For the past two years, CGI has seen an exponential uptick in commercial sector interest in blockchain beyond just the financial services industry. Many government agencies also have been wading deeper into the blockchain waters.
For example, the U.S. General Services Administration (GSA) and other federal agencies have issued contracts for proofs of concept (POCs); the Department of Homeland Security has issued more than $1 million in blockchain startup grants; and the Departments of Defense and State have issued requests for white papers and held industry forums. (See a related blog by my colleague Sean Curry titled, “Blockchain: Should federal agencies use it?”)
States such as Delaware, Illinois and Maine have begun blockchain pilots as well, analyzing applicability to birth certificate digitization, vehicle title and registration, Uniform Commercial Code filings, and more.
Underpinning each of these efforts is a desire to better understand how blockchain can more efficiently deliver services and improve secure collaboration, both within and across agencies and with external stakeholders. Its inherent immutability and transparency, along with the ability to automate processes that are currently time-consuming and costly, make blockchain an attractive option for secure exchange and automation of transactions.
As a result, blockchain is relevant to a host of government use cases to improve collaboration, reduce fraud and abuse, speed time to access data and records and improve confidence in transactions.
Ready for POCs
This year, bitcoin celebrates its 10th birthday. Since its launch, 700 other blockchain platforms have been introduced into the market. The number of patent applications related to blockchain and cryptocurrencies has nearly doubled over the past year.
Blockchain can no longer be considered a technology in its infancy. As such, it is wise for agencies to explore blockchain technologies, analyze the impacts and start to adapt regulatory frameworks.
CGI sees four distinct advantages to agencies who invest in launching blockchain POCs now:
1. Familiarize and learn
A blockchain POC is a relatively low-cost way to familiarize an agency with blockchain technologies and how they can be used within existing technology and business ecosystems. In our experience leading blockchain POCs, beyond gaining technology insights, valuable lessons can be learned about how to prepare organizations to the move to blockchain, which—by nature—requires a new level of collaboration and information sharing.
Blockchain’s decentralized consensus model requires participants in the blockchain to agree on what needs to take place before a piece of data in the chain is permanently written to a block. In bitcoin, for example, the consensus standard is “proof of work.” This model requires agencies participating in a blockchain to gain consensus of the standard (and algorithm) with other participants, and verify that the approach agreed to meets regulatory standards.
Working collaboratively now on POCs with other stakeholders can help push discussions on how to work effectively together in this highly transparent model.
2. Shape standards and regulations
Within the commercial space, blockchain adoption is moving at blazing speed, even in advance of international standards. As of January 2018, ISO/AWI 22739 related to blockchain and distributed ledger technologies (DLTs) is in the preparation phase. CGI is participating in the development of the standard.
Increased adoption of blockchain will likely drive regulatory response. Through hands-on interaction with blockchain and DLT, agencies can provide well-informed insights to new standards and regulations surrounding these technologies.
3. Evaluate with minimal investment
In July 2017, over 100 U.S. federal agencies joined GSA’s Emerging Citizen Technology program at its U.S. Federal Blockchain Forum held to discuss DLT implications for federal use cases.
Through POCs, agencies can test out use cases and identify potential challenges to adopting blockchain and smart contracts using DLT. Our experience shows that effective POCs can be completed from a technical perspective in just a matter of days to weeks. Low-cost, small POCs can help validate the applicability of blockchain to piloted use cases to quickly determine if blockchain would be a beneficial approach.
Also using POCs, agencies can quickly uncover potential challenges—from security to governance—associated with taking the next step from POC to production. The earlier the conversations surrounding these challenges begin, the more creative agencies can be in brainstorming potential solutions.
4. Keep ahead of the curve
CGI has conducted a number of blockchain POCs—employing a variety of technologies—to investigate the application of blockchain to use cases highly relevant to the public sector.
While government has trailed retail and other consumer services in digital transformation, it recently has begun to see improvements in citizen satisfaction with its digital services. As blockchain becomes more pervasive in the commercial space, the expectation will soon be that government will be able to share information at the same speed and with the same level of transparency.
By committing to blockchain POCs now, agencies will be better prepared to make the necessary adaptations to operate within a blockchain model in the future.
Is your agency investing in blockchain POCs? Share your thoughts.