Guest editorial: Bridging the chasm between “what could be” and “what is”: the impact of blockchain technologies on public service management
Evrim Tan, Sorin Dan, Khuram Shahzad · International Journal of Public Sector Management · 2024
While artificial intelligence (AI) has attracted significant attention from public management scholars and practitioners in recent years, another emerging technology, blockchain, deserves similar consideration due to its equally disruptive and transformative potential (Cagigas et al., 2021; Sousa, 2023). In the late 2010s, blockchain technologies (BCT) created considerable hype in policy circles, leading to growing experimentation and small-scale implementations and a surge of scholarly interest across disciplines, including public administration and management (Clifton et al., 2023; Tan, 2023). A growing body of research have explored the application of this technology in various public sector domains, such as healthcare, education, voting systems and governance more broadly (Tan et al., 2022; Cagigas et al., 2021; Khan et al., 2021; Rodríguez Bolívar and Scholl, 2019; Casino et al., 2019).In this initial phase (Phase 1), public management scholarship has primarily focused on understanding and theorizing the implications of this disruptive technology in reshaping existing processes within the public sector. However, much of this work remains largely conceptual, discussing the potential impacts of blockchain without exploring its real-world effects. While these early studies have been valuable in identifying frameworks and models for the application of blockchain in government processes, our understanding of its actual impact on the public sector remains limited.One key challenge in assessing blockchain’s real-world impact is that experimentation with the technology has yet to reach to mature phase, what we might call Phase 2, characterized by broader uptake and measurable impact on a larger scale (Lindman et al., 2022; Tan et al., 2022). Some early findings suggest that government organizations across the world has encountered setbacks in scaling up their blockchain projects to full-scale implementation (Berryhill et al., 2018; Cagigas et al., 2021; Khan et al., 2021; Verma and Sheel, 2022). This lack of wider-scale implementation of BCT in the public sector prevents the scholarly community from fully exploring the potential implications of this technology for public service management and governance. Furthermore, the exploratory and experimental nature of blockchain implementation in government makes it challenging for researchers to collect empirical data to explore the extent of actual implementation and understand the transformative impact of blockchain in the public sector.The goal of this special issue is to understand better this “chasm” between Phase 1 and Phase 2 and to explore how we might bridge the gap between a conceptual “what could be?” stage and a practical “what actually is” stage. Our approach in this special issue has been to call for studies that integrate insights from public administration theory and practice, applying the theoretical lenses from managerial and organizational sciences alongside empirical evidence from real-world use cases. We argue that this is an important academic endeavour for public administration scholarship, considering the implications of blockchain about how services are organized and delivered in the digital age, both now and in the future.With that aim in mind, this special issue presents seven articles that together contribute to the emerging public administration literature on blockchain in three principal ways:Before outlining the specific contributions of each article in this special issue, we will first provide a brief introduction to BCT and discuss their potential role in transforming public service management.Blockchain, as a concept, gained public attention following the release of the 2008 Bitcoin whitepaper (Nakamoto, 2008), which described a decentralized approach to recording a history of transactions in a peer-to-peer network in a transparent and tamper-resistant way. Each transaction is recorded in a “block” of information that is linked to previous blocks, forming a “chain of blocks”. To maintain an unbreakable link between blocks in a blockchain, each block refers to its previous block by its hash. In addition, a timestamp is attached to each transaction to prove that the blocks are in chronological order. This structure makes it computationally unfeasible to control or tamper with the ledger of records through cyberattacks.Since then, blockchain has evolved into a shorthand term encompassing a compilation of technologies – some that preceded it, such as smart contracts, zero-knowledge proofs and distributed ledgers and others that emerged later, like consensus models (e.g. proof-of-work and proof-of-stake), non-fungible tokens (NFTs), decentralized applications (DApps) and decentralized autonomous organizations (DAOs). While the precise conceptual boundaries of blockchain are still being defined, it fundamentally involves a distributed ledger that allows network participants to verify the authenticity of information without relying on a centralized authority to approve or correct transactions. In this editorial, we use the term “blockchain technologies” (BCT) to refer to a family of decentralized technologies, including distributed ledgers, smart contracts, DAOs and others that replace the roles of humans, organizations and institutions in coordinating and managing transactions with code-bound processes.The decade following the release of the whitepaper has witnessed the emergence of two prominent developments concerning BCT. First, the whitepaper originally positioned blockchain as the backbone of an alternative financial system in the wake of the 2008 financial crisis, which experienced significant trust erosion. Bitcoin, the first cryptocurrency backed by blockchain technology, heralded a decade of innovations, leading to the rise of initial coin offerings (ICOs), NFTs and decentralized finance (DeFi). This created a complex and somewhat infamous market that, as of 2024, is estimated to have