Alexander Boldachev

Blockchain technology analyst, Head of Research and advisor to eGaaS ' Electronic Government as a Service' platform.

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Features of Technology

What should we know about blockchain for taking the solution about introduction of blockchain ecosystem of e-Government?

  • · Blockchain technology is a mechanism for data storing and management, which is fundamentally different from traditional information systems.
  • · Records in blockchain are extremely protected from unauthorized changes.
  • · Data integrity is achieved through:
    1. Use of special crypto algorithm,
    2. Storing of copies of the database on various nodes of network,
    3. Absolute data synchronization on all nodes.
  • Data recorded on blockchain has a level of protection at least as high as documents with an electronic signature (the legal importance of which has already been recognized by the laws of majority countries of the world).
  • The smart-contracts mechanism which is implemented into blockchain ecosystem allows users to perform operations with data with full guarantee of they unchanged and therefore with the preservation of its legal significance.
  • All the operations/transactions in blockchain-ecosystem are signed by the key of agent, who performed them. This allows one:
    1. to control strictly the rights to data access (reading, recording, adding),
    2. to receive the reliable information about agents who performed data operations.Thereby, blockchain is a special digital technology that allows endowing a legal status to both the data entered in the registers and the procedures for its processing. Blockchain offers a fundamentally new approach to the implementation of e-Government. Unlike the traditional information systems which mainly perform functions of communication and preservation of the results of offline activities of agents, using blockchain means the transfer of the legal activity itself into digital ecosystem.

Principles of use

Principles of organization of state and other legal activities in the blockchain-ecosystem.

  1. Data of any objects participated into legal activities (State, financial, economic, social) are kept in a form of records in the blockchain registers. These records should have juristic significance fixed by the legislation; as a result they may be taken as a sufficient legal basis for conducting both offline and online operations with register objects.
  2. Special software modules called smart contracts are created in the digital ecosystem to implement operations with registry objects. They acquire legal significance due to being saved in a blockchain and ensure the uniqueness of implementation of the prescribed algorithm.
  3. Special software modules called smart-laws are created to control the smart-contracts activities, to regulate the access to rights to the registries (reading and recording). Smart-laws implement the algorithms and restrictions prescribed in state laws and other normative acts. The legal status should be given to smart-laws, this will let to recognize the legal significance of the records, made by smart-laws in the registers. To obtain a guarantee of the legal significance of the records in registries, they must be implemented only through smart laws. Technically this is ensured by the fact that the right to perform an action with data is provided to a specific smart-law during the registries creating.
  4. The main activity of state departments and individual officials should become filling of state registers with offline data (introduction of new objects, changing their status or state), that is providing the base for implementing any legal activity in the environment of the blockchain-ecosystem.
  5. The task of the legislature should be:
    1. creation of procedures of adding the offline data to registries,
    2. creation of the system of smart-laws that control the rights to perform operations with data of register inside digital ecosystem,
    3. description of the mechanisms of legal resolution of problem situations which are not regulated by smart laws (couldn’t be algorithmized).
  6. As a result, the solution of private and legal entities requests (civil status registration, licensing, receiving of benefits, etc.) should be performed automatically in majority of the cases by analyzing the data of registries by smart laws. If the data in registries is not enough for making decision automatically, the contract has to make request to the appropriate department. The result of request processing by authorized person will be new record in registry which will allow contract to make a definite decision.
  7. In the scheme above the official may influence on making decision only by data registry’s managing within his competence (prescribed by a smart law). All records made and modified by official are signed by his personal signature (the key of identification of the person) and protected from falsification. With automatic decision-making each official is responsible for the records made by him in the registers, which became a base of the past verdict.

Required measures

Legal and organizational measures which are necessary for the transfer the state activities to the blockchain-ecosystem:

  1. Development and implementation of the procedure of person’s identification, which is required for connection to the digital ecosystem.
  2. Development of mechanism of initial registries filling.
  3. Development of mechanism of smart-laws verifying.
  4. Adoption of package of laws for the legal status of the person’s identification procedure, records in registries and smart-laws.

Conclusion

So, it should be understood that blockchain is not a means of digital modeling and automation of state, financial, business and other processes existing within the established legal field. Blockchain-ecosystem is a remedy for creation fundamentally different legislative system, where the majority of legally significant relations are performed automatically by smart-contracts under the control of smart-laws. The transition to blockchain-ecosystem requires a significant restructuring of the legislative system, revision of the principles of the functioning of state departments, as well as changes in the methods of organizing and doing business, building of the new relations between the state and citizens (although all these changes could be doing gradually, step by step).

Advantages for the sake of which it is worth to transfer the governmental activities into a blockchain-ecosystem

  1. Unconditional provision of services supported by traditional information systems:
    • introduction of a person identification system
    • Creation of unified registers of objects involved in legal activities.
  2. Implementation of fundamentally new opportunities:
    • increased data protection from unauthorized changes,
    • transparent control of this data changes (limited by legislation),
    • automation of the fulfillment of many state functions with the full guarantee of the legal norms compliance,
    • use of blockchain-ecosystem as a unified digital environment for the implementation of activities in any area (financial, business, social)
    • Flexible management of the functional of the ecosystem with the help of smart-laws passed by legislative body of the country. As a result is no need to rewrite the software kernel code of the system when the political and economic changes take place.
  3. Priority is in the building of a modern state with the prospects of rapid integration into the new digital economy of the future.