The private sector has invested more than 1.4 billion dollars in blockchain since 2014. To put this number into context, this is on par with the amount of money spent on internet investments during the early 90’s! What do you know about blockchain? Personally, I knew almost nothing besides the fact it was a technology people were excited about and that it had something to do with Bitcoin. Luckily for me, Procurement U recently released a free course entitled “Blockchain: The Public Sector Big Picture”. This course provided me with a basic understanding of how blockchain works and explains it in a simple, approachable way through videos and interactive graphics. As someone who is not the most technically savvy, I can say that this course helped me understand blockchain and made me excited about its potential uses. This course goes over how blockchain works and how it can be used in procurement. Take this Procurement U course to start exploring blockchain and its uses in your office!
Why is blockchain causing such a stir? It is a great technological leap forward in terms of efficiency and data security! This technology makes data virtually incorruptible and the amount of security and trust this engenders provides a great opportunity for the public sector. The course breaks down how blockchain works in order to understand how blockchain increases data security. Blockchain is essentially a distributed virtual ledger composed of a series of blocks that stores information across a network of computers. The blocks of data link together to form an unalterable chain showing the series of transactions that occur between users. These blocks cannot be edited but can be amended if necessary, which does not change what was recorded on the original block. This allows for the creation of an incorruptible ledger which all users are in possession of and can reference in the future. So, the fundamental way Blockchain works is what makes it so secure. Firstly, the data is recorded in a way that does not allow you to erase or delete a block in an attempt to alter the record of the chain of events. The second great thing for data security is that the information is stored on multiple computers meaning that if a hacker attacks one of the computers the data is still safely stored on the other computers in the network.
After this course, I began doing a little more digging into blockchain. I found a very interesting report by the Deloitte Center for Government Insights entitled “Will blockchain transform the public sector? Blockchain basics for government” wherein they explore some of the applications of blockchain. Most people have heard about blockchain in the context of cryptocurrency (e.g. Bitcoin), but it has other usages in both the public and private sector. Blockchain can be used when there are multiple parties in a transaction, an environment of low trust and when an agency needs to be ready for auditing at a moment’s notice. Blockchain allows for a reduction in costs during business transactions as a trusted intermediary, such as agents or brokers, is no longer necessary to verify the accuracy of the record. Some of these uses include identity management, land registration, and voting technologies. Given the possibilities blockchain offers, several public agencies such as the General Services Administration, the Department of Homeland Security and the states of Illinois, Texas, and New York are all considering applying blockchain technologies.
The public sector is already exploring potential uses of blockchain technology in many aspects of the government, but there are also a multitude of applications specifically for public procurement. A few of the benefits of utilizing blockchain in the centralized procurement office include:
Increased Data Security: Each computer in the blockchain contains a full digital ledger of the series of transactions. This decentralization means that if some computers in the block “go down” because of a system malfunction or cybersecurity attack, you still retain an accurate, up-to-date copy of the data.
Ease of Documentation: Logistic blockchain can be implemented to help the supply chain run more smoothly with automatic documentation which allows you to track the entire supply chain from a product’s creation to final delivery.
Removes Need for Middle Man: Because blockchain creates a decentralized ledger between all parties involved and is unalterable, it lessens the need to have an independent agency validate the series of transactions as the unalterable “blocks” record the chain of events which occurred.
Both the public and private sectors are excited to explore the benefits of blockchain and it’s clear there is enormous potential in the field of public procurement. Use the free course “Blockchain: The Public Sector Big Picture” provided by Procurement U to gain a more thorough understanding of how blockchain works and it’s possible utilization in your office!