reached a global capitalization of $2.5tn (Forbes, 2024).The second significant development was the launch of Ethereum in 2015, a global blockchain platform that enabled the use of smart contracts and token technologies to create DApps. Following Ethereum, numerous similar blockchain networks emerged, facilitating a wide range of use cases beyond cryptocurrencies and paving the way for the emergence of DAOs, which allow for the automated and decentralized control of transactions.Nowadays, BCT is being applied in various sectors beyond finance to enhance transparency and efficiency in numerous digital transactions. In supply chain management, blockchain solutions are used for real-time tracking and verification of goods, with a value proposition for building trust for stakeholders in the entire product journey from origin to consumer (Shahzad et al., 2024). In healthcare, blockchain facilitates secure sharing of patient data, reliant on the interoperability and data integrity among different healthcare providers (Ghosh et al., 2023). The energy sector is utilizing blockchain for peer-to-peer energy trading, which allows consumers to buy and sell energy directly with one another, thus optimizing energy distribution (Juszczyk and Shahzad, 2022). Additionally, blockchain is being explored for digital identity verification, providing a secure method for individuals to manage and authenticate their identities (Sullivan and Tyson, 2023). Other applications include voting systems, where blockchain can ensure secure and transparent electoral processes and intellectual property protection, enabling creators to establish and verify ownership of their works (Berryhill et al., 2018). As organizations continue to explore these applications, blockchain is proving to be a versatile tool across various industries.We render the transformative impact of BCT on public governance and public service management in three functional ways.First, as a verification technology, it provides a means to verify the authenticity of data without the need for trusted intermediaries and allows for greater control over personal data in public service delivery processes. Blockchain can also be used for public and legal activities where citizen data are handled (Lindman et al., 2017).Secondly, as a process-tracking technology, BCT increases the transparency, auditability and accountability of processes used in public management, thus fostering greater trust between the public and governmental entities.Third, as a management technology, BCT can facilitate peer-to-peer management of public service delivery (Lember et al., 2019), and through the combination of smart contracts, digital wallets and token technologies, it can allow service users and stakeholders to contribute to public services directly without requiring public authorities to act as mediators (Tan and Rodriguez-Müller, 2023).In what follows, we delve into each transformative impact in greater detail:Using BCT, actors can independently verify the authenticity of data without relying on intermediaries. This has far-reaching implications for the design of public governance, as it removes the need for trusted third parties such as banks, notaries or government agencies to validate transactions or information. In the management of public services such as in education, healthcare and social services, the verification of credentials, medical records and benefits eligibility could be automated and securely stored on the blockchain.Especially in service areas where notaries and notarization serve as key trust anchors in the transaction of assets and information, this feature has significant implications. Consider the case of land registry systems, where blockchain has been piloted to verify property ownership and transfer titles in countries such as Ghana, Georgia and Sweden (Ameyaw and De Vries, 2023; Allessie et al., 2019). Such practices eliminate the need for manual verification by multiple authorities, speed up the process and reduce the risk of fraud.In the education sector, some universities are using BCT to support the issuance and verification of academic credentials, including diplomas, certificates, degrees and qualifications (Tan et al., 2022). For instance, the University of Nicosia is issuing all university diplomas since 2017 on a blockchain (UNIC, 2024). Similarly, the University of Lille issues blockchain-backed digital attestations for diplomas and other educational credentials. As of 2023, the university has reportedly issued over 56,000 blockchain-based credentials (BC diploma, 2024).In the context of public services, verification via blockchain means for citizens reduced administrative burden and faster service delivery. For governments, BCT can reduce costs, enhance security and build public trust. Citizens no longer rely on intermediaries to validate their credentials, and public service organizations can keep a tamper-proof system for ensuring the legitimacy of the information being exchanged.Blockchain’s ability to provide transparent and immutable tracking of processes is another key application in public governance. This feature allows for the continuous, verifiable tracking of the status and history of public services, projects or assets throughout their lifecycle. By recording every step of a process on a blockchain, governments can improve accountability and transparency, reducing the risk of corruption and fraud.One example of this is the use of blockchain to track the supply chain in government procurement and to track public funds and grants. Governments can ensure that funds intended for specific projects, such as infrastructure development or education programs, are used as planned. By recording every financial transaction on a blockchain, public authorities can offer complete transparency about how public money is spent. This increases public trust and prevents financial mismanagement or corruption, as anyone can verify the status of funds at any point in time.For instance, the United Nations World Food Programme (WFP) uses blockchain to track cash, food and medicine delivery and distribution in humanitarian aid programmes. The project “Building