Blockchain for Governments: The Case of the Dubai Government
Abstract
:1. Introduction
2. Blockchain and Digital Governments
3. Benefits and Challenges in Adoption of Blockchain by Governments
3.1. Benefits
3.2. Challenges
4. The Methodology
5. The Dubai Economic Department (DED)—Case Study Assessment Framework
5.1. Case Study General Features
5.2. Functionalities
5.3. Governance
UBR Roles
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- All trade license entities that will have access to trade licenses from issuing authorities within the emirate, e.g., Dubai Silicon Authority, Dubai Chamber of Commerce, Ministry of Labor, Dubai Courts, Dubai Statistics, etc.
- –
- Access based on business activities—entities that need access to trade licenses from all issuing authorities but only for specific types of activities, such as Dubai electricity and water authority (DEWA), and Etisalat (a telecommunication company).
- –
- Access based on license type—entities that need access to trade licenses based on license type, such as Dubai Customs and Dubai Port Authority, need access to Trade/Commercial Licenses.
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- Access based on a need-to-know basis—entities that need access to selected trade licenses granted by the license owner, e.g., banks, other private commercial entities, and free zones.
5.4. Usage
5.5. Technical Architecture
5.6. Benefits and Challenges
6. Insights from the Case Study
6.1. Benefits
- Enhanced trust: The DED benefited by having simpler and faster processes across different authorities. It helped in creating trust among investors as any modification made to the investor’s data can be synchronized across different authorities automatically and instantaneously. The surface area of integration required by the service provider is vastly reduced. Various policies and rules are in place to secure the access and authority levels of the customers. These measures help in increasing trust among participants.
- Standardization of regulatory checks: By standardizing all the regulatory checks, by unifying and verifying all the processes on the blockchain, resulting in drastic time savings in various business processes.
- Reduced operational costs: High operational costs reduction is achieved by using blockchain-as-a-service based on a pay-as-you-go model with different subscription packages. The DED is achieving around 85% cost savings by providing connected services to customers on the unified business registries (UBR). Cost reductions have been possible as they do not need to build the entire infrastructure by themselves, and they do not need to hire subject matter experts in this domain to maintain and develop the use case. Sharing information across entities in a common registry resulted in the reduction of the overall cost of information management, improvement in data quality, and creation of opportunities for collaboration.
- Increased customer satisfaction: Re-use of information from trusted authorities (create once use many) increased customer satisfaction by relieving constituents from the burden of submitting copies of documents issued by government entities. Moreover, real-time data sharing between various entities resulted in efficient, trusted, and secure services, thus leading to intangible benefits in terms of customer satisfaction and trust.
- Authenticity of documents: By allowing data in the blockchain, it brought authenticity to the documents submitted, as otherwise documents submitted could have been tampered with. Security of data is ensured through various policies and controls in place to secure the access and authority levels of the customers.
- Improved accountability: By choosing to use blockchain instead of simpler solutions based on database systems, the DED has given precedence to secure systems that are cost-justified as well. Accountability has improved by using decentralized blockchain technology, which has created a link between other free zones and another mainland in Dubai.
- Positive environmental impact: It brings a positive impact on the environment by reducing fuel emissions. This is possible because of the paperless and travel-free transactions using this technology.
6.2. Challenges
- Underutilization: Currently there are only a few participants in this chain. Data are lying there on the blockchain underutilized. The DED is finding it difficult to bring together required stakeholders.
- Technical immaturity: A consent mechanism is used for sharing data with other entities. However, it works on a trust basis, as audit rights or sharing of audit reports with partners is still in its formative phase.
- Lack of awareness and trust: To increase trust and awareness among organizations, the ‘Dubai blockchain center’ has been established for educating private and public organizations about the use cases of blockchain technology. It is helping the government to build and enhance strategies and regulations to help businesses to accelerate the adoption of blockchain. However, awareness among stakeholders is still low and organizations are skeptical about the use of blockchain technology.
- Shortage of skills: For blockchain, various skill sets are needed for front-end as well as for back-end development. Various required skill sets include chain coding and integration skills. Other skill sets are needed for the development of the protocol and the consensus, involving the back-end side. For the front end, there are skills available in the market to write smart contracts and leverage kind of required solutions for blockchain platforms as a service. However, there is a shortage of people with skills in back-end programming. To fill this gap, the UAE has set up a ‘Dubai blockchain center’ to offer training to people, offering certification courses to develop front-end and back-end applications on various blockchain protocols and use cases.
- Migration challenges: Organizations find it challenging to map legacy data into the new system. Once legacy data are mapped into the new system, they become incumbent to perform lots of quality checks because not all the data fetched from the legacy system will be of equal quality as needed in the new system. Thus, it is not only linking/fetching, but it also requires quality checking of the data.
- Governance challenges: Another challenge is in terms of changes in the governance architecture. Changing the centralized to decentralized governance model is a gradual process, however, it starts with people having trust in the platform.
7. Conclusions and Future Research
7.1. Recommended Policy Actions
- To fully utilize the transformative power of blockchain, below policy actions by governments will spur the exploitation of the full potential of blockchain technology.
- Blockchain is a consortium and there have to be multiple participants in this. The public, as well as the private entities, need to increase the utilization of blockchain technology by plugging into this consortium to consume the data provided on the blockchain. The higher the utilization and integration, the better the benefits of this technology will be. Technology maturity will also increase with an increased number of participants on the blockchain platform.
- Moving to the future requires organizations to be well prepared to have new structures, systems, and securities. Migration from legacy to the new model requires an update in infrastructure, linking of the two systems, fetching and mapping the data, and performing the quality checks on the mapped data.
- Organizations face a challenge in terms of changes in the governance architecture. Organizations need to understand that changing the centralized to decentralized governance model is not going to happen overnight. It is a gradual process that starts with stakeholders having trust in the platform.
