Jesús Cepeda
OS City
Startup Contributor

Blockchain ID: An Emerging Opportunity For Governments

By Jesús Cepeda | Wed, 12/09/2020 - 14:00

In my previous article, I wrote about an unexpected push that is fostering the creation of a $400B industry called GovTech. This time I’m deepening on the chance to create big business and big impact, and what is perhaps our best opportunity to build the future of government. Let me start with some context and share the journey through the experiences of OS City.

Each week, an estimated 1.3 million people migrate to a city in search for economic progress and social welfare. By 2030, 5 billion people are expected to live in cities. Invariably, every government will find itself operating inefficiently. Actually, today many governments are already suffering a crisis of institutional agility, using outdated or legacy technologies that are insufficient to meet daily challenges, and operating under bureaucratic processes that mismatch with the speed of change that the present demands.

As the Open Government expert Álvaro Ramírez-Alujas would say “bureaucracy is the art of turning the easy into the difficult through the useless”, governments can’t afford to continue like this. According to McKinsey, this translates to 5 trillion dollars in global public budget that disappears every year (on average 20% of the budget of any government), where 9 out of 10 public employees are dissatisfied with their performance and feel they have no adequate tools or regulations to be able to do their job well. All, within a widespread distrust where more than 50% of citizens do not trust and feel apathetic about their rulers. Those mistrust and inefficiencies have led us to the environmental, social, economic and health collapse that we live today.

It is then time to “turn the difficult into easy through the useful”. Raise contextual awareness and understand that in technology we have been able for decades to follow Moore's Law, doing more and more and at a lower cost, while in governments we have gone the other way, doing less and less and at a higher cost. This has happened because in the technological world things work as platforms, where people contribute in an open way, duplicate efforts are minimized, solutions and lessons learned are shared, and they bet on simple and modular services that solve something minimal and specific but are capable of being integrated to solve something bigger together. Functioning as platforms is what has allowed the accelerated transformation of multiple industries, facilitating the rapid adoption of technologies and the continuous improvement of services. The public sector will not be the exception in this transformation, more and more we will hear about "governments as platforms" and we will witness a new institutional agility driven by an ecosystem.
When we speak of a new agility driven by an ecosystem, we refer to a new ecosystemic vision where the government, startups, academia and civil society organizations jointly explore public problems, seek (and transfer) appropriate solutions and they feed back on their learnings. It is not the State hiring suppliers, but the State interacting with other actors to solve pressing problems. In this vision there is a clear roadmap towards a destination called Government as a Platform (GaaP) and whose cornerstone is a new digital identity based on blockchain technology.

Working on a new digital identity promises to solve one of the main obstacles that we see when advancing in the transformation of the public sector: the lack of interoperability between the different areas of government. Currently each area advances in digitization depending on political will, or available budget, which means that some areas are more advanced than others. It is natural that the speed of digital change is heterogeneous, but this becomes a big problem if later the systems that each area implements cannot interact with each other. Hence, we see fragmented governments that do not share data or processes, and for this reason citizens end up repeating the same procedure hundreds of times or delivering the same information over and over again.

At OS City, we believe that the way to avoid the aforementioned fragmentation lies in building governments as platforms for digital services, centered on the citizen, and whose common thread is a new digital identity that allows for a new kind of citizen-government transactions that are fraud-proof and  work under an unprecedented confidence and efficiency. In other words, a new digital identity that allows governments and citizens to get the most out of blockchain technology.

Such is the case of the pilot that we are doing with the help of UNICEF Innovation, the Ethereum Foundation, the Development Bank of Latin America CAF, and the Presidency of Argentina. What was one day the first real use case of blockchain technology in the region - traceability and transparency of subsidies in the city of Bahía Blanca, Argentina in 2017 - today has evolved to be the first use case of self-sovereign identity in an Ibero-American nation.

Self-sovereign identity means giving citizens back the power and management of their own information, safeguarding their privacy and allowing them to choose which attributes of their identity they want to show, always having control over who their data is shared with. In other words, it is a citizen-centered identity that functions as a document holder and digital signature, being perhaps the best opportunity to forever change information flows between citizens and government.

Among the most important principles of the design of this new identity are portability, transparency, interoperability, consent and protection of credentials or digital assets that are linked as attributes of the same identity. In the blockchain world we could see it as a digital portfolio or “wallet” in which instead of transacting with cryptocurrencies, digital documents written on blockchain are issued, stored, verified and shared, and in addition to the foundational attributes of the blockchain - immutability , integrity, decentralization, disintermediation, transparency, accessibility, encryption - they are issued under open standards that allow for open verification to third parties. This means unprecedented portability, simplicity and efficiency to transact digital documents and easily validate them (using a QR scan) for authenticity, integrity, expiration and revocation.

With this new identity, we offer the Presidency of Argentina the possibility of having an interoperable open source platform, which allows building new foundations of its digitization based on shared APIs, open standards and datasets where public officials, companies and others actors can provide radically better services to the public in a safer, more efficient and more responsible way. Just as in our cell phones we have the possibility of contracting third-party services but through a common platform, any government area, developer or company can develop its own solution or public innovation, anchor it to our platform and start interacting with the new digital identity of the citizen. We eliminate data silos, stitch together all fragmentation, solve the lack of interoperability, and we advance in an homogeneous digitization of our governments, entering into the era of platforms.

This new self-sovereign identity is in an exploratory stage. We expect during December 2020 and the first quarter of 2021 to begin to issue digital assets written on blockchain and allocate them to the first citizens with their self-sovereign, digital document holder. To date, we have managed to issue more than 10,000 blockchain assets ranging from university diplomas from public universities and the certification of quality and origin of products from local economies, to business licenses, inspector certification, construction permits and more, issued by public institutions in Argentina, Chile, Costa Rica and Mexico. These certificates have reached a population of up to 650,000 citizens who interact with the safest and most fraud-free public assets ever issued by a government. Next step is to be able to transact with them and demonstrate the potential towards a new breed of governments in the region.

Summarizing, it is clear that we are at an inflection point for the citizen-government relationship as we know it today. This relationship is about to transform at an exponential speed going towards governments as platforms of digital services centered on the citizen and their new identity. We will see more and more pilot implementations in that direction. Therefore, we consider it vital not to confuse a government platform with "government as a platform." What commonly happens is that governments create their own platform where they host the services that the State itself offers. This is a breakthrough in digitization, but it is still a one-way street. When we speak of government as a platform, we refer to the construction of a new economy based on public services, where any company or startup can offer its solutions in an interoperable way and the State becomes the link between technological innovation and the citizen. This is where the opportunity to build the next generation of government really lies, a game-changing possibility. 
As new identities and governments as platforms emerge, a certain amount of openness between the government, startups and the public will be key to accelerate the transformation of the public sector and build the future of government. This is an openness that we have never seen before. But that is the ship that is currently departing, promising a journey full of challenges and adventures for those with a great passion to create a world that we’ve never seen.

Photo by:   Jesús Cepeda