Blockchain For Government Services
Cryptocurrency is top of mind for many people these days. If you cut through the media frenzy though, the potential protocol revolution that Bitcoin and other blockchain applications promise is knocking at the door. Many of the stories in the press track the relative market value and uses for each currency. Yet these reports often ignore the blockchain technology empowering crypto transactions and ledger records. It is critical to understand the role blockchain plays in the process and the opportunity the technology poses for local government services.
What is blockchain technology and what purpose does it serve? A blockchain is a specific type of distributed ledger technology that organizes data into blocks that are “chained” together chronologically by a cryptographic hash function and confirmed by a consensus mechanism. While most associate the technology with currency exchange, its true function lies in frictionless transfer of information and validating the worth or status of said information. (examples-NFT, Top Shot?)
The corporate and finance world already feels the blockchain impact. That said, my local government focused research (and writing) has me wondering how municipalities could leverage the digital tool.
My research poses how local jurisdictions achieve greater efficiencies without sacrificing service provision quality. Most folks would be surprised at the lengths leaders go to reduce service costs while also enhancing productivity and quality. Municipalities often pursue initiatives individually. For example, I evaluated a small north Texas town leveraging Lean Six Sigma analysis in replacing a wastewater treatment plant as well as a mid-sized city utilizing complex tax incentives to enhance water delivery and economic development.
However, regional cooperation frequently bolsters productivity while spreading costs among collaborating units. These opportunities revolve around large regional players such as the major hub city, a county or even voluntary cooperative jurisdiction like a council of governments (COG) or regional planning commission (RPC), or a true regional jurisdiction in the city-county consolidated vein. While examples abound, my favorite studies investigated how a regional EMS serviced 16 cities with a total population easily eclipsing 1 million people at zero taxpayer cost. That is an impressive story in urban planning efficiency. Yet the possibilities extend to rural regions such as the RPC providing contract city management to isolated towns with flagging tax bases.
So how does Blockchain enter the municipal world? What sorts of innovation can local leaders leverage?
A few ideas come to mind.
Big Blockchain Ideas
Land registry
Recording land transactions, ownership, and property values remains a critical municipal responsibility as well as a revenue sources as most jurisdictions need property tax revenue to exist. Loading title documents on the blockchain reduces the likelihood of fraud by allowing all parties to sign and view documents from the chain as well as verify ownership more easily. It also yields more efficient record management.
Voting/elections
Municipal elections historically suffer from egregiously low turnout, apathy, and fraud. These realities combine to imperil democracy as a little electoral chicanery can go a long way toward undermining legitimate vote preference when few people vote and the margin between holding office and dusting off the old concession speech is razor thin. Blockchain technology offers solution to each malady by allowing voters to cast their ballots through their personal digital device via decision tokens. A manipulation free blockchain logs the results which reduces the possibility of human error. This does not speak to the obvious efficiencies gained from replacing the labor (and paper in some precincts) intensive election management process taxing county level resources across the country.
Utilities
Local jurisdictions manage a multitude of critical services directly impacting the community safety and comfort. The great Texas “Snowmageddon” electric grid breakdown of 2021 dramatically illustrates the need for secure utility delivery and guarantees that supply meets demand. A blockchain could provide a system for tracking energy exchanges providing jurisdictions the opportunity to buy and sell energy from each other. This could even lead to families exchanging energy capacity based on demand thus yielding a more efficient energy market that more effectively matches need with actual consumption.
Other Administrative Uses
The technology original digital ledger structure obviously lends itself to the administrative needs burdening city manager offices across the country. Here are some examples although the list is hardly exhaustive:
Utility bills
Property Taxes
Revenue collection
Record sharing and distribution
Economic Development (opportunities and incentives)
Debt management/ranking
Tokenized Municipal Bonds
Accounting
Interlocal contract management
Cooperative projects
Supply chain/procurement
Barriers/Concerns
Like all innovation, blockchain will encounter vested municipal stakeholders who either zealously guard the status quo or benefit from it. This obviously includes local officials both elected and appointed and certain voting but also the “municipal-industrial complex” of vendors, consultants, and contractors whose livelihood disruptive technology compromises. Granted, it would be callous to dismiss any concerns on the basis of greed or self-interest especially in fragmented municipal America with 90,000+ jurisdictions fighting for resources and citizens. This is where regional leadership in its many incarnations proves so valuable. Regional governments and COG’s offer the promise of shared capital and development costs along with effective feasibility studies to help cities and town of all sizes and locations determine whether blockchain technology merit the investment for their communities. Most should find the possible upside worth the initial investment of time and resources.