Blockchain Revolution

CHAPTER 8
REBUILDING GOVERNMENT AND DEMOCRACY
he Republic of Estonia is a Baltic state with Latvia to the south and Russia to the
east. With a population of 1.3 million, it has slightly fewer people than the city of
Ottawa.
1
When Estonia regained its independence from the former Soviet Union in
1991, it had an opportunity to completely rethink the role of government and redesign
how it would operate, what services it would provide, and how it would achieve its
goals through Internet technologies.
Today, Estonia is widely regarded as the world leader in digital government, and
its president, Toomas Hendrik Ilves, will be the first to say so: “We’re very proud of
what we’ve done here,” he told us. “And we hope the rest of the world can learn from
our successes.”
2
Estonia ranks second of all countries on the social progress index for personal and
political rights, tied with Australia and the United Kingdom.
3
Estonia’s leaders have
designed their e-government strategy around decentralization, interconnectivity,
openness, and cybersecurity. Their goal has been to future-proof infrastructure to
accommodate the new. All residents can access information and services online, use
their digital identity to conduct business, and update or correct their government
records. While much of Estonia’s work predates the blockchain, the country
introduced a keyless signature infrastructure that integrates beautifully with
blockchain technology.
Central to the model of e-Estonia is a digital identity. As of 2012, 90 percent of
Estonians had an electronic ID card to access government services and travel within
the European Union.
4
The chip embedded in the card holds basic information about
the cardholder as well as two certificates—one to authenticate identity and one to
provide a digital signature—and a personal identification number (PIN) of their
choice.
Estonians use these to vote, review, and edit their automated tax forms online,
apply for social security benefits, and access banking services and public
transportation. No need for bank cards or Metrocards. Alternatively, Estonians can do

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the same with mobile-ID on their mobile phones. In 2013, Estonians submitted over
95 percent of taxes electronically and conducted 98 percent of banking transactions
online.
Parents and students use Estonia’s e-School to track assignments, curriculum, and
grades, and to collaborate with teachers. Estonia aggregates in real time diverse health
information from various sources into a single record for each citizen, and so these
records don’t reside on a single database. Each Estonian has exclusive access to his
own record and can control which doctors or family members have access to these
data online.
5
Since 2005, citizens have used i-voting for their national elections. Using their ID
card or mobile-ID, Estonians can log in and vote from anywhere in the world. In the
2011 parliamentary election, citizens cast almost 25 percent of ballots online, up from
5.5 percent in the previous parliamentary election. The people obviously like and trust
the system: the number went up again for the 2014 European Parliament elections in
which a third of voters participated over the Internet from ninety-eight different
countries. The Estonian cabinet uses a paperless process and makes all draft
legislation accessible online. The average length of weekly cabinet meetings has gone
from around five hours to under ninety minutes.
6
Estonia has an electronic land registry that has transformed the real estate market,
reducing land transfers from three months to a little over a week.
7
In the last few
years, Estonia has launched its e-Residency program, where anyone in the world can
apply for a “transnational digital identity” and authentication to access secure
services, encrypt, verify, and sign documents digitally. An entrepreneur anywhere in
the world can register his or her company online in fewer than twenty minutes and
administer the company online. These capabilities contribute to Estonia’s image as a
digital country.
8
None of this would work or be acceptable without solid cybersecurity. As Mike
Gault, CEO of Guardtime, noted, “Integrity is the number-one problem in cyberspace
and this is what Estonia recognized ten years ago. They built this technology so that
everything on government networks could be verified without having to trust
humans . . . it is impossible for the government to lie to its citizens.”
9
Estonia’s cybersecurity derives from its keyless signature infrastructure (KSI),
which verifies any electronic activity mathematically on the blockchain without
system administrators, cryptographic keys, or government staff. This capability
ensures total transparency and accountability; stakeholders can see who has accessed
which information, when, and what they may have done with it. Consequently, the
state can demonstrate record integrity and regulatory compliance, and individuals can
verify the integrity of their own records without the involvement of a third party. It

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lowers costs: there are no keys to protect, and no documents to re-sign periodically.
According to e-Estonia.com, “With KSI, history cannot be rewritten.”
10
Clearly, blockchain technology applies not only to corporations fixated on profits
but also to public institutions focused on prosperity for all, from government,
education, and health care to energy grids, transportation systems, and social services.
Where to start?