If you buy a house in Chicago and want to register the deed, the Cook County Recorder of Deeds will accept two kinds of submissions: paper records and scanned images of paper records. No matter which option you choose, the clerks will manually type the information into the county database.
Roughly once a week, someone — for example, an addict claiming a home that actually belongs to a grandparent with dementia — will mail in a fake document, and “if they formatted it correctly, we have to record it,” said John Mirkovic, the deputy recorder. “It’s one of the main reasons we’re so interested in blockchain.”
Blockchain is a data structure popularized by the digital currency bitcoin. It’s also one of the biggest buzzwords in Silicon Valley, finance and government, where proponents say it can save money and increase trust in public institutions.
In 2017, more than 200 government agencies around the world, including the Department of Homeland Security, were exploring the use of blockchain, according to the Blockchain in Government Tracker compiled by the Illinois Blockchain Initiative.
Britain’s National Archives is testing it for storing digital records. Australia is building a prototype system for welfare payments. Estonia is using it to secure health records, court files and wills. Dubai aims to become “the first blockchain-powered government,” weaving the technology into many vital systems.
“We’re throwing a lot of things at the wall right now and seeing what will stick,” said Andrew Young, knowledge director at New York University’s GovLab.
Blockchain is a very broad term
The term blockchain was first used to describe the public record that exists for every transaction on the bitcoin network, copies of which are kept by thousands of entities around the world. Now it’s used to describe a wide range of systems that incorporate cryptography or decentralized data storage.
“I think it’s important to make clear that there is no one ‘blockchain,'” said Stefaan Verhulst, the co-founder of GovLab. “What we see right now is massive experimentation in different versions of blockchain technologies that provide for different results.”
What Blockchain could do for government
In theory, blockchain can save money and reduce errors by replacing workers, while adding accountability by generating a public record of all activity.
This has even greater implications for countries with low trust in government, said Emin Gun Sirer, a Cornell professor who specializes in distributed systems.
“If you look at a government system that is opaque, that’s closed behind doors, versus one where I can inspect what’s going on behind it, it’s an amazing leap forward,” Sirer said. “It means sleeping better at night.”
Blockchain can also enable seamless transactions with people outside the jurisdiction and give residents greater control over their data, advocates say.
“We want you to buy a house while you’re lying on a couch somewhere,” said Zeina El Kaissi, head of emerging technology at Smart Dubai, which is leading the city's blockchain initiative. “Blockchain can make that possible.”
Dubai identified 21 uses for blockchain, including charging electric vehicles, obtaining notary services and ensuring food safety. About 12 blockchain-based services are being built, El Kaissi said.
One goal is to ensure that Dubai residents can submit documentation for common tasks, like buying a home or applying to schools, digitally and only once. The current system often requires multiple visits to government offices.
“Today we’re using human beings as data transfer tools,” El Kaissi said. “That's just a waste of my human life, to be honest.”
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Real world challenges
Government agencies usually aren’t the first to try new technology, but the momentum around the blockchain industry has spurred adoption. It helps that some vendors are offering their services pro bono or at a discount, avoiding what is typically an arduous procurement process.
Still, there are significant challenges. The technology is immature, with problems around speed, volume and security, Sirer said. The industry is also immature, with new vendors popping up and dropping out. Finally, political bureaucracy can be a hindrance.
Some high-profile projects have stalled. The Hong Kong Monetary Authority concluded that a digital currency would “look broadly similar to, and not clearly superior to, existing infrastructures.”
The Texas company building a blockchain-based land registry in Honduras gave up because of communication problems with officials. Isle of Man’s plan to secure internet-connected devices with blockchain halted after the startup behind it shut down because of a founder spat.
Perhaps the biggest gap between expectations and reality occurred in Sierra Leone, where the Swiss foundation Agora was widely reported to have powered the first blockchain election. This turned out to be overzealous marketing. The National Electoral Commission denounced the reports as “fake news,” and Agora acknowledged that it had merely been allowed to record some votes in its presidential election on a blockchain as a demonstration.
The Cook County Recorder of Deeds worked on a land registry pilot with velox.RE, a California-based startup that did the work free. The pilot, which created blockchains for more than 1 million parcels, took a team of nine people eight months. The system is accessible through a rudimentary website. If you look up the property status of 5801 S. Ellis Ave., for example, you will see hundreds of pairs of 64-character strings, which correspond to transactions going back to 1985.
The pilot made it clear that some foundational work is needed before Illinois can move to a blockchain land registry, Mirkovic said. Records must be digitized. Data formats must be standardized. A law must be passed to require that title transfers be registered with the government. Finally, Illinois voters recently decided to merge the Cook County Recorder of Deeds and the Cook County Clerk’s office, which would delay any decision on blockchains until 2020.
The pilot also showed that the agency could solve some problems without blockchain. The pilot inspired the office’s existing software vendor, Conduent, to integrate some blockchain-like concepts into its more conventional design. And in his post-mortem, Mirkovic pointed to Iowa, where land records were accurate, title insurance was cheap, and citizens could look up information in a statewide online database that did not use blockchain.
Mirkovic hopes that his office can eventually use the technology. “I still believe the idea is too good to ignore,” he said.
In the United States, some of the momentum around blockchain comes from a desire to attract blockchain businesses, investment and high-tech jobs. Illinois, which ran six blockchain pilots, promised to create a “welcoming regulatory environment” to draw companies to the state. Arizona, Delaware, Nevada, Tennessee, Vermont and Wyoming have passed blockchain-related laws.
Proponents in those states praised legislatures for acting quickly to keep up with technology, but Angela Walch, a research fellow at the Centre for Blockchain Technologies at University College London, is concerned that they’re making bad law.
“A bunch of states are really in a rush to pass some sort of legislation to demonstrate how crypto-friendly or tech savvy they are,” she said.
Estimates vary as to when blockchain will have an impact in government. Dubai’s goal is to have its systems running by 2020, but Sirer said it would take at least 10 years to see an improvement. “It’s definitely not a fast process,” he said.