Russia's blockchain experiments point to bigger things

23 August, 2019

Moscow's Information Technology Department recently opened bidding on a new blockchain system designed to host a small number of electronic services for local residents. Though the project is rather small, it is just the latest in a series of so-called 'experiments' being conducted by the Russian government in Moscow. The combined experiments point to something bigger.

Before you jump to conclusions and assume that we are talking something nefarious here, know we are not. All of the experimental projects currently ongoing involve Moscow city government. They are designed to make city government more accessible to citizens by providing new online systems by which people can access documents, complete government paperwork, etc.

What is being done in Moscow is an attempt to harness the power of blockchain to eliminate the often-tedious task of interacting with city government. IT leaders seem to be on the right track. Time will tell if their experiments prove fruitful and, if they do, whether or not the entire city computer system will eventually be transformed into a series of blockchain apps.

Property documents and farmer's markets

This most recent experiment looks to set up a new blockchain system for hosting a platform through which Muscovites can apply for certain property related documents and procure open slots at one of the city's farmer's markets. Not much is known about the property documents at this time. However, the farmer's market slots are pretty well known.

There are more than 2,700 slots across several farmer's markets that run from April to November. Apparently, some 20,000 people apply for the slots every year. You can imagine the headaches that it must generate when city officials attempt to do things with old technologies.

Moscow apparently launched another blockchain experiment back in 2018 to handle distribution of the slots. It is unclear if that project is still ongoing. At any rate, the new project aims to take on that same responsibility. Perhaps technicians learned from the 2018 experiment and are now incorporating changes into this new project.

Those wishing to bid on the project have to be able to get in under the projected RUB 57 million (USD $860,000). Once the contract is awarded, the winning bidder will have 60 days to have the platform up and running. That doesn't seem like much time, but blockchain technology is now well-established enough to facilitate a fairly quick build. The project will be built on the Ethereum blockchain.

Giving citizens easier access

News reports suggest that the new platform will be integrated with other experimental platforms now in operation. The goal is to give citizens easier access to local government while also maintaining complete transparency. Moscow's IT department says the new system has to be able handle up to 1.5 million users simultaneously, though it is unclear if the other experimental projects have that same capacity.

Among the projects the new system will integrate with is a voting platform known as Active Citizen. This is a platform that allows Muscovites to give their opinions on all sorts of local issues including street decorations, local events, and recreational opportunities. Active Citizen has been in place since 2017.

It is suspected that the system is a precursor to a more robust voting system that could eventually be used to facilitate national elections. There is already talk of allowing some Moscow districts to vote through Active Citizen during city legislature elections later in 2019. Some 6% of Moscow's electorate should be able to vote through the platform.

Blockchain is the perfect tool

While it certainly is newsworthy that Moscow is heading toward moving more of its government services online via blockchain, going online itself is nothing new. Consider Estonia. The Eastern European country embarked on an ambitious goal to make government operations completely electronic nearly 20 years ago.

Estonia has done so well with its e-government initiative that its citizens now vote online. Almost all interactions with government involving documents, applications, etc. is conducted online. The point is that e-government is not only possible, governments have been working on it for a while.

What makes Russia's effort different is its focus on blockchain. As you already know, blockchain is the foundation for decentralized apps. This is somewhat murky in the realm of government because nothing is decentralized in the government ecosystem. Yet the principles of blockchain can still be applied in order to extend services to citizens in a more transparent manner.

Blockchain is the perfect tool for what Moscow is doing. It offers the opportunity to build specific apps perfectly suited to things like document storage, online applications, and even bidding for farmer's market spots. Blockchain is perfectly suited to online voting - especially since blockchain ledgers are irrevocable. It is mighty difficult to stuff the ballot box with a properly designed blockchain ledger for voting.

The proof-of-authority model

Every blockchain system must have some means of validating transactions before they can be added to the ledger. Bitcoin, the granddaddy of them all, uses what is known as proof-of-work (PoW). This model requires multiple computer nodes on the Bitcoin network to complete a complex mathematical computation (the work) in order to validate the transaction. All of the nodes must come to a consensus on that computation. If they do, the transaction is verified and added to the ledger.

PoW is still the most secure and reliable means of validating transactions. However, the intense amount of work required makes it slow and not very scalable. As such, the contractors working on Moscow's projects have to use some other model. Moscow's ID department has settled on proof-of-authority (PoA).

The PoA model relies on the authority of validators rather than the work a validator might do. So where coin miners on the Bitcoin network are confirming their ability to validate transactions by doing work and receiving coins in exchange, nodes on a PoA network already have authority to validate transactions.

These nodes are arbitrarily selected by builders as the network is being built. They are the only trustworthy entities on the network capable of validating transactions. However, they still much reach consensus. All of the nodes on a PoA network look at transaction data and then either agree or disagree on its validation.

This system is much more efficient and less resource intensive. It is also highly scalable. As the network grows, it is possible to add as many more nodes as required to keep things running smoothly.

Automatic and in the background

Another benefit of the PoA model is that transaction validation is automatic and running in the background. Human beings do not constantly have to monitor hardware or software to keep things moving. However, both hardware and software must be maintained to ensure that it remains uncompromised. A compromised node would not be allowed to give its input on current and future transactions.

Being an automatic system makes it a lot easier for Moscow's IT team to serve up to 1.5 million users simultaneously without worrying the system will get bogged down. The only downside here is that the model prevents true decentralization in its purest form. The system is still controlled by the local government with no decision-making input among its users.

The counter to this point is the fact that e-government does not necessarily have to be decentralized. That is not the point. In fact, decentralizing local government would lead to its disintegration. So why go blockchain? Because blockchain is still great technology even if it is not decentralized.

Blockchain interoperability

Streamlining government by putting things online is always a monumental task that threatens to create more work than it saves. Older computer and network technologies have proven that. For example, e-government systems that do not offer robust interoperability often create scenarios in which the left hand doesn't know what the right hand is doing. Trying to deal with such a scenario leaves citizens frustrated and angry.

The biggest benefit of blockchain technology is that it actually encourages interoperability. It makes it a lot easier for the IT department to integrate multiple apps that all rely on the same foundational software to run. Then throw in automation and you make it even better.

Automation takes human IT personnel out of the equation. When you remove humans, you also remove the tendency for errors to create problems. Everything runs more smoothly and efficiently. Muscovites will start discovering that once the new project is up and running. They will have instant access to property documents and applications without having to go down to a local government office where they would likely stand in line while they wait to deal with a human clerk.

In terms of record-keeping, few technologies can compete with blockchain. A blockchain ledger leaves a perfect digital trail in its wake, a trail of information that has already been verified as accurate. And because blockchain information is irrevocable, records are permanent.

Russia is taking big strides toward e-government. Through multiple blockchain experiments already running in Moscow, they are trying to figure out just what it will take to get all of their government operations online. Achieving a complete e-government solution will take a lot of time, money, and effort, but it will be well worth it in the end.