Blocks” states that the BCT-backed system enables the WFP to track the movement of aid supplies from the moment they leave the warehouse to their final distribution to beneficiaries (UN WFP, 2024). The immutable record of transactions ensures that resources are not misappropriated and reach the intended recipients without interference. Additionally, the system reduces transaction fees and speeds up the distribution of aid.A blockchain-enabled procurement industry is emerging, particularly in the public sector, where fairness and openness in procurement departments need to be ensured. For example, the General Service Administration initiated a new project to develop a new procurement blockchain for the USA government that can preserve records of procurement data regarding time, deliverables, pricing and assessments to improve confidence in the procurement process (Lumineau et al., 2021).Another example is the use of blockchain to track and verify products to ensure they meet standards in production, sustainability and authenticity. For instance, several government initiatives are currently developing and testing digital product passports, in combination with digital signatures, Internet of Things (IoT) and blockchain solutions, to combat counterfeiting, supply chain disruptions and fraud in industries such as sustainability, fair trade and waste management (Zhang and Seuring, 2024).In summary, blockchain’s process-tracking capabilities can significantly improve governments’ capabilities to ensure that public resources are properly allocated and that the delivery of public services remains compliant with established policy standards.Automated management through smart contracts is one of the most transformative aspects of BCT in public management. Smart contracts are self-executing contracts with the terms of the agreement directly written into code. Since BCT does not directly depend on the enforceability of external legal obligations (Werbach, 2018), smart contracts facilitate rules enforcement by their embedded codes and algorithms in blockchain-based networks (Catalini and Boslego, 2019). In essence, they automatically execute and enforce contractual agreements when predefined conditions are met, reducing the need for manual intervention and minimizing administrative overhead.For example, the Estonian Government uses such automated management systems in the delivery of public services. Utilizing KSI blockchain, in combination with the eID system and X-road interoperability solution, Estonia’s e-government program (e-Estonia, 2024) uses a decentralized and automated system to manage its national health, judicial, legislative and commercial systems.Another example can be seen in the Smart Dubai initiative, where the city has begun implementing smart contracts across various government services. For instance, the Dubai Land Department uses blockchain-based smart contracts to facilitate real estate transactions. The smart contracts automate the process of payment verification and transfer of ownership for the automatic execution of transactions and recording on the blockchain (Dubailand, 2017).Another area where automated management through blockchain is gaining traction is the use of DAOs in public governance. DAOs are organizations in a digital space where traditional management processes are replaced by autonomously executed codes (Rikken et al., 2023; Wright, 2020). While most practical examples in the public sector remain largely theoretical, DAOs hold the potential to transform citizen participation in public budgeting, management and the delivery of public services (Rikken et al., 2023; Tan and Rodriguez Müller, 2023).By using BCT for automated management, public authorities can significantly reduce the administrative workload and human errors involved in managing public services. Furthermore, processes can be streamlined, administrative delays can be reduced and bottlenecks in service delivery can be avoided.Despite these promising examples, the development of blockchain technology into a mature innovation that public sector organizations can fully rely on remains limited (Berryhill et al., 2018). Consequently, there is a need to understand what explains its limited and patchy impact in the public sector. Existing research points to several reasons for the unused potential of BCT in the public sector, including unclear regulatory and procedural guidelines, privacy and security concerns, inefficient and energy-intensive transactions, interoperability challenges and insufficient data infrastructure (Tan, 2023; Janssen et al., 2020; Ølnes et al., 2017; Zachariadis et al., 2019). However, much of the empirical evidence in the published research is either anecdotal, sharing the perceptions and expectations of project owners or heavily reliant on secondary sources and self-reported data, without verifying the true extent of implementation. As a result, the actual use of blockchain in public sector organizations may be more limited than existing research suggests.Why, then, is there such a significant gap between theory and practice when it comes to the use of blockchain in the public sector? Is there something inherently unique about blockchain that makes it difficult to implement in public service processes? Or is there something unique about the use of disruptive technologies in the public sector? Research on other disruptive technologies, such as AI, reveals a similar pattern of limited actual implementation despite numerous reported projects (Van Noordt and Misuraca, 2022). This suggests that the uncertainty surrounding these potentially disruptive technologies, particularly regarding regulatory conditions, practical challenges and ethical implications, needs to be reevaluated to comprehend their potentially transformative impact.Furthermore, there is a noticeable lack of theoretical studies explaining the limited uptake of blockchain technologies in the public sector, despite the rich theoretical perspectives and the interdisciplinary nature of the field of public administration (Hattke and Vogel, 2023; Meyers et al., 2023; Raadschelders, 2019). 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