Building block(chain)s for smarter government at TechCrunch Shenzhen

Blockchain and crypto were front and center at last week’s TechCrunch Shenzhen 2018.

One theme that featured in panel discussions was blockchain for government—not only what governments can do for blockchain, but also what blockchain can do for cities and public services. Such discussion soon give rise to contemplation on the importance of citizens’ views on privacy. 

Contrary to the more typical technology vs. authority narrative, blockchain experts at TechCrunch Shenzhen spoke positively about how the two can work together.

In the case of China, that viewpoint may surprise some who’ve been closely following the mainland’s increasing number of blockchain regulations. The Cyberspace Administration of China released a new set of draft regulations in October that could narrow the scope of the country’s blockchain-based businesses.

In September, Chinese authorities imposed a stricter oversight on cryptocurrencies and ICOs. Not long after, the country effectively banned all crypto exchange platforms.

Still, panelist Veronica Zheng of New York-based blockchain software company ConsenSys said that on blockchain, the Chinese government’s understanding is very deep—even more so than that of some other countries.  Speaking on the sidelines and after her panel appearance, Zheng cited the Ministry of Industry and Information Technology’s (MIIT) regular public rankings of global blockchain startups as an example. Of course, “they still hope to have supervision and control over… [companies],” she added, referring to the Chinese government.

ConsenSys is advising China’s government on its large-scale development project in Hebei Province, the Xiong’an New Area. The project is essentially an effort by China to build a second capital, and specific details of ConsenSys’ collaboration are under wraps. Speaking on a separate panel, Zheng’s colleague, Ray Valdes, ConsenSys’ Chief Transformation Officer, said some might consider the cooperation between the US blockchain company and the Chinese government as unlikely, describing the situation as akin to [US President] “Trump contracting with a Muslim-owned company to do homeland security.”

Nevertheless, it’s happening, said Valdes. And with a new “blockchain pilot zone” in the southern province of Hainan, as well as existing incentives for companies in provinces such as Guizhou, Zhejiang, and Jiangsu, both local and central government bodies seem determined to make China a leader in blockchain.

Laying the groundwork

Zheng said that in September 2017, Zug, Switzerland, began offering digital identities hosted on the Ethereum blockchain to all its citizens. Using their e-IDs, residents can reportedly vote on public referendums. In 2016, Zug had already begun to accept Bitcoin as payment for certain municipal government services.

Gavenraj Sodhi, who heads blockchain education platform Guwoo and chairs the Early Education Working Group of US-based Government Blockchain Association, cited the UAE’s Dubai. There, the local government is working on 20 different use cases that integrate blockchain with official operations.

In China, Sodhi added, the potential for added blockchain security exists in areas from food safety to energy conservation. For instance, using tokens authorities could incentivize further switches to electric vehicles in the taxi industry. On a more mundane level, it could also help prevent tax fraud and fake fapiao, or receipts, a common phenomenon.

Zheng of ConsenSys added various aspects of smart city planning to the list: smart ports, healthcare, and education could all benefit from transparent and trackable transactions, she says.

At TechCrunch side-stage panel ‘Your City on Blockchain’ Lman Chu, co-founder and CEO of Taipei-based BiiLabs spoke about the real-world applications and current challenges of integrating the technology into smart cities. 

In Taiwan, a major government blockchain initiative is already underway with the aid of Biilabs. The startup, which focuses on decentralized ledger technologies (DLT) and applications such as air quality and pollution monitoring systems, officially launched a digital identity system for Taipei this month.

Although it’s currently only available for corporate users, the Tangle-based system marks a big step forward for government-blockchain partnerships in Greater China. Launching the decentralized ID system in Taipei, a city with around 3 million people, put scalability, performance and other technical aspects to test, said Chu.

Privacy concerns

One of those challenges has been privacy. To address that, one of the steps Biilabs took to enhance the privacy and security of the system was working with risk advisory firm Deloitte to make sure the system is GDPR-ready and in compliance with local regulations. The General Data Protection Regulation (GDPR) is a regulation on data protection and privacy that came into law across the EU in May.

But despite stringent safety measures, privacy may still be a concern for some. On the topic of blockchain-enabled e-identities, Chief Public Mission Officer of Hong Kong Cyberport Dr. Toa Charm commented that “once you have the digital identity whatever you do is on the blockchain.” Even if that makes the people of Hong Kong’s lives easier by streamlining official services, some are likely to “perceive it’s a bad thing.”

Outside of e-identity systems, Chu commented that in terms of ownership of personal information, there are still many aspects that fall into a gray area. That includes the ownership of new forms of data like medical records or surveillance camera footage.

There are still a lot of questions that need to be addressed such as the sort of data that should be considered part of a person’s digital assets, and the role government should take in this transition period, Chu added.

Still, in Sodhi’s opinion, citizens tend to place convenience before other concerns. That paves the way for advances such as prospective blockchain-government partnerships. After all, when a faster online system could make onerous official tasks easier, “do you want to stand in line for two hours [to] renew your driver’s license?”

Additional reporting: Bailey Hu.