerging technology and how it could help improve government services.

1. Blockchain 101
Stephen Newell
Blockchain Leader
US Public Sector
IBM Corporation
srnewel@us.ibm.com
6/13/18

2. Blockchain is being called the next big transformative technology in government.
What is blockchain? In a nutshell, it’s an incorruptible and transparent
ledger of digital transactions. Examplesinclude identity management, contract
management, financial services, licensing, electronic voting and more. There is a lot to
like. This session introduces this fast-emerging technology and why it is particularly
suited to government applications.

3. High level of interest

4. Source: Google Trends for topic=blockchain worldwide news searches on 5/22/18
Google search for “blockchain” topic for past 3 years

5. Gartner Hype Cycle for blockchain
TIME
VISIBILITY
Technology trigger
Peak of inflated
expectations
Trough of
disillusionment
Slope of
enlightenment
Plateau of
productivity
You are
here

6. “As the internet resulted in a digitization of information,
blockchains result in the digitization of trust and agreements.”
- Andrew Keys of ConsenSys
It’s about de-institutionalizing trust

7. Three ways to look at blockchain
1. Yet another database.
(Shiny new tech)
2. Improvement in business networks / interactions / processes.
(Enterprise collaborations)
3. Disrupting / disintermediating businesses
(Decentralized participants)

8. What is blockchain?

9. In one sentence…
A blockchain is a list of transactions shared between multiple parties where the
new transactions are added at the end, never deleted, and never changed.

10. Private ledger kept by central authority
Independent systems of record
Business network with intermediary
Ledger
Asset
Transaction
Contract
Today – Centralized
Trust the central authority

11. Public ledger
Shared record book
No central authority
Distributed ledger
Asset
Transaction
Smart contract
Blockchain – Decentralized
Trust the blockchain

12. Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
. . .Starting
block
Chain of blocks Block contains all the transactions within a period of time.
Transaction
Transaction
Transaction
Chain has a complete history of all transactions from the starting block to the most recent block
Blocks are sealed with cryptography and chained together.
Each new block is linked to previously sealed blocks. Creating a
chain of accepted history with a verified record of every transaction.
Any attempt to change any transaction is visible to all participants.
1
2
3

13. Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
. . .Starting
block
Blocks added by consensus
Gather new transactions
Add to new block
Add block to end of chain
Consensus – agreement on next block by the network
1
2

14. Replicated across network
• Business network of nodes
• Each runs their copy
• Peer-to-peer network
• Spread across sites, countries, or institutions
1
• Each node gets a complete copy
• Nodes are kept in sync
2

15. Verified origin digitally signed
Consensus agreement on the next block
Provenance complete history / append-only
Transparency everyone has copy of complete ledger
Immutability tamper-proof
Finality history is never changed
Smart contracts automatically execute business contractual terms
Transaction
Transaction
TransactionBrings trust to transactions

16. Many varieties of blockchain
Key differentiators:
• Permission model
• Consensus approach
• Smart contracts
• Programmability
• Extendibility / Modularity
• Scalability and latency
• Resource consumption
• Use of virtual currency
• Privacy

17. "When I use a word," Humpty Dumpty said, in a rather
scornful tone, "it means just what I choose it to mean -
neither more nor less."
"The question is," said Alice, "whether you can make
words mean so many different things."

18. Blockchain == Distributed Ledger
Permissioned == Private / Consortium
Permissionless == Public / Non-permissioned
Cryptocurrency == Virtual currency
Node == Peer
Hybrid blockchain == Sidechain
For today, these are interchangeable terms

19. First blockchain application
Asset on the ledger
Sparked the interest in blockchain
Permissionless
It started with cryptocurrency
But Bitcoin has nothing to do with a government blockchain

20. Identity known participants
Endorsement not proof of work
Business assets not cryptocurrency
Privacy confidential transactions between parties
Governance group oversees rules and operation
Higher throughput up to several thousand / second
Blockchain for government is private

21. Components
Might be
• User interface
• Interface to existing system
• Interface to feed analytics, AI, etc.
2
Can run on laptop, server,
virtual instance, cloud
1
Operating System
Blockchain Platform
Smart Contract
Blockchain Application
API
P2P network, certificate authority,
consensus mechanism, access
control, crypto, blocks, other *
3
Contracts – Java, Golang, Solidity, other *
App – business as usual using an API4
Dev
Tools
* - depends on the platform

22. Integration
Might replace:
• Point-to-point integrations
• File transfers
• Reconciliation process
• Paper / electronic notifications
• Manual transaction input
Legacy
System(s)
API
Enterprise
Blockchains can be an addition and not a rip-and-replace.

