Each year, the United Nations conducts a study into eGovernment across the world, the United Nations eGovernment Development Index (EGDI). The report looks at the effectiveness of delivering public services online, and in 2016 the UK was rated the top country, globally, for eGovernment. Since then, although our score has remained broadly the same, we have dropped to eleventh place overall [2022 report – links to pdf] with other countries leap-frogging us during the pandemic by accelerating their engagement with cloud-based technologies, citizen video platforms and online accessibility, to name but a few.

The UK is extremely fortunate that it has relatively high levels of average wealth, and 63.5m internet users for a population of 67m. This means that many of the challenges in eGovernment are concerned with digitizing services, reaching, educating and informing the last remaining unconnected people around the country – or building trust.

Trust is a key issue in the UK today, and according to the Office of National Statistics, only 35% of the population trust the national government, far lower than the global average of 41%. Furthermore, the UK is not a nation of cynics – the same study reported that 75% of the population admitted to being trusting of other people, so there is clearly a challenge to be overcome for national government.

Blockchain may not be a silver bullet to fix every issue, but it has a clear part to play in restoring trust in the UK government and across the world.

Blockchain’s Role in Building Transparency

Blockchain technology is now tried and tested, and although many people still associate it with cryptocurrency, it is a mature and trusted technology that has many more applications than bitcoin. Blockchain is a visible, shared, unchangeable, distributed database that can track many kinds of assets, and members of the blockchain all share a single source of the truth, making it completely trustworthy. Blockchain’s architecture is based on a chain of interconnected data blocks, and the linkages between blocks makes it very difficult to tamper with.

There are many ways that blockchain can support the public sector – and is already doing so. For example, University College London is conducting research into how to make blockchain more energy-efficient, a topic we’ll return to later. Similarly, many cloud providers are supporting the ecosystem and looking at ways to better enable the blockchain industry to be more agile, sustainable and innovative.

But blockchain has much more potential, especially when we look at how it can support eGovernment, helping to create transparent and trusted systems. Identity and property records could use blockchain systems, with transactions being certified in a clear, traceable and unchangeable way. Blockchain can play a crucial role in eSignature solutions, ensuring that all signatories are who they say they are, and that records are securely stored. In fact, almost any kind of ownership can be proven using a blockchain solution with on-chain records.

Data breaches and identity fraud have become common in recent years, and blockchain offers a way of making records more resilient. Blockchain infrastructures are designed to be ‘trustless’, relying on many supporting validators; these validators secure the network and ensure that the transactions are correctly processed on-chain, helping to minimize the chance of fraud. Identity management on blockchain could also verify people’s identity without relying on one centralised store, which has clear applications in the area of e-voting, for example.

However, there are two main challenges to broader blockchain adoption in the public sector: sustainability and the creation and adoption of the central coin or token to support the public sector blockchain solution. We will tackle them one at a time.

The Energy Consumption Question

With the looming climate crisis, one of the main concerns about blockchain is its power consumption. According to the White House, the total power usage for the cryptocurrency economy is around 180 billion kW hours per year, which is more than the electricity used by all of Australia in the same time period. Blockchain may offer a transparent, trustworthy system, but if it is power-hungry and inefficient, then it’s not a fit system for modern use, particularly in the public domain.

But this is not a true picture of blockchain. Proof-of-Work, the consensus mechanism that validates transactions in bitcoin, is highly power intensive, whereas Proof-of-Stake is much more efficient. In a network operating the PoW protocol, transactions are validated by a mining node. The verifying nodes solve a mathematical problem, mostly using the computing power of a GPU or CPU, which runs continually.

In comparison, PoS consensus mechanisms are managed by a network of validators that run infrastructure equipped with the operational cryptocurrency of the network itself. They are driven by a common interest in maintaining network security and transparency. These validators ensure the legitimacy of the transaction by operating a pool of staking nodes that delegate a portion of their token assets to the process, a little like paying a premium for an insurance policy. PoS nodes do not necessarily use the full compute resource capacity, making it a much more sustainable and energy-efficient blockchain solution.

To illustrate how well this works, we can use a real-life example. When the Ethereum consensus mechanism switched from PoW to PoS, its power consumption dropped by over 99%. Ethereum’s PoS system now uses one twenty-fifth of the power used by PayPal and twenty-four thousand times less than the gold mining industry.

Ethereum is able to deliver results at scale, efficiently. According to academic studies from UCL, it has half the number of validators as Bitcoin but handles five times more transactions per second, not to mention layer two solutions such as Polygon and Solana also working on a PoS basis, which can drastically impact the amount of transactions that are then passed into the Ethereum chain. As a result, its power consumption per transaction is almost three hundred thousand times lower than a PoW solution. This is clear evidence that there are blockchain systems capable of delivering power-efficient solutions across the globe.

Building a UK-backed Stablecoin

We now return to our second challenge for a UK blockchain-based solution, the operational token. It sounds simple, but a blockchain technology designed to be used in the public sector and for everyone needs to be publicly accessible. A private blockchain solution would be centralized and the controlling power would sit with a central authority, rather than being a transparent, distributed ledger with public access to on-chain data.

As you’ll remember from previously, Proof of Stake consensus mechanisms require validators. In turn, these validators require incentives in the form of tokens or coins to confirm transactions. If validation was ‘free’, then there would be no reason to do the ‘work’ involved in the process, and like a website form with no Captcha codes, it’d be jammed up with spam and fake transactions.

There are two main options for these tokens: they can be ‘pegged’ to the national currency as a stablecoin, or they can be an entirely new central bank digital currency (CBDC) run by an authority like the Bank of England.

Both of these options would have to be very secure and well regulated, but the complexity would be no greater than any other national IT project. The CBDC is a much more complex project to fulfil, rather than the GBP-pegged stablecoin, and on the bright side, the pound-pegged stablecoin would be an easier solution to build, quicker and would avoid the economic impact of dollarization when using a USD-pegged stablecoin.

Into the Future

It is important not to oversimplify this matter. Every link in a blockchain network can be trusted because of how the system as a whole is built, and to mirror this it’s important that the human and organizational network behind the systems can be trusted as well. For example, staking providers must be selected in a fair and transparent process, with open competition. This is something that the UK government is already very good at – public sector tender processes have clear and transparent frameworks, although the criteria behind them must be rigorous and avoid an over-dependence on price. We are building innovation, and the systems that the government could put in place now must be of high quality to pave the way to a sustainable future.

There is a very real opportunity for the UK to supercharge its innovation pedigree, tackle the issue of trust and drive renewed progress in eGovernment. We are still a world leader in eGovernment, helping citizens everywhere to access and engage with public services, and many would say that the templates we created have enabled many other countries to drive their own excellence and innovation. However, as the great Einstein once said, life is like riding a bicycle: to keep your balance, you must keep moving.

We must keep moving.

About the Author

Omar Abi Issa is an award-winning Senior Business Development Manager at OVHcloud, with over 7 years of experience working with clients in the B2B SME/Enterprise areas. Specialising in helping tech companies with a strong focus on blockchain, AI & ISV sector achieve higher performance and lower operational costs.

Connect with Omar: https://www.linkedin.com/in/omarabiissa/

Find out more about OVHcloud’s blockchain solutions here.