Blockchain in the State: Let's take action


The time has come to materialize hours and hours of analysis on a possible application of blockchain in the State of Chile, and definitely set a roadmap that allows incorporating this technology as a priority axis of the modernization of our public administration.

“Sir and madam, if you are not in Pilar Solidario, we do not have your data. We need you to register, and to do so, please go to the website of the Social Security Institute, where you can register your data. This will allow us to carry out the entire process so that you have this new Universal Guaranteed Pension”, said on February 1 the Minister of Finance, Rodrigo Cerda.

It seems like a joke, but it is quite the opposite. His call revealed a serious problem, since it is the State as a whole, it is one of the entities that has the greatest access to the data of the inhabitants of the territory.

However, it is fragmented information between ministries and departments, which practically does not dialogue with each other, with few exceptions when it comes to investigating assets or auditing from the tax point of view, to cite a few examples.

How is it possible that having advanced so much in digitization, there is still no large database that each ministry can access and in turn enter new information?

And it is precisely here where blockchain technology stands as a robust solution to be applied in areas such as Digital Identity, Commerce, Financial Services, Registry Systems, Energy, Agroindustry and Health, as was already discussed in 2018 on the occasion of six public and private sector work groups.

Blockchain Estado

On that occasion the Treasury, from Health, Corfo, Fonasa, Chile Buy, SII, the National Energy Commission, Segpres, Depósito Central de Valores, Conservador de Bienes Raíces, besides the Universidad de Chile, Microsoft, Amazon Web Services, Oracle, the Santiago Chamber of Commerce, to mention some of the more than 40 participants.

They analyzed the pros and cons of the possible use of blockchain in the State, taking into consideration its potential, but also the legal, political, human capital, energy, financial, technological and coordination barriers and requirements.

Before commenting on his conclusions, it is necessary to review basic aspects regarding this methodology called block chain, which was born on the wing of Bitcoin and cryptocurrency transactions.

As I have described in previous articles available on my blog hectorpincheira.com, blockchain is a decentralized database, which works like a digital ledger made up of individual blocks. As new data is added to the network, a new block is created and attached to the chain.

All this registry is automatically saved in identical copies or nodes that are distributed in a network, content that remains protected by cryptography to be safeguarded from fraud attempts by those involved or by third parties that intend to corrupt the system. Each node is independent and has ample storage and computing capacity.

In the blockchain, Bitcoin transactions have a unique address, from the person who issues the transaction to a specific destination address, and contains the amount of cryptocurrency to be transferred and its digital signature, being able to be validated throughout the blockchain. network of Bitcoin nodes, who are tasked with solving a mathematical challenge that allows you to decode the transfer. The first node to do so informs the nearest node about the exchange, which in turn sends the information to another, and so on until the network is complete. 

In this way, a reliable historical record is maintained with multiple backups, and with the capacity to continue operating despite the fact that, for example, there is a failure of half or more nodes, in charge of managing the data, through an agreed protocol.

There are open or closed (permissioned) blockchain models, and it all depends on the governance model defined by the participants.

Here the system as a whole is the repository of the trust of the network, unlike a traditional centralized model, where there is a single authorized and reliable third party that concentrates all the decision-making power and is therefore the exclusive repository of trust. information management and effectiveness.

Modernizing the State through Blockchain is a real need

It is time to take action regarding blockchain in the State, take concrete steps to apply in the short and medium term a tool that has already been successfully tested by other world leaders.

As a result, we will evolve towards a system that has a remarkable standard of transparency, security and that can be implemented based on both public (such as Ethereum) and private (such as Hyperledger) networks, depending on the type of application and governance model.

There are plenty of success stories of blockchain in the State and they are models to follow, for example Estonia, which uses the blockchain to store tax information related to the national productive sector and the health of its citizens. In Australia, this technology is used in security, communications and logistics activities.

Dubai implemented a land registry on the blockchain, by using a database of all real estate contracts, including lease records, and linking them to the Electricity and Water Authority, the telecommunications system, and various bills related to land. property.

In the book 'Blockchain: a path to the 4th Industrial Revolution' publication of the Ministry of Economy, a compilation of the proposals of the public-private tables of 2018, it is argued that this technology could be applied in Chile in the digital registry of citizens that replaces the limited current rut, smart contracts of the energy sector, financing of SMEs , e-commerce, real estate, and health.

Only in this last sector, the blockchain in the State could be used to combat drug counterfeiting and carry out traceability from import to delivery to the user of the health system, management of clinical records, prescriptions, medical bills, supply management, and even waiting lists.

How much progress would we make in transparency and empowerment, if patients could access real-time updates and prioritization of the public health system, leaving behind the obscurantism and accusations of manipulation of care figures.  

Other countries have already pointed out the way forward, let's take action and lead technological change at the Latin American level. 

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