Businesses Broke Ground on Blockchain. What Can Civic Groups Learn?
At best, blockchain has been a trial-and-error technology. For every successful cryptocurrency, there are a dozen cases like Civil, which had to cancel its initial coin offering after failing to gain traction on a plan to use blockchain to verify user-submitted news content.
Although 84 percent of global companies are dabbling in the decentralized ledger technology, the truth is that 92 percent of blockchain projects have failed. Firms have found the technology’s promise to verify data in a decentralized way appealing, but they’ve struggled to implement it effectively. Those that get beyond blockchain’s technical hurdles have found it difficult to engage users, while others have learned the technology isn’t as secure as once thought.
Still, blockchain’s business value wouldn’t be headed for the $2 trillion mark if some firms hadn’t gotten it right. As West Virginia gears up to apply the technology to a first-in-the-nation absentee voting system this November, states and voting rights groups would do well to learn from the business community’s rollercoaster experience with the technology.
Better Elections or Bust
From a theoretical standpoint, it’s obvious why governments and political groups are interested in blockchain. A secure way to share and verify data online could drastically cut election security concerns while boosting turnout. But to turn blockchain into a real-world voting aid, they’ll need to:
1. Make it rewarding.
Although rewarding people for voting with even small gifts like food has been illegal since 1948, nobody can fault advocates for trying to improve America’s abysmal voter participation rate. Just 55 percent of eligible Americans made it to the polls in 2016, putting the U.S. in 26th place out of 32 rated OECD nations.
With a proven track record of driving social actions for its brand partners, Sweet, a social marketplace and loyalty platform that currently uses internally driven blockchain technology to reward users with a digital token called “Sugar,” may be the solution. Earlier this month, Sweet announced it had joined forces with nonpartisan nonprofit Rock the Vote to get the word out about the 2018 midterm elections. Users earn Sugar for educating themselves on current events and sharing election-related content on social media, which can be spent in Sweet’s Rock the Vote Rewards Marketplace.
2. Start small.
Although JPMorgan Chase scaled up its blockchain-based interbank exchange this past September to include 80 global banks, it debuted the model last October with just a handful of participants. The financial giant’s goal is to reduce the time and number of middlemen involved in bank-to-bank transactions. If the larger trial proves successful, JPMorgan plans to support currencies other than the U.S. dollar and open the network to additional financial institutions.
Sweden seems to be modeling that same approach in its electoral application of blockchain. This past summer, the Swedish municipality of Zug put blockchain-based voting to the test. Although Swiss media hailed the experiment a success in terms of administration and voter privacy, Zug officials noted that turnout could have been higher. With Sweden expected to become the first country to launch its own cryptocurrency, expect to see it apply blockchain to its elections on a wider scale.
3. Don’t assume it’s secure.
Because blockchain uses a decentralized network of nodes to confirm data with one another, the model was supposed to be incredibly difficult for hackers to manipulate. So when a hacker cracked a smart contract used by the ethereum blockchain in mid-2016, owners of Ether, the token associated with Ethereum, woke up to quite the shock: $55 million in virtual currency had been stolen from the system, never to be recouped.
Such attacks have made security experts skeptical of blockchain-based voting initiatives. To prevent vote manipulation and data breaches, West Virginia will use a three-tier security system for its blockchain voting app. Users will first submit a photo of their government-issued identification before being asked to record a video of their face. They’ll then be able to cast a ballot, which will be scrubbed of personal data and documented on an indelible public ledger.
4. Dream big.
If the business community has done one thing well with blockchain, it’s thinking up creative use cases. Walmart and IBM have announced plans to use it to track foods from suppliers to shelves, Sony hopes to use it to protect creative content in a digital rights management scheme, and Brooklyn Microgrid is implementing it for sustainable energy transactions.
Nonprofit civic advocates aren’t short on ideas, either. One of the boldest is from Democracy.Earth, which wants to create a blockchain-based social network where users can spend “vote tokens” to indicate their preference on any number of private and public issues. A homeowner’s association might use the platform to vote on maintenance standards, while local governments could crowdsource and vote on ideas for municipal ordinances. Unfortunately, though, the startup has yet to figure out how the minted tokens could act as currency without giving disproportionate voting power to wealthier users.
Blockchain isn’t the magic bullet some in the business community first thought it would be, but it’s hardly just hype, either. Private companies have learned where it works and where it doesn’t through trial and error, just like states and election advocates will. In the midterm elections and beyond, they’ll need to start small, prioritize security, and get users accustomed to the technology before their vote depends on it. The stakes to get it right are great, but so are the opportunities to build a better democracy.