Blockchain is synonymous with cryptocurrencies, and most people think of digital currencies when they hear of the technology. However, what many do not realise is that it has more use cases outside of cryptocurrencies. One such field is the adoption of blockchain by governments, where distributed ledger systems can change the public sector significantly.

Why Governments Should Consider Adopting Blockchain for Governance?

Blockchain offers several advantages for nations worldwide, and a few government entities can benefit significantly by leveraging the distributed ledger technology. Some of the benefits include increased decentralisation, data integrity, and transparency. Also, there is better efficiency and reduced operational costs. Let’s take a look at each perk in more detail.


Blockchain databases can play a crucial role when it comes to storing and protecting government records in a manner that makes it hard for anyone to manipulate or hide the information. Under the current model, most governmental data is stored in centralised databases that are directly controlled by the authorities. Most of these databases are in the hands of a few individuals, making manipulation quite easy to get away with. In such an incident, blockchain is suitable since it can distribute the process of data verification and storage to multiple parties.

This means blockchains can be used as transparent databases that eliminate the need for trust between governmental bodies and civilians. So far, some European authorities are exploring the potential of blockchain-based registries that will help reduce property disputes. Such models are based on a distributed system that is accessible and can be verified by both governmental agencies and citizens; each party is able to hold a copy of the official documents.

Decentralisation and Data Integrity:

In a blockchain, multiple nodes work in synchrony to verify and validate all data. They have to reach a consensus and agree on the state of the database, thereby preserving a unique version of the truth.

This allows distributed ledger systems to reach a high level of immutability, and their framework can be customised to ensure that the information can only be accessed and, in some instances, modified by authorised parties. Practically, different governing agencies can act as validators, with each contributing to the process of distributing and verifying data. This highly reduces the likelihood of data getting tampered with.

Also, non-governmental organisations, universities, and even citizens can be included as validating nodes, resulting in a higher degree of decentralisation. Additionally, these verification mechanisms can prevent other common mistakes such as data entry errors, since in a case where a block of data lacks fundamental information, it will be denied by the distributed network of nodes.

Blockchain technology is also expected to play a crucial role when it comes to the election process. There is a need for fair and open elections, which are the cornerstones of democracy, and thanks to the immutability characteristic of blockchain, the technology is perfect for protecting votes from being tampered with. Other than providing additional security for votes that are cast at polling places, the technology has the potential to make online voting secure.

Also, blockchains can offer permanent access to records that law enforcement officials and watchdog organisations might need if they want to uncover corruption or abuses of power. By reducing and eliminating the need for intermediaries in data sharing and financial transactions, distributed ledger systems can make it impossible for government officials to obfuscate wrongdoing by routing funds through a series of opaque private entities.

Higher Levels of Efficiency:

efficiency level conceptual meter

Blockchain in governance can help reduce operational costs by maximising the work efficiency of national institutions. This can help governments spend taxpayers’ funds wisely. Distributed ledger systems and smart contracts can be used to automate tasks and workflows, which greatly reduces time and money spent on bureaucratic processes. This helps bolster the trust and satisfaction of citizens, which results in higher approval ratings for governing bodies. By cutting operational costs, governments can invest more in other areas such as education, public health, and security.

Blockchain can also be applied in tax collection as distributed ledgers can move funds easily between parties following preset conditions. This helps reduce administrative costs associated with collecting and distributing tax money and enforcing tax laws. For example, by storing records and processing returns on private blockchains, tax collection agencies can offer improved security to protect individual taxpayers from fraud or identity theft.

What Are Some Potential Limitations of Blockchain in Governance?

Even though blockchain can improve data integrity, transparency, and efficiency, there are a few limitations associated with its use in the public sector. The property of immutability which serves as an advantage for blockchain systems can be a disadvantage in some circumstances. Data immutability requires records to be entered correctly before validation, which means steps need to be taken to ensure the initial data collected is accurate.

Even though some blockchain implementations are designed flexibly, which allows for data to be changed, this can require the approval of most validating nodes, leading to questions being raised about decentralisation of the system which can eventually lead to disagreements. Privacy can also be a problem since records added on the blockchain will remain there permanently and are available to anyone with access to the system. This can clash with procedures meant to seal documents such as criminal record expungement.

Disclaimer: The content in this report is from the open source and for educational purposes only, therefore should not be considered as financial advice. We all know that the cryptocurrency market is highly volatile. Therefore, all the financial decisions should be made after doing your wide spectrum research.


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