Blockchain and other distributed ledger technologies have been identified by startups, entrepreneurs and investors as revolutionary, with the added potential to disrupt multiple industries. But it’s also catching the eye of the federal government, which recently held a blockchain day alongside other countries to explore the ways it could be used in different government departments.
Then earlier this month, the non-profit research organization, the Conference Board of Canada, released a briefing about the potential for blockchain to improve Canadian government digital services. The 22-page report acknowledges the technology’s ability to support the government’s efforts to ensure accountability and transparency but raises questions about regulatory standards, privacy issues, and blockchain’s impact on public sector and business processes.
Canadian values are essential when it comes to how the digital ledger technology rolls out in the country, says Alex Benay, the Government of Canada’s CIO. “It’s not about the technology, it’s how we deploy it and how we interact with other human beings,” he tells CanadianCIO.
The conversation around blockchain at the federal level can be traced back to December 2016. That’s when senior government officials and then-international trade minister Chrystia Freeland, met to discuss the technology with executives from big banks, regulators, the tech sector and other companies, according to reporting by The Star.
Benay says Canada was “a little late in the cloud game,” and when the conversation shifted towards blockchain, it was impossible to ignore. Canada was suddenly participating in an international discussion.
“[Blockchain’s] applications are kind of endless,” he says.
The Conference Board briefing, titled Cautious Optimism: Adopting Blockchain to Improve Canadian Government Digital Services, echoes Benay’s suggestion.
“Governments may choose to adopt digital ledger technology where public services require personal interaction or for individual identification and verification associated with handling or managing public documents, permits, and licences,” the briefing reads, pointing specifically to commercial and property-related matters, in addition to personal applications such as marriage certificates, visas and other credentials.
A shared digital infrastructure such as blockchain could reduce overhead costs, improve citizen client services and improve data-sharing, which is music to the government’s ears. But without commonly accepted standards for blockchain or the underlying network, the briefing says selecting a blockchain platform remains a problematic choice. But two platforms have shown incredible promise among Canadian companies and startups: IBM Blockchain and Ethereum.
Canada already producing strong examples of smart blockchain applications
Toronto-based identity management service provider SecureKey has several major banks in Canada jumping on board its new digital identity sharing network. The network called Verified.Me is built on IBM Blockchain on top of the Linux Foundation’s open-source Hyperledger Fabric. In February, Sun Life Financial became the first North American insurer to join the network. SecureKey’s Concierge platform, which already lets more than 80 Canadian online government services to be securely accessed with online banking credentials, is cited by the Conference Board’s briefing as an example of how the Canada Revenue Agency is already dabbling with blockchain. The Concierge platform is just an appetizer for what’s to come, says SecureKey CEO Greg Wolfond.
“This is the year you’ll start to see things happening,” says Wolfond during IBM’s latest Think conference in Las Vegas, where he was able to share SecureKey’s work on the world stage. “Canada is an amazing place because you can get parties who are willing to working together. The country is getting hit by a lot of security risks out there. Only an ecosystem of partners can turn that around.”
Also built on IBM Blockchain is Vancouver-based Plastic Bank‘s blockchain network. Founded by David Katz and Shaun Frankson in 2013, The Plastic Bank has gained serious momentum in the past two years and gives poverty-stricken neighbourhoods a way to monetize plastic waste. The organization has successfully set up recycling markets in Haiti and the Philippines and has plans to expand to Brazil, Indonesia, South Africa, the Vatican, and India.
“There’s an immense need for authenticity amongst the poor,” says Katz, adding it can be dangerous for customers in impoverished countries to handle cash because of corruption and crime.
The introduction of IBM Blockchain was a no-brainer for the Katz since their targeted countries have tens of thousands of smartphone users. It allowed the company to build the blockchain network through a free app.
“We’ve created a platform the world can contribute to,” he says.
A similar ecosystem can be found working with Ethereum. Between 2008 and 2016, global startup growth around blockchain grew by 18 per cent, and as of January 2018, there were more than 40,000 applications built on the Ethereum blockchain alone, according to a Startup Genome report.
Michael H. Conn, CEO for Toronto-based technology company Ether Capital, says more than 94 per cent of decentralized applications are being developed on Ethereum.
“We’re starting to find businesses that are having true impact on blockchain,” says Conn. “And it’s not just startups. The JP Morgans, BMOs and others are trying to figure out how to use blockchain. You’re seeing this development where private blockchains are being married with public Ethereum blockchains, and that legitimizes it more.”
Government has a strong blockchain ecosystem to draw from
The large-scale applications of blockchain in both public sector and private enterprises lead some experts to believe Canada is already outperforming major players when it comes to blockchain.
“We’re actually ahead of Silicon Valley when it comes to the blockchain space in Canada,” says Shidan Gouran, the president and COO of Global Blockchain Technologies Corp, a Canadian-based company that gives investors access to a basket of holdings within the blockchain space. “There’s a real shortage of developers and we have a lot of the good developers, actually, right here.”
The Conference Board of Canada encourages the government to take further interactions with all types of developers to drive pilot projects and ultimately help provide some direction on how to implement blockchain appropriately.
“Expect DLT adoption to take time. Currently, any improvements to the blockchain-backed government digital services are years away from production. Proof of concepts, experiments, pilots, use cases, and prototypes can take several months to a year to complete,” the report reads.
But government-backed programs such as the Blockchain Codefest, which took place in April across five Canadian cities, are going to help bring new ideas to light quickly. The codefest encouraged individuals and small teams to develop solutions using blockchain that address a public sector problem or opportunity. Interacting with Canada’s blockchain ecosystem is a strategy Benay thinks will pay off.
“I don’t like big bangs and I don’t encourage that approach,” he says. “A pilot could quickly grow in a matter of weeks.”
There’s no doubt about whether Canadians will interact with blockchain in some capacity to access government digital services – it’s just a matter of when.
With files from Brian Jackson