The appeal of blockchain technology extends beyond cryptocurrency. Currently, it is being explored by governments around the world for applications ranging from e-residency to Internet of Things devices. Increased efficiency and security are the major reasons national administrations are considering the integration of blockchain technology in their operations, says Pablo Soria de Lachica.
The distributed ledger is a digital record of transactions that is spread across peer-to-peer networks. Attempting to create unrealistic records is very difficult, since each “block” in the chain is encrypted. Also, because the blockchain is not found in a single location, it is nearly impossible to alter every single record on the ledger. If applied, citizens’ identities and transactions with the state will need less checks to ensure accuracy and security. The US Food and Drug Administration recently issued a formal notice to obtain information on the blockchain’s application for exchanging patient-level medical data in the United States Critical Illness and Injury Trails Group network. The secure exchange of sensitive information will reduce the required investment in governments’ cybersecurity infrastructure.
The decentralized nature of Ethereum and other blockchain technologies has considerable potential to reduce costs borne by the state to provide public services. For example, McKinsey reported that for real estate transactions across countries that are part of the Organization for Economic Co-operation and Development, buyers pay $3.5 billion per year in fees to register their properties. A reliable and safe digitalization of these processes could allow governments to pass cost reductions onto citizens, or reallocate resources where they are most needed.
The significant reduction in operating costs due to distributed ledger technology in the private sector can have similar benefits for the public sector, notes Pablo Soria de Lachica. In the business word, Forbes reports financial reporting costs could fall by up to 70% for business to business transactions. After a successful testing period, the Australian Securities Exchange (with a market capitalization of $1.5 trillion) announced in December 2017 that it would use distributed ledger technology for the clearing and settlement of equity transactions in the near future. Blockchain technology is already being used as a tool to allow democratic governments to remain transparent to the public. The National Research Council of Canada is using the Ethereum blockchain to disclose the award of federal grants in real time. Such practices are expected to increase the level of trust between tax payers and their elected representatives. Using Ethereum also enables the government to reduce paperwork with smart contracts, reducing the administrative costs of grant programs.
Pablo Soria de Lachica is an internationally recognized foreign exchange broker, who currently collaborates with Kartoshka, a global leader in technological solutions for sales, telemarketing and customer support. He also offers professional guidance and educational materials to the investment community, authoring a number of instructional texts and series of webinars. Soria de Lachica received his MBA from Universidad Tecnológico de México. He is an active supporter of community causes, including the Boy Scouts and Delta Epsilon Sigma programs. He is also a contributor to many charitable organizations including Bridges for Peace, the America-Israel Cultural Foundation, and the Jewish Federation of Greater Phoenix.
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