How Can Blockchain Technology Help Government Drive Economic Activity?

Thomas Hardjono and Pete Teigen providing “A Blueprint Discussion on Identity“: Data breaches, identity theft, and trust erosion are all identity-related issues that citizens and government organizations face with increased frequency and magnitude. The rise of blockchain technology, and related distributed ledger technology, is generating significant interest in how a blockchain infrastructure can enable better identity management across a variety of industries.  Historically, governments have taken the primary role in issuing certain types of identities (e.g. social security numbers, driver licenses, and passports) based on strong authentication proofing of individuals using government-vetted documentation – a process often referred to as on-boarding. This identity proofing and on-boarding process presents a challenge to government because it is still heavily paper-based, making it cumbersome, time consuming and dependent on siloed, decades old, and inefficient systems.

Another aspect of the identity challenge is the risk of compromising an individual’s digital identifiers and government-issued credentials through identity theft. With so many vital services (e.g. banking, health services, transport, residency) dependent on trusted, government-vetted credentials, any compromise of that identity can result in a significant negative impact to the individual and be difficult to repair. Compounding the problem, many instances of identity theft go undetected and only discovered after damage is done.

Increasing the efficiency of the identity vetting process while also enhancing transparency would help mitigate those identity challenges.  Blockchain technology promises to do just that. Through the use of multiple computer systems (nodes) that are interconnected in a peer-to-peer (P2P) network, a shared common view of the information in the network ensures synchronicity of agreed data. A trusted ledger then exists in a distributed manner across the network that inherently is accountable to all network participants, thereby providing transparency and trustworthiness.

Using that trusted distributed ledger, identity-related data vetted by one Government entity and including that data’s location (producing a link in the chain) can be shared with other members of the network as needed — allowing members to instantaneously accept an identity without the need to duplicate the identity vetting process.  The more sophisticated blockchain systems possess this “record-link-fetch” feature that  is inherent in  the blockchain system’s building blocks.  Additional efficiency enhancing features allow downstream processes using that identity assertion as automated input to enable “smart contracts”, discussed below.

Thus, the combination of Government vetting of individual data, together with the embedded transparency and accountability capabilities of blockchain systems, allow relying parties (e.g. businesses, online merchants, individuals, etc.) to obtain higher degrees of assurance regarding the identity of other parties with whom they are conducting transactions…..

Identity and membership management solutions already exist and can be applied to private (permissioned) blockchain systems. Features within these solutions should be evaluated for their suitability for blockchain systems.  Specifically, these four steps can enable government to start in suing blockchain to address identity challenges:

  1. Evaluate existing identity and membership management solutions in order to identify features that apply to permissioned blockchain systems in the short term.
  2. Experiment with integrating these existing solutions with open source blockchain implementations.
  3. Create a roadmap (with a 2-3 year horizon) for identity and membership management for smart contracts within permissioned blockchains.
  4. Develop a long term plan (a 5 year horizon) for addressing identity and membership management for permissionless (public) blockchain systems. Here again, use open source blockchain implementations as the basis to understand the challenges in the identity space for permissionless blockchains….(More)”.