- Disseminating awareness among organizations needs to be increased to gain participants’ trust and for an increased participation.
- To overcome the shortage of skills, universities need to be advised to prepare graduates with back-end programming skills in Java, node.JS, Kotlin, Go, C++, C#, etc., required for building the protocol or automating onboarding of new entities in the blockchain.
7.2. Future Research
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Acknowledgments
Conflicts of Interest
References
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Project Name | Country of Implementation | Field of Implementation | Level of Government Involved |
---|---|---|---|
Exonum land title registry | Georgia | Land title registry; property transactions | National |
Blockcerts academic credentials | Malta | Academic certificates verification; personal documents storage and sharing | National |
Chromaway property transactions | Sweden | Property transactions; transfer of land titles | National |
uPort decentralised identity | Switzerland | Digital identity for proof of residency, eVoting, payments for bike rental and parking | Local (Municipality of Zug) |
Infrachain governance framework | Luxemburg | Blockchain governance | National |
Pension infrastructure | The Netherlands | Pension system management | National |
Stadjerspas smart vouchers | The Netherlands | Benefit management for low-income residents | Local (Municipality of Groningen) |
Fourth industrial revolution and smart customs | South Korea | Maritime Export Logistics; Import and Export clearance at customs department; Cross-Border Data Exchange | National and International |
Blockchain-city-Melaka Straits City | Malaysia | Tourism | National |
Tradelens | KSA | Supply chain and logistics | National |
The Study Found in Literature/Use cases: Govt. Adoption of Blockchain | Benefits | Challenges |
---|---|---|
Adoption of blockchain for identity management, with a focus on the Korean Government [42] | Data integrity and Reliability; reduce the cost of service delivery; A user-centric personal data management without a central authority. Allows for quicker data access [42] | Educating the public sectors on the blockchain, privacy, and, regulatory concerns [42] |
Key regulatory challenges of blockchain adoption in the EU and US. It discusses the hands-off approach initiated by both countries, and how this has leveraged the adoption of blockchain [49] | Promotes a clear understanding between cryptocurrency and blockchain [49] | Lack of adequate knowledge and blockchain expertise from regulators [49] |
Automating the process of regulatory reporting using blockchain technology in the UK [40] | Reduces duplication, efficient regulatory reporting system; Creates a better understanding of blockchain for regulators by making them use the technology in regulatory reporting. | Educating regulators and other stakeholders, on confidentiality issues [40] |
e-Estonia—Application of blockchain in healthcare innovation in Estonia [43] | Promotes better understanding of regulators, governments, and healthcare providers | Storage problems and end-user are responsible for data [43] |
Use of blockchain to boost tourism among small economies [50]. | Commercial opportunities for small countries and improved stakeholder knowledge | Educating stakeholders on blockchain and regulatory gaps [50] |
Adoption of blockchain technology in Tourism and the implications for tourism development in the Caribbean economy [41]. | Boosting tourism revenue; Launching the first digital legal tender in the Caribbean | Lack of IT infrastructure and government support for new technologies [41] |
1. Case Study General Features | |||||||||
---|---|---|---|---|---|---|---|---|---|
Level of government involved | Public services provided/enabled | Cross-border aspects | Cross-sector aspects | Location value creation | Openness of software | ||||
National | Issuing or modification of a commercial license to domestic and international investors and businesses | None | Other license issuing authorities, other government entities, and private entities, such as banks, telecom, real estate, and other financial institutions. | Across mainland and free zones | Propriety | ||||
2. Functionalities | 3. Governance | 4. Usage | |||||||
Institutions disintermediated | Functionalities provided | Roles Included | Blockchain governance architecture | Consortium governance | Current usage | capacity | Throughput | scalability | Maturity |
Automation of internal approvals within the government entities. |
|
| A hybrid permission-less governance model | Decentralized | Six to seven government entities transacting in this project | 400–500 tps |
| 500 tps | Production stage, following the successful execution of proof-of-concept |
5. Technical Architecture | |||||||||
Blockchain Interface | Corporate Registry Back-Office Portal | Blockchain peer node | CA Node | Orderer Node | |||||
Encapsulates all blockchain logic for Dubai Business Ledger. Encapsulates interfacing with its corresponding blockchain node. | Provide portal screens for the back-office operations of Corporate Registry, such check/audit exchange of trade license | Host Blockchain software and corresponding smart contracts of corporate registry | Authenticates all transactions | Broadcasts validated transactions for all organizations’ peers. | |||||
Underlying Software Technologies: | Underlying software technologies: | Underlying software technologies: | Underlying software technologies: | Underlying software technologies: | |||||
| REACT (client-side development framework) Node.JS | Hyperledger fabric Software V 1.1 CouchDB | Hyperledger fabricSoftware V 1.1 | Hyperledger Fabric Software v1.1 | |||||
6. Challenges | 7. Benefits | ||||||||
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Khan, S.; Shael, M.; Majdalawieh, M.; Nizamuddin, N.; Nicho, M. Blockchain for Governments: The Case of the Dubai Government. Sustainability 2022, 14, 6576. https://doi.org/10.3390/su14116576
Khan S, Shael M, Majdalawieh M, Nizamuddin N, Nicho M. Blockchain for Governments: The Case of the Dubai Government. Sustainability. 2022; 14(11):6576. https://doi.org/10.3390/su14116576
Chicago/Turabian StyleKhan, Shafaq, Mohammed Shael, Munir Majdalawieh, Nishara Nizamuddin, and Mathew Nicho. 2022. "Blockchain for Governments: The Case of the Dubai Government" Sustainability 14, no. 11: 6576. https://doi.org/10.3390/su14116576