Can The Use of Blockchain Technology Help Reduce Corruption?

Yes! Hundreds of billions of dollars are spent each year on public goods and services, but how much ends up in the hands of those who need it most? How much gets stolen by corrupt government officials, corporate executives, and others involved in the procurement process? It’s a problem that plagues just about every country in the world.

Corruption is a global issue that affects everyone. It deprives developing countries of billions of dollars every year that could be used to improve people’s lives. Following this, the OECD works with governments and businesses worldwide to promote transparency and integrity in public procurement.

Typically, corruption undermines public trust in government and encourages people to participate in corrupt acts by creating a negative environment where corruption thrives. It also creates an unfair playing field for companies competing for contracts, distorting markets and competition.

In 2020, The World Economic Forum’s report, Exploring Blockchain Technology for Government Transparency: A Public Procurement System That Works with Blockchain had crucial insights. The report explores the value of blockchain for public procurement and corruption, describes how it could be used, and makes recommendations for how governments can leverage policy and blockchain technology to stunt public corruption. It highlights four main areas where governments can leverage policy and blockchain technology to stunt public corruption:

  • Anti-corruption policies and regulations;
  • Open data initiatives;
  • Public procurement processes;
  • A more efficient system for auditing state funds and spending at all levels of government.

Why Blockchain?

The public sector is rife with corruption, costing taxpayers billions annually. Blockchain-based procurement could help governments to disinfect – or de-corrupt – their procurement processes.

In simple terms, blockchain-based procurement allows for increased transparency and accountability in government contracts. It does this by making the process more efficient and cutting down on costs, but also by providing an audit trail that prevents fraud from occurring in the first place.

The blockchain is a chain of blocks, each block containing a timestamp and a link to the previous block. By design, a blockchain is resistant to modification of the data — once recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks and the network collision.

This attribute makes blockchain an excellent tool for facilitating trust between parties who don’t know or trust each other, such as business partners or suppliers, by ensuring that transactions are transparent and verifiable without relying on an intermediary.

Mobilising People Power During Procurement

The blockchain-related investment, acquisitions, and patent filings are just the beginning. Soon, we can expect public blockchains to deliver even more intrapersonal applications than we’ve outlined in this article, ones that will help individuals take action against corrupt officials and enhance the world’s fight against government misconduct. Blockchain technology has enormous potential to influence governments and reshape society for the better — if people can learn enough about it and what it can do at an individual level.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.