Case Studies

Modex facilitates the adoption of blockchain technology in the public sector

September 22, 2021

Legacy infrastructures in the public sector are unable to cope with the rapid shift towards an increasingly digitalized society. As a result, there are more and more administrative bottlenecks, a general state of dissatisfaction with government performance, as well as a general sense of alienation concerning citizen-government relationships. Blockchain can change all that, and Modex offers the right products and services needed to reshape the public sector with the help of blockchain technology.

From healthcare, digital identity and banking to accounting, supply chain and automotive manufacturing, we’ve all seen the disruptive potential of blockchain technology. The public sector is another area prime for transformation. Thanks to its characteristics and benefits – integrity & immutability of all transactions, single source of truth with audit trails and traceability, embedded encryption and security, decentralization and real-time backup availability by design – blockchain has the power to transform and enhance the public sector services.

The European Commission has identified several potential uses for blockchain in the public sector. To name just a few: citizen identity management, tax reporting, development fund management, legislative compliance, electronic voting. When it comes to harnessing the power of blockchain, Estonia is amongst the leading country, using this technology to secure data in systems such as: e-health, property & land registry, business registry, succession registry, e-court, surveillance / tracking information system, state gazette and official state announcements.

digital city

Challenges in the public sector

Which are the challenges that could be solved with the adoption of blockchain technology? To start with, sensitive data leaks. Securing authentic records that institutions work with is conditioned by the quality of work of employees. Insiders with enough authority may steal or tamper with data and remain undetected.

Then we have legal & regulatory issues. Government institutions must prevent unauthorized access to sensitive data and create data management policies that comply with legislation such as GDPR or HIPAA. Up next: the citizens’ and investors’ trust is dynamic. Government institutions deal not only with real problems across a nation, but are also accountable for managing them. Governments with a history of lacking transparency have a harder time improving their image and how their effectiveness and regulatory quality are perceived.

The high cost of efficient data protection represents another challenge. Government institutions need to allocate huge chunks of public budget to cover data integrity and patchwork security inefficient systems. Last, but not least, low interoperability. Data sharing between organizations is impractical: even if all government institutions are already engaged in a digitalization process, they do not all use the same software applications and databases, therefore sharing data securely remains difficult.


Blockchain benefits for the public sector

Now that we’ve seen some of the main challenges, let’s take a closer look at the benefits of adopting blockchain in the public sector. By being scalable and offering secure digitalization, blockchain technology can support digitalization in public agencies and institutions by enabling a decentralized, highly efficient infrastructure that ensures privacy, regulatory compliance, and streamlined data sharing. When it comes to institutional interoperability, blockchain can help governments in building an ecosystem where trust is enforced by technology. Data can be shared among several entities in a secure and transparent way, ensuring real-time back-up and auditability to sensitive data.

Bureaucracy and corruption reduction are also benefits. Institutions can use blockchain to link real-world identities to encrypted, verified digital IDs & documents (e.g. certificates, diplomas, permits). This will streamline KYC checks and compliance with legislation by removing repeated verification processes, errors or fraud attempts. Blockchain can also boost citizen trust and engagement. It can shift the way citizens and institutions trust each other and interact by putting trust and assigning rules in objective coding, instead of in the hands of various entities with personal interests, thus boosting a country’s image and investors’ trust in that particular region.

Modex – spearheading blockchain adoption

From sharing and protecting sensitive data among multiple entities to online voting for causes and projects, Modex can change the way citizens and administrations work together, significantly boosting efficiency and transparency. The projects Modex has developed for government institutions can be deployed in any country and for any system, thanks to their embedded infrastructure agnosticism. How can Modex’ solutions enhance the public sector?

Governmental digitalization

Governmental institutions need a secure environment to store sensitive data and documents and they must have complete control over who can access that data, what they can do with it, and for how long.

Public institutions that are looking to “renovate” their systems can now opt for a dynamic, easily in-house customizable platform to fit their specific workflows while adding a blockchain layer to their document collection & storing processes & interactions with citizens and other parties alike. A blockchain-based online voting platform enables participatory democracy and transparent budgeting processes as well as trusted remote voting in shareholders’ meetings for large companies.

Tax collection & reporting

National Agencies for Fiscal Administration could be amongst the largest beneficiaries of blockchain technology given that decentralization, immutability and real-time synchronization of data are essential for streamlining the taxes collection system, with which most citizens interact regularly.

Decentralizing the databases of these agencies using the blockchain would mean that each access point to the Agency’s database would be synchronized in real-time with all other points in the network, eliminating the risk of erroneous payment requests or account seizures.

Public procurement system

Blockchain can bring more efficiency, transparency and security to the public procurement system. All participants can be sure that the data in the system (award criteria, value of contracts, specifications, etc.) won’t be changed to favour certain winners of tenders, and smart contracts will improve the bidding process in public tenders. These functions will reduce corruption in public procurement, both centrally and locally, and citizens and participants will have more trust in the system.

Land registry

In their current form, many land registry systems are subject to risks because they may contain false information, and data can be vulnerable to security threats due to the fact that it is held in a centralized system, with a single point of failure. Moreover, even if the systems reach a high coverage rate, authorities must ensure that updates will continue and that all new transactions will be recorded and will not take place informally outside the registry.

Pharmaceutical supply chain

Digitalizing the medical supply chain and making data available to all interested parties while guaranteeing its integrity will streamline resource allocation and contribute to a better healthcare system.

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