Infrachain has been a partner in the ‘Token’ Horizon 2020 project since January 2020. The Token project aims to ease the adoption of Decentralized Ledger Technologies (DLT) to create a more open, transparent, trusted and efficient government. BLING and Token share common goals and BLING interviewed Tom Kettels, Project Lead at Infrachain, to discuss our shared challenges and possibilities.
Hi Tom, can you tell a bit about your company Infrachain?
Infrachain is a Luxembourg based non-profit organization. We are a blockchain community and we provide community-driven governance for operational blockchain use. This means that we are a network of different blockchain-interested companies and institutions from the legal, business, technical and academic sectors who aim to bridge the gap between public and private Blockchain.
Why is governance important for blockchain?
Governance is fundamental as it creates trust in the blockchain. Good governance ensures optimal participation in decision making by all relevant parties. Bad governance destroys trust by creating imbalances and opening the door to manipulation. There’s a social and a technical or network dimension to governance, with the former initially preceding the latter. At
the social governance level, participants agree on what type of blockchain they will use, which architecture, public or private, permissioned or non-permissioned, voting rules, the rules for adding nodes, and so on. For a consortium blockchain this also includes the need for decisions about legal structures, business models, IP management etc. Once these decisions are taken, those related to the network are then translated into code, i.e. into the ‘consensus mechanism’ that validates data on the blockchain. That is the network dimension. Depending on decisions taken at the social level, some rules may be hard coded into the blockchain’s consensus mechanism algorithm, which means they cannot be changed at a later stage.
Getting back to what I said earlier about trust, good governance rules should, for instance, prevent a minority from taking decisions against a majority, and make sure that good decisions are being made even with limited participation.
Can you tell us a bit about the difference between ‘public’ and ‘private’ blockchains?
A public blockchain can be considered the ‘purest’ form of blockchain. ‘Public’ means that it is open to anyone to join that blockchain. Thus, it is truly decentralized. Some would even say that if it isn’t public, then you shouldn’t use a blockchain, as you forego its most distinctive feature and advantage – decentralisation.
By contrast, in a private blockchain there are rules that determine who can join, and who cannot. As there are some barriers – or at least conditions – to entry, there is some kind of control over the blockchain. A private blockchain may be distributed, but it is not fully decentralized.
What is your personal interest in blockchain?
Blockchain and Distributed Leger Technologies in general are interesting because there is a high degree of automation
and it links different technologies such as big data, Artificial Intelligence, and the Internet of Things together. Other technologies are able to share huge amounts of data, but
the parties that share the data need to trust each other. With blockchain, parties do not need to trust each other as the trust is provided through the blockchain – thanks to its immutability.
What is immutability? Why is it important?
Immutability means that once data is recorded in a blockchain it cannot be changed or tampered with, and it will stay there forever. In other words, the data on a blockchain is permanent and unalterable, but it is also traceable. This, in turn, allows us to perform very efficient (and on the fly) audits of data. And thanks to blockchain’s transparency, this validation can be done by anyone with access to the blockchain. This is particularly im- portant in situations where parties don’t trust each other, or for example in places where the authority of governments cannot be fully trusted.
So, a blockchain’s immutability – together with its transparency – create trust. And that is fundamental for Blockchain adoption, especially in an untrusted environment.
Blockchain can kick off new processes and keep an immutable record of what happened. For example, AI based systems use data as input and produce outputs that can trigger actions coded in a smart contract – basically a small script that executes action ‘X’ if situation ‘Y’ occurs. A blockchain is a ledger. Besides
providing the execution environment for these smart contracts, blockchain has a notary function. It provides an immutable record of anything that is registered onto it. Blockchain is thus more than just sharing data.
What is the value of blockchain for governments?
The decentralized structure of blockchain creates an environment in which data needs to be entered only once.
This reduces the risk of human errors. By decentralizing the information, all organizations linked to the blockchain can use the same input, and are not duplicating the data in their own storage silos. This improves efficiency and transparency. For example, when applying for a building permit, all municipal departments can have access to the same data and this data could also be made available to the public in case a public consultation is required, or to third parties, like the construction company you selected.
Blockchain can be of real added value to governments due to its efficiency and transparency, but there are also still some challenges to overcome. A common concern is blockchain compliance with GDPR. Since data on the blockchain is immutable, personal data that would have been registered in
a blockchain cannot be changed or deleted. This is in conflict with GDPR’s right to be forgotten. I am optimistic however, that one day blockchain and GDPR will be compatible as technology evolves and legislation changes. So far, we are missing jurisprudence on this issue.
