While it is difficult for many people to separate cryptocurrencies and the blockchain in their minds, they are not synonymous. In fact, several of the world’s governments that have either highly regulated or completely banned cryptocurrency are actually vocal supporters of blockchain technology. They understand its immense potential to solve many important problems and are eagerly exploring its use cases and applications.
While the first generation of distributed ledger technology (DLT) was used primarily to implement famous/infamous cryptocurrency, including bitcoin and litecoin, the second generation of DLT, which emerged just six years later, implemented the first smart contracts with the intention of moving past mere tokenomics into new and uncharted realms. Subsequent generations of blockchains have been created with an eye towards healthcare, identity authentication and management, taxation, election integrity, secure banking, and other realms.
The Emirate of Dubai, part of the United Arab Emirates, is a huge tourist destination. Unlike many of its neighbours, it is oil-poor, and its economy instead relies on income from property development and luxury tourism. Dubai is currently home to the tallest building in the world, the 160-story Burj Khalifa, as well as shopping malls containing indoor ski slopes. In order to handle all the documentation associated with its tourism industry, its leaders have stated that it hopes to become the very first blockchain-powered government, and they have set a target date of 2020 to reach that goal.
The country has tried its best to contain and even ban the buying, selling, and trading of cryptocurrencies but has moved forward rapidly and forcefully in its embrace of blockchain technology, even describing the economic value of blockchain as “ten times more than that of the internet.” Truth be told, three of the five largest companies in the world, based on revenue, profits, assets, and market value, are Chinese, and all have made a firm commitment to adopting DLT to store and manage enormous volumes of documentation, support existing business ventures, enable new business partnerships, and streamline internal operations.
A British territory also long claimed by Spain, Gibraltar is trying to be the global hub for blockchain-based fintech companies. The Gibraltar Blockchain Exchange, or GBX, which is a subsidiary of the Gibraltar stock exchange, aims to be a “world-leading institutional-grade token sale platform and digital asset exchange,” according to an official statement. They “seek to create a new era of trust, openness and global acceptance for the crypto industry, one quality token listing at a time.” Gibraltar’s expressed goal is to become the international gateway to cryptocurrency commerce, with a particular focus on investor safety and industry best practices regarding regulation.
Another small European country that is investing heavily in blockchain technology, it is home to the blockchain giant Ethereum. Based on a BlockShow Europe 2018 survey of 48 European countries, it ranked number 1 as the best location for starting a blockchain company. It established one of the first cryptocurrency hubs, “crypto valley” in the canton of Zug, described as “a global centre where emerging cryptographic, blockchain, and other distributed ledger technologies and businesses can thrive in a safe, supportive, and vibrant environment.” Not to mention that it is also a tax-free haven for blockchain investors.
In Eastern Europe, and the birthplace of Skype, it was one of the first countries to begin exploring DLT for government use, with efforts stretching back as far as 2008 (which predates the release of bitcoin), and it was in 2012 that it used the first blockchain solutions to support its government activities. Estonia’s DLT also gives citizens more control over their own data. For example, every citizen has immediate and transparent access to their own health records, as well as the ability to see who has accessed them, when, and for what purpose. The government itself plans to issue its own national cryptocurrency called ESTcoin, which would include the first government-backed ICO.
A couple of years ago, the UK stepped into the fray to begin the planning to integrate blockchain technology into government, primarily to reduce errors, corruption, and fraud in its primarily paper-driven processes. DLT is now being used to keep track of welfare payments and the disbursement of student loans. But that is just the beginning. The government’s technology agency “Innovate UK”, is looking to blockchain technology to improve governmental business processes in a wide variety of applications, including fintech and healthcare.
The Asian city-state touts itself as a hub for innovative blockchain development, and the government recently allocated over $225m for integrating DLT into its government operations. Nordic countries have indicated similar intentions, with Swedish Riksbank’s plan to issue a digital currency within two years, just as Denmark plans to release its own e-krone token. Though the exact technologies that will be used to support these currencies have not yet been decided, a DLT solution is a good possibility.
It goes without saying that the government of the United States moves slowly. Look, for example, at the lethargic pace with which the US moved to cloud computing. The cumbersome bureaucracy built into each agency, the horrendously burdensome procurement process, and acute security fears all conspire to slow the process of adopting new technologies. However, better late than never, the federal government has finally come to the party.
The first agency to award a contract for blockchain technology was the Department of Homeland Security. The dollar amount was meager — only $199,000 — however, it signalled the beginning in a change in attitude towards DLT. DHS hoped to increase the speed, accuracy, and security of data captured from sensors and devices at US borders. The goal was to limit the potential of records to become corrupt within a device, making it more difficult to spoof.
Last year, the Food & Drug Administration issued a “sources sought” notification looking for a blockchain application for “to enable the exchange of patient-level data within the United States Critical Illness and Injury Trails Group network.” The primary emphasis of this project was to exchange influenza patient data between the FDA and the US Critical Illness and Injury Trials (USCIIT) Group, which is funded by the National Institute of Health.
Even the Department of Defense has gotten into the act. Its Transportation Command is looking to the blockchain to increase the security and accuracy of its logistics and transportation transaction records.
Though the blockchain may have begun as a road for cryptocurrency to travel down, its true potential as an innovative technology which can improve nearly every aspect of lives is only now being recognised. The world of international commerce may have been the early adopter, but governments around the world are also following suit. Just watch, the best is yet to come.
Originally published at themarketmogul.com.
How Eight Governments Are Responding to Blockchain was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.