Smart Contracts for Government Processes: Case Study and Prototype Implementation (Short Paper)

Abstract

We study blockchain-based integrity-protected smart contracts as an implementation mechanism for municipal government processes. To this end, we attempted a prototype implementation of such a process in collaboration with a Danish Municipality. We find that such an implementation is possible, despite the obvious confidentiality requirements, and that it does provide benefits: integrity guarantees, verifiability, direct collaboration and payments between the parties. These benefits come at the cost of latency, pr. transactions charges, immutability of errors, and a very concerning single point of failure the municipal government: losing blockchain private keys means losing control over municipal government casework, with no recourse. Our municipal government partner felt that altogether no immediately pressing problem was solved by the implementation, and that the latter risk clearly outweighed any benefits. We note that smart contract implementations of government processes needs to be immutable and outside of the government’s control when running; however, they also need to be updatable when laws change, and provide an “out” for the rare case when errors in the contract implementation result in unlawful behaviour. We propose these conflicting requirements as a foundational research challenge for blockchain to be applicable to governmental processes.