Is this a blockchain issue, or a service/information design issue?
Immutability is a core feature of a blockchain, so I wouldn’t call it a blockchain issue. I would prefer to say it’s a regulatory issue. The General Data Protection Regulation was adopted before blockchain became widely popular and before the benefits of blockchain for making our economies more efficient were understood.
Today, the general recommendation is to not register any personal data directly on a blockchain, but rather to keep it ‘off-chain’. If you really want to register personal data on a blockchain, a common technique is to only register a ‘salted hash’ of personal data on-chain. In other words, what is stored on the blockchain is data that has been cryptographically transformed in a way which makes it even more difficult to establish a link between what is stored on a blockchain and the original source data. At the moment, in the absence of any firm statement from the EU legislators or regulators and with no relevant jurisprudence (legal decisions), we cannot definitively say whether these techniques are GDPR compliant.
What legal support/frameworks will we need to adopt blockchain more widely in government?
The legal aspects of blockchain are often uncertain, such as
the legal recognition of data notarized in a blockchain, and such questions need to be clarified before governments can integrate blockchain in their services. Legislators could for instance recognise blockchain the legal value of data registered in a distributed ledger. In Luxembourg we saw that the legislator specifically included the use of distributed ledger technologies for making some financial transactions. This is essential for legal certainty.
Another example of legal issues we need to consider is where data is stored in a blockchain. In a public blockchain, this data can be anywhere in the world, including in countries with very different rules regarding access to data, private or not, than those we have in the EU. Thus, the natural choice for governments is often a private blockchain where they can define the rules regarding who can join the network, and on what terms.
What is the goal of the TOKEN project?
Token is a Horizon 2020 project in which 11 partners from 8 member states work together to create a transformative impact in public services with DLTs. We will set up an experimental ecosystem in the public sector in which blockchain can serve
as a service for specific use cases. We will investigate four use cases: grant distributions via competitive open calls, mobility, smart city, and public procurement. Together with knowledge institutions, technical partners and local governments we are developing these use cases, but we are also building a community. Our DLT4Gov community is open to everyone interested in blockchain and together we connect and share knowledge on how DLT can impact public organizations. You can join the community via this link: https://fundingbox.com/c/ dlt4gov and you can find more information on the TOKEN project via this link: https://token-project.eu/
Can you tell us a bit about these four blockchain use cases?
Sure. The first use case is about improving the process for distributing public funding. Today, this is often a lengthy and cumbersome process with lots of red-tape and little transparency. In the Token use case implemented by Fundingbox, a decentralised and self-sovereign identity (SSI) is created for companies to make their grant application process more efficient, more transparent and more trusted. With the SSI, applicants can seek certification of their data from different authorities and the information provided to open calls can be automatically validated.
The mobility use case is being implemented in the city of Leuven in Belgium, and it seeks to promote ‘last mile’ deliveries and the local economy. Local farmers are granted privileged access to the city and to parking services based on their sustainable practices. This is done by combining multiple metrics such as sustainability, green mobility and real-time traffic information. Thanks to the Token platform’s transparency and distributed traceability, all parties can share data on a trusted platform while making sure that each participant can control which data is shared and can only access the information that is needed for each single step of each process.
The city of Santander in Spain has become a leading ‘smart city’. Smart cities collect vast amounts of data from various data sources – like IoT networks – in order to improve their services. Santander makes this data available to third parties through the SmartSantander marketplace. To better understand how this data is used, the marketplace is integrated with the Token platform, thereby benefitting from blockchain’s transparency which allows full traceability.
The fourth use case is deployed in Greece in the Municipality
of Katerini. The main goal is to increase transparency of public accounts though a blockchain-based platform. Thanks to the Token solution, processes will become faster and more transparent and this will not only save time and money but
also increase citizen’s trust and participation and allow real-time tracking of expenditures and audit trails.
What are the similarities between BLING! and TOKEN?
Both projects address the same issue: how can blockchain contribute to the services governments provide. Since BLING is already up and running, TOKEN could learn from their approaches. On the other hand, TOKEN focusses on four use cases which are highly replicable. This could possibly help BLING to further develop their current use cases. And of course, both projects have established an interesting field of stakeholders of which we can both benefit.