23. Data storage
Non-permissioned blockchains store transaction data on the chain.
Permissioned blockchains can store data off-chain
• Keep transaction record size small (performance, storage size)
• Keep sensitive data off-chain (PII, PHI, etc)
• Control location of off-chain storage
• Maybe metadata on chain
• Maybe consent and logging of access on chain
• Maybe optional large documents for a transaction off chain
• Maybe store a hashed pointer on chain
• Must consider off-chain data protection and integrity

24. Permissioned networks require governance
Group to oversee the network and the blockchain
Rules and policies for the decentralized business ecosystems
• New members / onboarding
• Members leaving
• Valid transactions
• Updates/changes to rules
• Smart contracts
• Legal structure
• APIs
• Consensus
• Data ownership / sharing
• Security standards
• Privacy of transactions
• Business model / fees
• Operations
• Selection and oversight of network operator
• Certificate authority and keys
• More….

25. Why use blockchain?
Benefits:
Save time
Remove cost
Reduce risk
Improve trust
Advantages:
Eliminates data silos
Replaces flows in/out of central information systems
Share with privacy, security, integrity
Provenance of what happened when
Auditors get real-time view of truth
Prohibits fraudulent tampering
Clarity of contractual agreements
Tends to standardize information
Immediate deployment of policy to all

26. Example – Food Safety

27. How long to trace a package of mangoes back to the farm?

28. 6 days : 18 hours : 26 minutes

29. Retailers
Logistics
Growers
Manufacturers
Pilot with network members for mangoes

30. 2.2 seconds

31. Scaling up
Add:
Fruits / Dairy
IoT
Certifications
Consumers
Regulators

32. State activities

33. Illinois Blockchain Initiative (Nov 2016)
• Create regulatory-friendly environment
• Invite blockchain business to Illinois
• Put blockchain to use in state and local government wherever possible
Initiative includes five Proof of Concepts:
1. Property deed recording. Issued a report.
2. Academic credentialing
3. Health provider registry
4. Energy credit market
5. Vital records
Landing page for the initiative
Presentation to NCSL (PDF)
Delaware Blockchain Initiative (May 2016)
• Create regulatory-friendly environment
• Legal infrastructure for corporate shares in blockchain
• Name ombudsperson
• Commit to use blockchain in the state, starting with Public Archives project
State initiatives

34. Utah – 3/22/16
Primary voting on Republican party website members to nominate US President candidate
West Virginia – 5/8/18
Primary voting on mobile devices for U.S. Senate for a set of overseas military members
and families
Pilots

35. Legislation
Number of states
Adopted
(Signed by governor)
Sent to governor
(Enroll)
Active
(Intro or Engross)
Failed
Conduct study / working group 3 5
Corporate record-keeping 2 3
Voter records / election results 1 1
State record-keeping 1
Regulate professionals / businesses 1
Marijuana tracking 1
Caveats:
1. My broad interpretation of the legislation to categorize.
2. Only includes studies or operational use.
Does not include legislation on cryptocurrency, economic development,
recognizing contracts/signatures, taxing blockchain, and prohibiting use.
Source: https://legiscan.com/ with “blockchain” full text search

36. Uses in government

37. Business network of multiple organizations – share data / transfer assets
Fragmented and slow business processes
Significant reconciliation efforts
Difficulty in tracking end-to-end
Need for greater trust between parties
Characteristics

38. Fitting into ITSD Strategic Plan
https://oa.mo.gov/sites/default/files/ITSD-Strategic-Plan.pdf

39. Tracking renewable energy certificates
Tracking chain-of-custody for evidence
Tracking and processing permit applications
Tracking payday loans
Tracking opioids
Tracking marijuana seed-to-dispense / seed-to-sale
Tracking grants
Potential uses
Credentialing of professionals
Maintain vital records / identity
Maintain corporate records
Health provider registry
Consent management
Outcome-based payments
Milestone payments
Data sharing with blockchain controlling access

