Blockchain and the fight against public corruption

Puerto Rico recently announced that it may be looking for a blockchain solution to fight corruption in the government, particularly after a Puerto Rican mayor pleaded guilty to accepting a bribe of more than $ 100,000.

But could a distributed digital ledger really have an impact on the unincorporated territory of the United States’ struggle against public fraud and wrongdoing?

This could be done in conjunction with other public efforts, governance experts tell Cointelegraph. Puerto Rico could also benefit from following the lessons of other countries that have adopted blockchain to fight corruption in recent years, including Georgia, India, and Colombia, and shouldn’t hesitate to provide foreign aid, although much of the key work is still going on Should be done by local agencies. Puerto Rico shouldn’t wait for a quick technical solution.

Blockchain and the fight against public corruption
Blockchain and the fight against public corruption

“We have a real credibility problem,” the President of the Puerto Rico House of Representatives told Bloomberg, and the greater transparency and accountability that blockchain technology may offer “could be part of the solution.”

For example, Nir Kshetri, a professor at the University of North Carolina’s Bryan School of Business and Economics at Greensboro, thinks the Commonwealth official may be on to something. As well as enhancing anti-corruption efforts, blockchain technology can be a tipping point, he told Cointelegraph.

â ???? Blockchain systems can keep a complete audit trail of all activities and transactions that government officials have been involved in ”, Kshetri said, adding, “The immutability feature means government officials cannot delete files. Any change is noticed immediately by other participants connected to the blockchain network. “

Others aren’t so sure, but they say blockchain technology can keep government clean when other conditions are met. “Blockchain can play a role in transaction security, event tracking, and preventing fraud and corruption”Per Aarvik, a researcher at Chr. Michelsen Institute (CMI) / U4, told Cointelegraph and went on, “but not without a regulatory framework as a basis”.

Puerto Rico runs the risk of adopting costly systems that can have limited impact unless a wide range of problems are addressed, ”he added. In this sense, “lessons can be drawn from other highly digitized countries such as Estonia or Singapore” as well as from the former Soviet republic of Georgia.

Technology can play an important role in the real estate sector, Jonas Hedman, professor at Copenhagen Business School, told Cointelegraph, as demonstrated in Sweden, where such a program has also been partially implemented – “a huge impact on acquisitions and elections. Imagine if an agency or a state like Puerto Rico, the CIA, the UN etc. had an open book on all of their expenses. “

Tips for Puerto Rico

When asked about Puerto Rico’s plans to fight public corruption, Kshetri said the island’s territory should begin in the areas most prone to corruption. You have to cross-validate the received data before it gets onto the blockchain. This is where it can help to use other emerging technologies like artificial intelligence, machine learning, and remote sensing technology instead of relying on government officials.

Reforms must also meet resistance from those who are currently benefiting from the status quo, both inside and outside the government. Involving third parties, as is the case with the Colombian School Lunch Program, can improve informal accountability.

After i said that “Puerto Rico shouldn’t depend too much on overseas corporations to implement blockchain to fight corruption”Kshetri told Cointelegraph. “It was supposed to develop local blockchain workers,” as happened in the state of Andhra Pradesh, India. “Local blockchain companies are more effective at delivering low-cost solutions that suit local needs.”

Georgia is getting creative

Georgia is often cited as an example where a blockchain was used to secure a government register, “but the story didn’t start with the blockchain,” Aarvik told Cointelegraph. “The country radically reformed the entire public sector before the blockchain was introduced.”

This involved carefully examining their corruption problem and then applying sometimes creative solutions, including moving some borderline practices into the legal field. “For example, most people paid bribes to get a passport or other document they urgently needed and they weren’t willing to wait,” said Tamara Kovziridze, a former senior advisor to the Prime Minister of Georgia. “Today you can get an international passport in one day if you pay a higher fee.”

When the blockchain company Bitfury presented its Exonum blockchain-as-a-service solution to the country for securing property titles, Georgia already had a functioning land registry system. Aarvik said, adding that technical solutions cannot exist in isolation. Certain requirements must be met. Or as Kovziridze CMI said:

“The general rule is that if the elites are still corrupt, no country can truly defeat corruption.”

Aarvik has this message for Puerto Rico: blockchain experts hired to discuss solutions with governments can be technology experts or digital technology specialists. but they are not necessarily strong designers of systems of governance. If the design of the reform does not “encompass the full range of skills in the fields of law, social sciences, economics and technology, I do not believe that the project will produce the expected results”.

Kshetri agreed that land registry is one area where distributed ledger technology can make a difference, referring to a promising blockchain-based pilot program in the state of Andhra Pradesh, India.. “Land management bribery is widespread in India,” he told Cointelegraph. A typical land record on the blockchain has 58 attributes, “such as unique ID, parcel code, geographic coordinates, survey number, boundary information, such as attributes that can change, such as owner and mortgage information.”

But the bottom line is that it also introduces a system of checks and balances. Kshetri added:

“A blockchain-based system in which many agencies act as nodes or transaction validators could act as a counterbalance to each other to ensure that no agency can tamper with the system without others noticing.”

“Validators” in the state’s land registers include your Treasury Department, the Chief Commissioner of your Land Administration Department, and other officials. • When a node tries to change the record, the owner receives a text message. The immutability function means that the data cannot be deleted. “

Colombia cracks down on crooked contractors

In Colombia, corrupt contractors inflated school meal bills, sold chicken breasts in supermarkets for more than four times their cost, and sometimes did not deliver any purchased products at all, Kshetri told Cointelegraph, making the government work with the world. Economic forum and the Inter-American Development Bank to implement a public blockchain procurement program to track the supplier selection process in the city of Medellín.

This required that a bidder publicly agree on contractual terms and selection criteria prior to soliciting bidsKshetri stated: “Risks such as adjusting the selection criteria after the publication of the tender in favor of certain contractors will be eliminated.”

There If vendors compete with each other, “the permanent and tamper-proof bid records of a blockchain-based solution can ensure that a company cannot change submitted bids after it has received new information about competing bids,” he said.

Adding other technologies

In the fight against public irregularities, blockchain technology can also be effectively combined with other emerging technologies. “There is concern in the cobalt supply chain that blockchain systems could be corrupted if government officials tasked with tagging the bags collapse with smugglers and enter the wrong data,” Kshetri reported, but the implementation of artificial intelligence and drones must check the data.

Traceability as a service provider Circulor has developed blockchain and AI solutions in the cobalt sector, for example. When miners enter supply chain information, their identity is verified using facial recognition software.

With ALL, Blockchain technology can be an effective means of combating government embezzlement as it introduces more “transparency in government spending” and makes corruption more difficult to commit.as Hedman pointed out. But it cannot work in isolation, and it will not work if a government at the top is corrupt. According to Kovziridze, the Georgia experiment was a success because “the top leadership was not corrupt”.

A holistic approach to combating public corruption is key, “more than quick technical solutions,” added Aarvik. But to streamline processes, increase public self-service and bypass corruption-prone upstream processes, digitization, including blockchain technology, is “an absolutely powerful tool,” he told Cointelegraph.

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