One of the crypto-startups which I have been engaged with chose Estonia to launch their offering. The reason was pretty simple: the government, regulators and the Baltic startup ecosystem all recognize and encourage the adoption of blockchain and its derivatives in our daily lives. While Estonia has been very active in adopting blockchain as a way of life, governments and regulators all over the world have, understandably, different takes on the reliability of blockchain technologies and the potential benefits and risks the technology brings along with it.
Until now, a number of countries have led the way in adopting a blockchain and its applications which are potent examples of early adopters. While Estonia and Singapore have placed their bets on focusing on a blockchain based e-government strategy, countries like the UAE and the Philippines are well on their way to creating crypto-economic zones to drive innovation and job creation. Interestingly, the countries which have a lenient legislative framework towards blockchain initiatives and state sponsored programs to support crypto innovation hubs have been able to attract entrepreneurial talent and foster innovation by providing a comforting ecosystem.
This article looks at how governments that favor a blockchain-led economy can adopt a strategy that might prove most beneficial to them. Additionally, it attempts to cast an eye at the crystal ball to predict whether the government or regulators might eventually tie the knot with blockchain and incorporate its application for more effective results.
So how would the government strategy for blockchain adoption look like? What are some of the aspects which governments would have to keep in mind while formulating and rolling out their strategy? What are some of the low-hanging fruits which the regulators could potentially focus on to ensure they are able to phase the roll-out for some quick wins?
- Administrative purposes: governments looking to use the blockchain technology for administrative purposes could look to roll out a platform to facilitate the interaction of citizens with the government representatives. This would reduce bureaucracy and increase transparency in the system. Additionally, enabling blockchain based asset and identity registries, tax reporting, licenses, certifications, access to government data could help introduce the layer of security and help build trust which is sorely missing.
- Smart contracts: Granting recognition to smart contracts and assigning legal value to other blockchain based legal-agreements would help in the penetration of the technology. Additionally, enabling crypto friendly regulations would spur the creation of innovation hubs for thriving activity in the space.
- Tax structure for the blockchain based economy: Ensuring that the tax structure imposed on revenues, transactions made on various cryptocurrencies would allow many more to join the ecosystem. Companies would be able to reinvest their profits to drive growth which would in turn help the economy grow prosper.
- Casting votes on the blockchain- There have been numerous startups which have mushroomed to help governments move to a blockchain based voting system. After much initial hesitation, we can see credible progress and this would be a space to certainly keep a close eye upon.
- Adopting a crypto based payment infrastructure- Since the government is usually the largest employers, creating and adopting a crypto based payment infrastructure India was rumored to get its first legal digital currency, the Laxmicoin which, I believe now, is under the purview of the regulators.
- There is some interesting work done in isolation to ensure land registry, banking remittance and a host of other projects could be put on blockchain to ensure seamlessness, transparency and security.
The ones listed above are only some of the infinite possible applications of blockchain technology which has caught our fancy. The applications and benefits of blockchain in governments are endless and its only time when a number of other countries would cross the chasm to be a part of the early majority. This would, however, not be a smooth and easy transition. In times to come the countries would most likely be split into tow factions- crypto friendly and anti-crypto governments before the naysayers start tinkering with the technology to explore further. It would, however, be pretty similar to the naysayers who had believed that the internet was just a fad. Not just did the internet outlive the initial hype, but eventually became the force which enabled industries to be disrupted. Today, some of the world’s richest people are internet entrepreneurs- Jeff Bezos, Mark Zuckerberg, Jack Ma and many others made their fortune on the internet.
The governments which have presently taken a hard-line stance against blockchain and its applications are more likely to capitulate and join the bandwagon sooner or later. Like banks and financial institutions who had initially been resistant to this alternative form of currency, governments too would realize the benefits and create effective strategies to tap into the possibilities which blockchain offers. Money is still the life and blood of cross-border global trade and expect global standards for a blockchain economy to kick in soon for skeptics in the government to be able to finally give their nod.
Only time will tell, but expect the marriage to be announced much earlier than most experts and industry pundits would anticipate.