Local Governments and Blockchain: A Match Made in Digital Heaven

Despite niche interest outside of the cryptocurrency community during its inception in 2008, blockchain technology is starting to go mainstream as local governments explore new ways to utilize the digital ledger system for improved security, efficiency, and transparency.

This is because blockchain technology offers an easy way to track and verify digital transactions. For example, each taxpayer to pay their property taxes to the county through the blockchain would have their payments logged as a unique “block” containing encrypted transaction information and timestamps. Each transactional block would also contain information referencing the block that preceded it (known as a cryptographic hash function).

While this sounds like an overly complicated way to describe completing, recording, and verifying digital transactions, the value comes from the way blockchain emphasizes security, transparency, and decentralization in a way that no previous technology has been able to. The level of encryption employed in how transactions are recorded keeps transactional information private so nothing can be exploited by bad-faith actors. Each individual block referencing the previous block also ensures transactions cannot be altered or reversed because it would affect previous blocks in the chain, which means that anyone at any time can verify each block without any doubt as to the accuracy of the chain. Perhaps best of all, blockchain technology cuts out the middleman by allowing people and organizations to manage their own transfers without the need of a centralized bank.

In a 2018 report entitled Blockchain in Cities, The National League of City (NLC) noted that “blockchain has the potential to further innovate all of the transactions we make — whether financial, legal or municipal.” American City & County has also recently reported on the trend of local governments embracing blockchain, noting that Cook County, IL started experimenting with blockchain in 2017 to track property titles and public records, and that now, according to the National Conference of State Legislatures, “more than 30 states across the nation have pending blockchain-related legislation” slated for 2021 legislative sessions.

While blockchain technology may not be the answer for every public entity, this nascent trend of government embracing technology that is so radically pro-security, transparency, and privacy is a recipe for happier constituents and more efficient government. Only time will tell, but the potential for blockchain to “restore confidence in the core tenets of our society” as the NLC believes should be cause enough to celebrate.

Share This Post:

This entry was posted in City Clerk Cafe, Latest News, Small Cities, Technology. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.