BLOCKCHAINS UNCHAINED: The Implications of Blockchain Technologies for the Public Sector

Draft Working Paper (Second Half)

Observatory of Public Sector Innovation

Reform of the Public Sector Division (RPS)

Directorate for Public Governance (GOV)

OECD

26 February 2018


Prepared by Théo Bourgery, Intern, opsi@oecd.org

This draft paper is shared online on the OPSI blog (http://oe.cd/opsi-blog) for public comments from 26 February 2018 through at the 20 March 2018. Interested individuals are invited to REVIEW and COMMENT on the paper by 20 March 2018 through the collaborative document at http://oe.cd/blockchainunchained or by editing the document in tracked changes and emailing revisions to opsi@oecd.org.

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.




Blockchain technologies an governments: challenges

The implementation of Blockchains does not come without challenges. While its applications in the public sector are numerous, they are not always evident. It is not the case that Blockchains answer all of governments’ problems. The next section seeks to make sense of such challenges and understand where technological limitations lie.

Transparency, Confidentiality and Decentralisation

Public Blockchains allow for perfect transparency, where “decentralised architectures generally rely on the disclosure of everyone’s interactions” (DeFilippi, 2016, p.1). Confidentiality settings are close to non-existent. Yet confidentiality and privacy mechanisms, at a time when the storing of personal information becomes more likely, are of paramount importance. Rules and laws insist on the absolute protection of such information. This is particularly well exemplified by the EU’s right-to-be-forgotten principle, which stipulates that an individual may ask to have her record deleted from government databases (see Gabison, 2016).

A necessary trade-off will have to be struck between levels of decentralised decision-making and privacy settings. Higher levels of privacy will require more centralised governance models (permissioned Blockchains) while “radical transparency” (DeFilippi, 2016, p.0) will bring risks to the exploitation of personal data, but remains closer to the Blockchain technology’s underlying aim to function independently of centralised authorities.

Coding and Governance Models

Who, or what, is the legitimate governing entity of Blockchains, be it public or private? As greater accountability on all spheres of public life is demanded by civil society, decisions over who controls Blockchains is of importance. DeFilippi & Loveluck (2016), in the specific context of the Bitcoin platform, decipher two layers of coordination:
  • “The infrastructural layer: a decentralised payment system based on a global trustless peer-to-peer network which operates according to a specific set of protocols;
  • Layer of architects: a small group of developers and software engineers who have been entrusted with key roles for the development of this technology” (p.10).

Levels of decision-making, and the integration of such decisions in the platform’s code, are thus contingent on… the code previously drafted. Power dynamics, even in public Blockchains, are ultimately constrained in what the code of each and every platform allows for.

As governments bring their attention to Blockchains and further development occurs, it might be that there will need to be an added focus on the level of government intervention versus room for a consensus-based way forward. It will ultimately require government entities to be familiar with the process of coding, and constrain room for change on the platforms to what is deemed feasible and democratically acceptable.

Talking About Blockchain – Separating Blockchain from Bitcoin

There seems to be a large consensus across Blockchains specialists that talking about Blockchains to citizens is one of the most complex part of their jobs. In the words of Justin Herman (2017), Emerging Citizen Technology Programme Lead at the US’s General Services Administration, “The technologies of Blockchains are supposed to increase trust. And yet, […] either within Government or within the Blockchain community itself, there is an inherent distrust. That’s one of the most important things we have to work on”. Similarly, Tomicah Tillemann (2017), co-founder of the Blockchain Trust Accelerator at the New America think tank, considers the lack of education about the technology to be one of the main hurdles facing the Blockchain community: “Blockchains are technologies that are very misunderstood, it is complicated technology. We spent a year and a half with some of the best thinkers and the best communicators in the World, trying to come up with new strategies for explaining the technology. We have made some progress there, but the basic reality is that this is not a simple technology”.

At the same time, Emmanuel Noah (2017) of BenBen speaks quite differently of his introduction of Blockchains to senior public officials: “What spoke most to the authorities when we introduced our Blockchain solution were the benefits that the solution brought in terms of public service delivery, along with the possibility to maximise revenue generation […]. The Government has revenue targets, customer satisfaction reviews – these were the main arguments we used with the Government”. On a rather different page still, Mats Snäll (2017) of the Land Registry Authority argues that he “should not be forced to explain [Blockchain technologies] because no one should even care about that. By essence it is complicated to explain a technology if you are not a technician. You are not asked to explain how a medical diagnosis works if you are not a doctor.”

Along with this defiance, and almost paradoxically, the expansion of the Bitcoin platforms has been significant in recent years – in terms of market cap, value of the Bitcoin against the US Dollar, or the number of recorded daily transactions. More may need to be done to explain and convey the possibilities before blockchain technology can be used widely and become accepted.

Copyrights

Copyrights can be apprehended from two different perspectives when integrated to any Blockchain architecture:

As content becomes so multidisciplinary and copyright ownership blurs, Blockchains are excellent tools to “timestamp [artists’ and content producers’] work, keep a ‘vigilant’ eye out for anyone violating their copyright, create a permanent record of their work and issue their clients a time-stamped copyright certificate” (Willms, 2016). In this sense, they also serve as proof of ownership and proof of existence.

On the other hand, “[o]nce a copyrighted work of art is recorded on the ledger, it will become virtually impossible to take down because no central server can be disconnected and no individual can be stopped.” (Gabison, 2016, p.6). Any erroneous information, if confirmed on a blockchain and added to a secured block – for malicious purposes, but also due to nodes’ ignorance – will indeed not be mutable or destroyed.

This is of issue in legal terms – who then will be penalised for the provision and use of illegal content? While original infringers (illegal providers of content) may be held liable – and will most likely be more easily traceable than in the current system – they may quickly become judgment-proof. This is particularly true when “a copyright holder attempts to recovery for every download for each upload” (ibid.), making original infringers unsolvable in front of Justice. Instead, copyright holders may be more inclined to file injunctions to block access to links rather than deleting such links (Gabison, 2016, p.7) – thus going after subsequent infringers (illegal content users) instead. At the same time, it may prove necessary to think of new governance mechanisms to control what goes into Blockchains with regards to protected content – in the form, for example, of accredited observers.