Although the U.S. government has yet to put any blockchain-powered solutions into full production, there’s considerable movement to start doing so within federal agencies and among the technology companies serving the public sector.

“Agencies are taking a lot of interest in this technology and trying to understand what it is, how to use it and what the benefits can be,” said Ishan Kaul, managing director of KPMG’s federal advisory practice, one of several speakers during a Thursday technology conference in the Washington D.C. suburbs. “We’re on the precipice of a turning point.”

The event was sponsored by the Northern Virginia Technology Council, which represents about 1,000 of the region’s technology companies, many focused on public-sector organizations. Representatives of KPMG, Microsoft, IBM and Accenture all stressed the technology’s potential while reminding attendees that many of its underlying concepts — encryption, interoperability and data exchange — are familiar ones within federal IT shops.

To understand the impact blockchain could have in the public sector, look no further than how the federal government handles college financial aid.

“It’s just a bunch of code running, so it’s all about the user experience or the business problem you’re trying to solve,” said Susie Adams, chief technology officer of Microsoft’s federal business. “So it’s really important to identify why you’re using blockchain.”

Start With ‘Why’

Discussions about use cases for blockchain often turn to government, where it has been touted as a solution for everything from voting and grant administration to digital identities for refugees, a goal that is driving arguably the largest public-sector blockchain effort to date: ID2020, a joint effort of several United Nations agencies, non-governmental organizations (NGO) and technology providers.

To understand the impact blockchain could have throughout the public sector, look no further than how the federal government handles college financial aid. When students and their families apply for aid online, information is passed back and forth among the U.S. Department of Education, Social Security Administration, Internal Revenue Service, colleges, and state and local scholarship organizations, said Mark Fisk, a partner and blockchain leader of IBM’s public service industry business.

“They all have their versions of the truth, there’s a lot of information being sent around, and there’s a lack of visibility and trust in the process,” he said.

As with enterprise endeavors, public sector blockchain solutions make the most sense when they involve multiple players and complex information needs, speakers said. “Those entities could exist inside a single federal government agencies or multiple agencies, but they have to be different entities that you don’t trust and have a visibility problem,” said Adams.

Steps to Adoption

A federal official at the event stressed the “unprecedented” levels of collaboration on blockchain within government agencies and their technology partners.

“There’s a bunch of sharing of knowledge, lessons learned, best practices, and helping each other move forward,” said Sherri Sokol, an innovation leader at the Defense Information Systems Agency and co-author of a blockchain primer for federal agencies.

At the same time, speakers acknowledged the hurdles to adoption. “I think it’s going to take a little time from a cultural and standards perspective, which are not small issues at all,” Adams said.

Another challenge is that agencies may be reluctant to publicly disclose their blockchain experiments because of misperceptions about the technology. “I think that’s a hindrance towards network effects as a whole,” said Accenture’s federal senior manager Patrick South.

To encourage federal agencies to use blockchain, it’s critical to provide plain-English explanations of the technology, dispel myths and assumptions, describe its value with specific use cases and, whenever possible, demonstrate the blockchain in action, Sokol said.

Government at Work

While speakers acknowledged that current solutions are not yet “enterprise ready,” many federal agencies have already begun a technology transition that will ultimately help address blockchain’s scaling issues: specifically, the shift to cloud-based platforms and applications, often offered in a software-as-a-service (SaaS) model.

Government IT projects tend to be massive endeavors, so along with physical supply chain use cases there’s also the potential to manage what South called the “digital supply chain,” or identifying the provenance of specific code changes within larger systems.

Technology companies working with public sector entities will focus on familiar challenges: integrating existing systems and applications, operating within the context of existing development methodologies, and finding ways to take advantage of other emerging technologies such as internet of things and artificial intelligence, speakers said. But they reminded attendees to focus first on how all participants in a blockchain, both in and outside of the government, would benefit from the technology.

“Building the blockchain is half the battle,” Fisk said. “The other half of the battle is how everybody’s going to leverage it.”

Mark Toner
Mark Toner is a Washington, D.C., writer and editor. He has covered business, technology, media, education, and healthcare for a wide range of trade and industry publications.