Lets face it. Efforts at implementing accountability in government anywhere have always been a bit of a hit-and-miss affair, even though we have been improving in recent years. However, they come at a massive cost. Greatly inflated bureaucracy to carry all the checks and balances, frustration for administrators and the public alike (which sometimes results in corner cutting, which renders the checks and balances pointless) and inefficiencies.
Blockchain technology has arrived, and is making an enormous splash in technology spheres. This technology, the magic sauce for Bitcoin, gives us the ability to re-engineer the way government, or any organization, works with money.
The first step in how government spends money is to establish a budget (which should be based on the income available). The available money is virtualized. Essentially, a cryptographic token that represents real money is generated and allocated to departments and ministries according to the budget. The tokens are then used by anyone in government to pay for things. Tokens need to be redeemed for cash, and each token destroyed as part of that process so that it can’t be used twice.
The true beauty of this approach is that every transaction is recorded on the blockchain. This can be thought of as a distributed database or ledger, that resides on many computers, and is publicly visible. This is not to say every detail is visible, as they may be encrypted. However, according to the design of the system it is possible to keep some information confidential (visible to those with suitable credentials), while allowing for public scrutiny and verification of relevant information.
Due to the nature of the blockchain there is just no way to fiddle the books, or lose information, because every transaction is quickly distributed across many computer nodes that house the blockchain. The term used to describe this is “immutability”. Once a transaction is performed it is written and remains there forevermore. Thus the blockchain is like an accounting ledger that cannot be changed without the changes themselves being visible.
It doesn’t end there. Since the living transaction records are publicly visible, it now becomes possible to engage a much larger audience in the processes that surround their creation. In the case of a government budget, and the spending of public funds, the public themselves can be included in considering the suitability of specific transactions. Members of the public can scrutinize proposed transactions, give their opinions, and also make suggestions as to alternatives that could lead to cost savings or other improvements.
Then metrics can be extracted from all this data to present a detailed account of the effectiveness and efficiency of the wheels of government. Where the metrics point out deficiencies they can be addressed quickly, without having to wait for annual reports.
The repercussions are myriad, especially when one extrapolates the power of blockchain into voting mechanisms. Imagine the responsiveness of politicians to the public if every decision were open to scrutiny and opinion polls?