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Could blockchain tech be used to combat corruption?

ByAlasdair Flett

Mar 14, 2017

Blockchain is an anonymous, decentralised public database for all financial transactions via the virtual currency, Bitcoin. The information stored is distributed to ward against cyber-attacks to which data concentrated in a single location is more vulnerable. Once data is recorded it cannot be altered after the event, preventing potential cover-ups and making exchanges more verifiable. Former prime minister David Cameron recently expressed his desire to utilise the system to curb governmental corruption when he spoke at the launch of a fintech (a portmanteau of ‘financial’ and ‘technology’) company’s new offices in London at the end of last month.

This type of database, which came into being at the same time as the digital currency with which it is associated, is not purely a financial tool and could be used to store and ensure the reliability of public information such as medical records. Blockchain was ostensibly invented by Satoshi Nakamoto, a pseudonym, whose identity is aptly unknown. Several people have claimed to be the inventor, although none of these has been verified. Whomever the true originator is, they are speculated to have amassed a fortune of over a million Bitcoins, totalling approximately £961 million at today’s exchange rate (accurate 9/3/17).

Currently blockchain’s decentralised aspect works by a sharing of resources. Users lend the processing power and bandwidth of their PCs to make up the network that supports the online ledger, for which they are, of course, reimbursed in Bitcoin.

Cameron wants to use blockchain to increase transparency in public life. He specifically refers to preventing people from trying to break the law by rebuilding trust in institutions. Reducing fees for transactions is also an aspiration, as well as lowering administrative costs for settling trades. He equates corruption with global destitution and sees more accountability as being conducive to prosperity. However, Cameron admits that his knowledge is limited in this area of technology.

Controversially tipped for the role of NATO Secretary General, the former PM is clearly not yet ready to withdraw from politics following his resignation from the premiership after the personally disastrous EU referendum result on the morning of 24 June. Even so, this is not the first time he has flirted with the idea of the government using blockchain. A trial was conducted in the first half of 2016 in relation to benefit payments while he was still in office.

This solution is far from novel. George Galloway ran for London mayor last year on a platform proposing that the city’s budget be run using blockchain. Estonia is also currently planning to put its medical records onto a privately run blockchain database.

The question remains of how this system can be implemented successfully. Is it truly in the interests of a potentially corrupt government to put in place an apparatus that might expose this? Honduras attempted to use blockchain in an initiative to log land titles in 2015 but it kept being held back because of its political contention. When title deeds records were previously gathered centrally by the government, the system was hacked meaning that those in the know could technically, and did in some cases, try to illicitly secure desirable beachfront property.

There are significant pros and cons when it comes to blockchain. Yes, transactions are all recorded, but crucially they are anonymised. This means substantial trawling would have to take place before the culprits are found, although at least under blockchain the crime would be visible.

One cannot ignore the hefty degree of irony surrounding the proposal to use blockchain, a concept so closely associated with the dark web’s most dodgy dealings by its inexorable relationship to Bitcoin, to combat corruption. However, its users are traceable; while transactions are anonymised it is possible to chase the trail. In this way, using the system means that embezzlement and other such white-collar crime is brought out into daylight, although it takes dedicated detective work to pinpoint the perpetrator.

Image: Flickr

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