40. Getting started

41. Steps
1. Understand blockchain and the potential
2. Envision solution with stakeholders
3. Evaluate prototype / business case / value
4. Deploy pilot / governance
5. Iterate to grow capability / grow network / add integrations
Keys to success
Business network
Shared Value
Industry standards
Enterprise-ready
Extended value
Network effect
User experience
Recommendations

42. Reference Info

43. More info
Topic Description Link
NASCIO report Blockchains: Moving Digital Government Forward in the States https://www.nascio.org/Publications/ArtMID/485/ArticleID/496/Blockchains-Moving-
Digital-Government-Forward-in-the-States
Food Trust IBM page on the Food Trust blockchain solution https://www.ibm.com/blockchain/solutions/food-trust/
Delaware initiative Delaware plans to move forward with UCC filings https://www.delawareonline.com/story/money/business/2018/04/16/wyoming-giving-
chase-blockchain-moves-forward-delaware-part/438162002/
IBM Academic Initiative Blockchain resources for educators and students.
Includes six months no-charge use of cloud blockchain services
https://www.ibm.com/blogs/blockchain/2017/08/blockchain-in-academia-training-for-
students-and-educators/
IBM blockchain Landing page to explore the platform, start developing, and more https://www.ibm.com/blockchain/
Topic Description Link
Get started with Composer Use Composer in your browser or download a copy to run locally.
Has links to tutorials, documents, and community.
https://hyperledger.github.io/composer/latest/
Blockchain Developer Center IBM developerWorks landing page for tools, tutorials, code, and community. https://developer.ibm.com/blockchain/
Download Hyperledger Fabric Various signed Docker images for download. https://hub.docker.com/u/ibmblockchain/
github IBM Blockchain page for code samples, documentation, issues https://github.com/IBM-Blockchain
Zero to Blockchain IBM Redbooks course to start with no experience and build a complete
blockchain application
http://www.redbooks.ibm.com/abstracts/crse0401.html?Ope
n
GeneralDeveloper

44. State Description Notes
Arizona HB2603 [ADOPTED] – allows a corporation to store corporate records on a blockchain
California SB838 – use blockchain to file corporate records and permits the Secretary of State to store documents on blockchain
Colorado SB18-086 [ENROLLED] - use blockchain to record transactions and state records
SB18-029 – tracking marijuana grow-to-dispense with blockchain
5/16/18 – sent to governor
2/7/18 – postponed indefinitely
Delaware SB69 [ADOPTED] – use blockchain to create and maintain corporate records; allows trading of stock on blockchain.
Hawaii HB1481 – establishes Blockchain Technology and Digital Currency Working Group
Illinois HJR0025 [ADOPTED] – task force to study how state, county, municipal governments can benefit from use of blockchain Task Force Report
Maine SP305 / LD950 – commission to study use of blockchain to support and enhance paper ballots to improve security, election
transparency, and reduce costs
Failed.
Maryland HB1634 / SB1068 – Consumer Protection Commission will study cryptocurrencies and other blockchain technologies
New Jersey A3613 / S2297 – establishes the NJ Blockchain Initiative Task Force
A3768 / S2462 – adds blockchain as a technology for a corporation to maintain corporate records
New York A08792 – state board of elections will evaluate blockchain to store voter records and election results
A08793 – establish a task force to study use of blockchain for state record keeping, information storage, and service delivery
Vermont S.138 [ADOPTED] – Secretary of State will submit a report to the GA: blockchain technology: opportunities and risks by 1/15/16
S.135 [ADPOTED] – Vermont Law School will submit a report to the GA: opportunities/risks in fintech; policy direction by 11/30/17
H.765 – review areas for blockchain adoption to regulate businesses and professionals
Technology report
Fintech report
Virginia HJR153 – establishes a one-year joint subcommittee to study blockchain for state recordkeeping, information storage, and service
delivery.
Wyoming HB0101 – authorizes corporations to use blockchain for corporate records; shareholders known by a digital address and private key;
and shareholder voting with electronic signature
Legislation