Fight against public corruption on behalf of the blockchain


Puerto Rico recently announced that it may be looking for a blockchain solution to combat government corruption, especially after the mayor of Puerto Rico pleaded guilty Accept cash bribes More than 100,000 US dollars.

But can distributed digital ledgers really have an impact in the fight against public fraud and wrongdoing in the unincorporated territory of the United States?

Governance experts tell Cointelegraph that if it is done with other public efforts, it may succeed. Puerto Rico can also benefit from the lessons learned from other countries (including Georgia, India, and Colombia) that have implemented blockchain to combat corruption in recent years. It should not be unwilling to introduce external help, although most of the key work should still be done by local institutions. Finish. Puerto Rico should not expect rapid technical fixes.

“We have a real credibility issue,” the speaker of the Puerto Rico House of Representatives Tell Bloomberg and greater transparency and accountability-the kind that blockchain technology might provide-“may be part of the solution.”

Nir ​​Kshetri, a professor at the Bryan School of Business and Economics at the University of North Carolina at Greensboro, believes that Commonwealth officials may make a difference. He told Cointelegraph that blockchain technology can not only strengthen anti-corruption efforts, but also change the rules of the game.

“The blockchain system can conduct a complete audit trail of all activities and transactions involving government officials,” Kshetri said, adding, “The immutability feature means that government officials cannot delete files. Any changes will be immediately connected to the block. Other participants in the chain network noticed.”

Others are not so sure, but said that if other conditions are right, blockchain technology can keep the government clean. “Blockchain can play a role in protecting transactions and monitoring incidents, preventing fraud and corruption,” said Per Aarvik, a researcher at Chr. The Michelson Institute (CMI)/U4 told Cointelegraph, continuing, “But it is not without a regulatory framework as a basis.”

He added that Puerto Rico is likely to adopt expensive systems, “unless it solves a wide range of problems, these systems may have limited effectiveness.” Along these lines, “you can start from other highly digital countries such as Estonia or Singapore and the former Soviet Republic of Georgia. Lessons learned there”.

The technology can play an important role in the field of land ownership. Copenhagen Business School professor Jonas Hedman told Cointelegraph that, as it has been shown in Sweden, such a plan has been partially implemented, and it can also have “a pair of procurement and elections.” Huge impact. Imagine if an agency or country—such as Puerto Rico, the Central Intelligence Agency, the United Nations, etc.—has a public ledger of all expenditures?”

Advice for Puerto Rico

When asked about Puerto Rico’s plan to combat public corruption, Kshetri said that the island’s territory needs to start from the most corrupt areas. It needs to cross-validate the received data before it enters the blockchain, where it may well use other emerging technologies, such as artificial intelligence, machine learning, and remote sensing, instead of relying on government officials.

Reform should also face resistance from actors who currently benefit from the status quo inside and outside the government. Involving external parties—like Columbia’s school meal procurement program—can strengthen informal accountability.

In other words, “Puerto Rico should not rely too much on foreign companies to implement blockchain to fight corruption,” Kshetri told Cointelegraph. “It should develop local blockchain manpower”-as happened in Andhra Pradesh, India. “Local blockchain companies are more effective in providing low-cost solutions that suit local needs.”

Georgia becomes creative

Aarvik told Cointelegraph that Georgia is often cited as an example of the use of blockchain to protect government registration, “but the story does not start with blockchain.” “Before the introduction of blockchain, the country had completely reformed the entire Public Sector.”

This involves carefully studying its corruption issues, and then sometimes applying creative solutions, including the transfer of some marginal practices to the legal realm. “For example, most people pay bribes to obtain passports or any other documents they desperately need, and they are not ready to wait,” according to Tamara Kovziridze, former chief adviser to the Prime Minister of Georgia. “Today, if you pay a higher fee, you can get an international passport in one day.”

Aarvik said that when blockchain company Bitfury introduced its Exonum blockchain-as-a-service solution to the country to ensure land ownership, Georgia already had an effective land registration system, adding that technical solutions cannot exist in isolation. Certain prerequisites must be met. Or as Kovziridze told CMI:

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

Aarvik sent a message to Puerto Rico: The blockchain experts hired to discuss solutions with the government may be technologists or digital financial technology experts, but they are not necessarily the designers of a sound governance system. Unless the reform design “includes comprehensive capabilities in law, social sciences, economics, and technology, I don’t think the project will produce the expected results.”

Kshetri agreed that land registration is an area where distributed ledger technology can play a role, citing a promising blockchain-based pilot program in Andhra Pradesh, India. “Bribery in land management is rampant in India,” he told Cointelegraph. A typical land record on the blockchain has 58 attributes, “such as unique ID, plot code, geographic coordinates, survey number, boundary information—for example, information about neighboring plots, locations related to roads or other landmarks— -Land classification and dynamic attributes that may change, such as owner and mortgage information.”

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

“A blockchain-based system in which many institutions act as nodes or verifiers of transactions and can cancel each other out to ensure that no institution can manipulate the system without being noticed by others.”

The “verifiers” in the national land records include its taxation department, chief commissioner of the land administration department, and other officials. “If any node attempts to change the record, the landowner will receive a text message. The immutability feature means that the data cannot be deleted.”

Colombia cracks down on improper contractors

Kshetri told Cointelegraph that in Colombia, improper contractors inflated school meals and sold chicken breasts to the government at four times the cost of supermarkets. Sometimes they did not even deliver the purchased goods. Therefore, the government cooperated with the World Economic Forum and the Americas. The Development Bank implemented a public blockchain procurement program to track the supplier selection process in Medellin.

This requires bidders to publicly commit to contract terms and selection criteria previously Kshetri explained that in order to attract bids, “the risk of customizing selection criteria after a request for proposal is issued to support a specific contractor is eliminated.”

As the suppliers are competing, “the permanent and tamper-proof bid record of the blockchain-based solution ensures that the company cannot change the submitted bid after learning new information about the competitive bid,” Kshetri explained.

Add other technologies

In terms of combating public wrongdoing, blockchain technology can also be effectively paired with other emerging technologies. Kshetri reports: “In the cobalt supply chain, if the government agency responsible for labeling luggage colludes with smugglers and enters incorrect data, the blockchain system will be destroyed,” Kshetri reports, but artificial intelligence can be used. And the implementation of drones to cross-validate the data.

For example, traceability as a service provider Circulor has developed blockchain and artificial intelligence solutions in the cobalt industry. When miners enter supply chain data, their identities will be confirmed through facial recognition software.

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All in all, as Hedman pointed out, blockchain technology can be an effective means to combat government malfeasance because it introduces more “government expenditure transparency”, which makes corruption more difficult to implement. But it cannot operate in isolation, and it will not operate if high-level government corruption. According to Kovziridze, the Georgia experiment was successful because “the top leadership is clean.”

Aarvik added that the holistic approach to combating public corruption is the key, “not a technical quick fix.” But in order to simplify processes, increase public self-service, and omit previously corrupt processes, digitization, including blockchain technology, “is definitely a powerful tool,” he told Cointelegraph.