Digital currency is far from the only application for blockchain, however. It is expected to play an increasing role in supply chains, copyrights, contracts, health care, e-commerce and more, making processes and management more efficient and transparent.
Governments are also exploring possible uses. Last fall, the Urban Institute identified initiatives and pilot projects at state and local levels that ranged from digital wallets to mobile voting.
Blockchain’s appeal centers on security and shareability. A blockchain is a ledger comprised of individual entries (“blocks”), each marked with unique cryptographic identifiers that connect them to previous and subsequent entries (the “chain”).
This “distributed ledger” can be shared among members of a peer group, enabling them to access — but not alter — the records. Elizabeth Tanner, the commerce secretary for Rhode Island, explored the technology’s potential for government by becoming an “e-resident” of Estonia, the first country in the world to open its borders via a government-issued digital identity.
Wired has described “E-stonia” as the “most advanced digital society in the world.”
According to a report from PricewaterhouseCoopers, the Estonian government is saving 1,400 years of working time annually through e-governance.
Secretary Tanner wants her state to be the first in the nation to implement this level of digital service, enabling secure data sharing across multiple entities. She spoke with Governing about the progress she’s made to date, and where she’s headed.
Governing: How did you come to be leading this work rather than the state’s CIO?
Elizabeth Tanner: I was hired to make it easier to do business in Rhode Island. As an attorney who had opened up over 350 LLCs and corporations, I was very frustrated with the pains of opening and running a business in Rhode Island.
When Treasurer Raimondo — now the U.S. secretary of commerce — was running for governor the first time, she spoke of having a concierge-level service for businesses and a focus on making it easier to get rid of bureaucracy and red tape.
I wanted that job, so I left private practice to come and do that work.
Governing: How did that lead you to Estonia?
Elizabeth Tanner: When I started to look around at what other states did to see if they had made it any easier to open up a business, I realized that we all do it the exact same way. We go to different websites to achieve different goals. There's no coordinated effort.
(Michael Salerno)
But when I started to look internationally, I discovered several countries, Estonia in particular, where you entered your information once and only once. After I had been looking at Estonia for a couple of years and had become an e-resident, they started talking about using blockchain technology. That's how I became familiar with blockchain.
Governing: You must find yourself explaining blockchain pretty often. How do you describe it?
Elizabeth Tanner: I don't use the word “blockchain” very often anymore because it does have a negative connotation due to cryptocurrency.
I use the term “distributed ledger” technology, which has absolutely nothing to do with cryptocurrency. I explain distributed ledger technology as essentially a souped-up spreadsheet that holds so much information that you would get lost in an Excel spreadsheet.
Governing: You put out an RFP recently. What was the purpose of that?
Elizabeth Tanner: We’ve completed a pilot that proved you can use your driver's license to verify your identity and then retrieve your certified public accountant credential. This RFP is to take it to the next level to put that into production.
CPAs do a lot of work across state lines and often have to prove themselves. A national organization oversees their credentialing. We would have to have a relationship with them to make this an authorized form of identification for a national credential. There's no such thing as that right now.
Next would be creating an LLC or corporation. We also have a budgetary request for additional dollars for next year to expand it to opening up a restaurant.
Governing: What would you want to develop for LLCs?
Elizabeth Tanner: At this point it would be the simplification of the registration process. Then they would have the credential of their existence in their wallet. As we develop this, there would be more and more tools, but for now we're looking to simplify the registration process and then hold that information on a blockchain.
I describe it as spokes in a wheel. When you come into the singular website, you're in the middle of the wheel. You and your basic information are in there. The plan is to produce more and more spokes on that wheel so that you as an entity can do more and more governmental transactions.
We're starting very simple, very slow, very non-risky until we've perfected it and then we'll add a lot more.
Governing: And eventually that would be something a citizen could do as well?
Elizabeth Tanner: Yes, exactly.
Governing: How long might it take to get to that point?
Elizabeth Tanner: The country of Estonia offers every governmental transaction except marriage and divorce through their system, as well as many private functions such as banking. It took them just under 20 years. They're the only nation in the world that has done this.
I'm not sure what the build-out for us will be. There are other countries who are building this faster than we are, but we would like to be the first in America to do so.
Many other governments are doing one-off projects to introduce blockchain technology to the state, such as with voting or land evidence records or issuing a certification. Those are all good ideas, but what we're doing is creating a platform for digital identity that all governmental functions could go on.
My focus as secretary of commerce is making it easier to do business. But my guess is that once there is a general acceptance of the system and the technology, more and more governmental agencies will be interested in using this technology to streamline their operations.
Governing: As these systems are implemented, will fewer workers be needed in some departments?
Elizabeth Tanner: No, not at all. This is not geared at employee reduction. It’s geared toward improving the process for the citizen or the business. On the flip side, it should make things easier for the state worker. But there's still plenty of work for them to do behind the scenes.
Governing: What does it take to move these kinds of projects forward?
Elizabeth Tanner: For states who are looking to do this kind of work, it doesn't happen without leadership from the top. Our new Gov. Daniel McKee allowed the funding for this to happen. Gov. Raimondo, now Commerce Secretary Raimondo, gave the green light in the first place.
Without good leadership at the top, new and innovative projects just don't happen.
Governing: Any last thoughts?
Elizabeth Tanner: Just two things. I'm happy to speak to other governments; I do hear from them occasionally.
The acceptance and the use of blockchain technology will only continue to grow if other governments take the chance and do projects themselves. I would hope to see others trying projects to introduce the technology to their governments.
