“It takes more courage for transparency and technology”

Mountains of files, bureaucratic processes, endless processing times: the democratic right of citizens to control the administration only exists on paper. In reality, it is a bumpy road to gain insight into administrative processes in Germany. A technology too often reduced to crypto-currencies, distributed ledger technology, could provide a remedy. At the instigation of the FDP parliamentary group, the Technology Assessment Office of the German Bundestag has published a report on the opportunities and risks of artificial intelligence and distributed ledger technology (DLT) in public administration . The report was tabled in the German Bundestag on Thursday. The results are revealing.

Decentralized management of DLT registers and types

DLT – or blockchain technology – describes a type of decentralized ledger management. The registry is stored on multiple nodes. Anyone can view the database and make registry entries on public DLTs. It only seems appropriate for administration in a few cases. Not because everyone can see the database, but can modify it. Because the data stored on the DLT can be seen by everyone, but not necessarily readable, since the data can be stored in encrypted form. On private DLTs, only a limited group of actors can view and modify the database. A mixed form are so-called public authorized networks, which represent publicly accessible databases with limited write permission. The last two types probably come into consideration mainly for administrative processes. The Office for Technology Assessment highlights the potential of DLT for administration. It can advance the automation of registers at all administrative levels and thus increase the transparency and efficiency of registers. In public administration, many institutions at different administrative levels are often involved in record keeping. In standardized processes, data is used and modified, but not exchanged. An elegant use case for DLT solutions, as these are characterized by resistance to manipulation and non-repudiation.

Enough theory, concrete applications

DLT applications can optimize many complex, previously paper-based processes in public administration and implement document verification faster and more securely with fewer resources. In procurement, for example, compliance and respect for human rights and environmental standards could only be verified and payment initiated if compliance is observed. The DLT ensures data integrity and automation; however, the integrity of the data source must be guaranteed. Notarial powers of attorney and certificates of inheritance could be issued via DLT and in this way it could be determined beyond doubt whether a power of attorney or certificate of inheritance is still valid at a given time.

The German authorities are lagging behind

If you ask the German authorities, there is no such potential. In the official Germany-wide survey “Future Panel State & Administration”, a third of respondents said they were unable to assess DLT. The highest decision-makers and authorities were interviewed. The DLT has been proven to be of little relevance at all administrative levels. Other countries are more advanced here and are already running pilot projects. For example, electronic identity in Estonia is not based on DLT, it has existed since 2002, but in DLT-like application e-Estonia public administrative services are offered in digitized form. Estonians can already participate in electronic elections, digitally register their place of residence or register a car without going to the office. 95% of tax returns in Estonia are filed digitally and it takes an average of three minutes. When the tax return is due every year, German taxpayers would dream of it.

From football education to cadastre

The Maltese Ministry of Education relies on a DLT solution for the verification of final diplomas and certificates. Participating institutions receive digital keys and it is recorded on the blockchain that only they can issue certificates. Users receive a digital identity and can share their certificates via an app (free). In Groningen, the Netherlands, vouchers for low-income citizens are processed through a Zcash blockchain solution. The validity of transactions is checked using zero-knowledge mechanisms without revealing information about the identity of the partners involved. In Sweden, land registry and cadastre are implemented using DLT. Data such as purchase contracts or property transfers are stored on the blockchain and can be viewed by the public. After all: In Germany, too, the coalition has agreed in the coalition agreement on a feasibility study for a land register on blockchain.

Using public infrastructure instead of digitizing administration in a planned economy

Instead of relying on a vibrant blockchain developer community, the last government gave us the Online Access Network (OZG) in 2017. By the end of 2022, 575 administrative services are expected to be available in digital. As of August, 49 of these services were fully digitized, and 207 services are at “PDF maturity level.” The reason for this is the municipal back and forth and probably also the reactivity of the authorities, too reluctant to do without their traditional working methods. We need an offensive of administrative modernization and more courage for transparency, more courage for technology. Blockchain technology can offer an entry point for this.

Above

Frank Schäffler is a member of the Bundestag for the Liberal Democratic Party (FDP) and managing director of the Berlin think tank Prometheus – The Freedom Institute. Frank Schäffler is a member of the Budget Committee, the Digital Affairs Committee and Spokesperson for FinTech and Blockchain Innovations of the FDP Parliamentary Group.