A blockchain-based administrative governance model

Published on April 22, 2022

 

An article published by Lorena Stanescu on Feb 7th, 2022.

 

1. Public administration — Trust — Blockchain

Trust is the foundation for the legitimacy of public institutions and a functioning democratic system. It is crucial for maintaining political participation and social cohesion.” (OECD)

Public administration trust is fundamental to both economic growth and societal well-being. In the past years, a lack of confidence in governments has been weakening the credibility of public institutions, fostering political polarisation and favoring populist groups. The year 2020 has posed new difficulties to trust in public authorities, as well as civil rights and democratic institutions in general. Perhaps a not-so-surprising fact is that, in a recent study, governments were rated as being less ethical and competent than corporations, the media, and non-governmental organisations.

Given the context of global digital transformation actions, accelerated by the COVID-19 pandemic, states struggle to adapt to the emerging, but disruptive technology developments in the economy and society. In an increasingly “connected” world, administrations strengthen priorities to fit for the future.

With the trust in government decreasing, blockchain technology offers the solution of a “build-in trust” ecosystem between and among unknown people, allowing them to perform business and share information without the need for a middleman while also preserving data integrity and giving a comprehensive audit record.

In an emerging digital society, blockchain mass adoption may challenge discussion on rethinking the current philosophy of government. Perhaps, following Thomas Hobbes’ governmental model, one can imagine a digital Leviathan, based — not on the power of a ruling elite -, but the distributed consensus algorithms. Likewise, as it was argued, bitcoin may be construed as an evolution of social contract theory.

Nonetheless, one unforeseen consequence of blockchain is that it may drive individuals and society to reach a new stage of maturity[1] in how subjects such as governance, authority, data control, and civic participation are conceived and assimilated into the governance system.

There is a growing literature on the benefits of blockchain in the public sector, and one of the most recent and popular subjects is theoretical approaches to governance. The studies cover a wide range of blockchain applications designed for administrative space, with many different interpretations of the concept of decentralisation.

For example, based on open, axial, and selective coding processes, this research identifies three categories of blockchain governance in the public sector: micro, meso, and macro-level of governance, corresponding to the individual, organisational, and institutional levels decisions and interactions.

Some other researches include technical solutions, such as “an application model of government big data sharing based on blockchain, which mainly realizes the data sharing between government sectors from two aspects: unified data sharing model and autonomous authority management”. According to the authors, in comparison to the existing centralised approach, the proposed model can better preserve distributional concerns while ensuring data security, making it a viable choice for municipal big data sharing.

In another interesting study, the researchers present “a new platform for user modeling with blockchains that allows users to share data without losing control and ownership of it and applied it to the domain of travel booking [2].

Understanding the dynamics of administrative processes and the features of the DLT is critical to the adoption of blockchain in the public sector.

2. Proposal of a new blockchain-based administrative governance model

Within the efforts to redefine governance, two divergent emphases can be seen. A new governance model which involves both the government and the for-profit sector is referred to as “new governance”. In the view of the other, “new governance” is the process of providing societal direction primarily through civil society organisations: governance centered on citizen participation. “The former emphasizes adaptation, the latter transformation[3].

Having in mind the transformation feature of the new governance, the existing architecture of the public administration, and the trust relationships established between the public sector actors, I am considering a simplified approach of a new blockchain-based administrative governance model, founded on three pillars: data governance, decentralised governance, and participatory governance.

The proposed blockchain-based administrative governance model is designed to improve the quality of public administration by addressing existing key challenges: trust, transparency, and inter-institutional communication.

Based on functionalities such as distributed ledger, smart contracts, data trust, and traceability, blockchain technology provides a new model of data governance, enhancing access and ownership of data, and enabling distributed control.

Proposal of a new blockchain-based administrative governance model

3. Benefits

Like any other service organisation, public administration requires continuous open innovation to remain competitive, cost-effective, and meet citizens’ future expectations. Governments around the world allocate funds for blockchain-enabled initiatives such as the registration of ownership of movable assets, self-sovereign identities, supply chain, and verifying ownership.

By adopting blockchain technology the authorities endeavor to make public services more accessible, secure, efficient, inclusive, and transparent. Decreasing the volume of documents needed, ensuring integrity and ownership provenance, as well as speeding up processes are some of the results blockchain technology provides to overcome some specific issues of public administration such as bureaucracy, fraud, human errors. As an outgrowth, these administrative efforts are reflected in an improved quality of life for people.

Blockchain-based administrative governance model

4. Challenges

The numerous use cases provide a more comprehensive picture of public demand for blockchain functionalities and potential improvements, but it also highlights some of the concerns related to scalability, energy consumption and carbon footprint, immutability, privacy, and regulatory uncertainness. The industry is working on several solutions (mini-blockchains, tree-chains, and side-chains, using consensus mechanisms like proof-of-stake (PoS), pure proof-of-stake (PPoS), protocols to modify data on a blockchain, or developing privacy-preserving solutions for blockchain) to overcome the potential barriers of adopting blockchain in the public sector.

Though blockchain has many benefits for public administration, it also has significant issues that should be addressed case-by-case.

5. Conclusions

Conceptually, the debate about good governance has many substrates of normative political theories. The blockchain-based administrative governance model above introduced is envisaged to provide improved governance.

The proposed blockchain-based administrative governance model outlines the relations existing in the administrative system, on the one hand, between the public institutions and the beneficiaries of the public services (citizens, companies, and other entities), and, on the other hand, between different public institutions.

Data governance, decentralised governance, and participatory governance are key-concepts in redefining “the relationship between bureacracy and democracy, between administrators and the people, between managerial responsability and popular sovereignity and the rule of law[4].

By making data access and sharing services more efficient and secure, minimising bureaucratic resistance, boosting citizen engagement, strengthening digital democracy and transparency, and supporting automatic processes through smart contracts, blockchain helps create better public facilities.

As expected, blockchain is a disruptive technology and will change today’s game as we know it. In advancing our understanding of blockchain-based public governance, the objective is not to attribute the technology the role of being the answer to every problem but to research the frames in which this structure may be a driver of innovative good governance.

***

This article was written within the DLT Talents, a program developing a community of leading women in the blockchain industry. Being a DLT Talent, #cohort 3, is very special for me. I feel grateful to be part of such an empowering and diverse environment, with passionate and inspiring blockchain professionals.

[1] Melanie Swan, Blockchain: Blueprint for a New Economy, 1st Edition, O’Reilly Media, 2015, p. 54.

[2] Shrestha Ajay Kumar, Vassileva Julita, Deters Ralph, A Blockchain Platform for User Data Sharing Ensuring User Control and Incentives, Frontiers in Blockchain, volume 3, 2020, available at <<https://www.frontiersin.org/article/10.3389/fbloc.2020.497985 >>.

[3] Lynn, Jr, Laurence. (2012). The many faces of governance: adaptation? Transformation? Both? Neither?. The Oxford Handbook of Governance. 10.1093/oxfordhb/9780199560530.013.0004.

[4] Lynn, L.E.. (2009). Public Management: A Concise History of the Field. The Oxford Handbook of Public Management. 10.1093/oxfordhb/9780199226443.003.0003, p. 20.

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