From a Startup to a Law: How Ukraine Blockchainizes Public Management

25.03.2016

Blockchain Conference Kyiv, the biggest distributed technology-focused event within the post-Soviet realm, took place on March 19 in Ukraine’s capital of Kyiv. Speaking at the meeting were founders of startups, financial experts, cryptography experts, officials, and public actors. It was the second meeting of blockchain enthusiasts in Kyiv, with the first held last December. The forum featured new reality of corporate world in the era of decentralization, as well as Ukrainian reforms in the context of blockchain technology’s capabilities.

Advisor of Ukrainian president’s administration, David Kiziria, made a presentation titled “Digital Middle Ages” covering modern social and political trends. He believes now is the moment when centralized government structures shall give place to decentralized unions while blockchain may become a DNA analog for the new systems.

According to Kiziria, blockchain-based political communities shall apply the following principles:

abandoning behind-the-scenes decisionmaking in favor of primaries
the free market of political ideas and politicians
open financing
new mechanisms of motivation: a shift from political officials to practical politicians.

A spokesperson for the Cabinet of Ministers, Yegor Stefanovych, also covered political decentralization: he introduced a project of an online portal dubbed E-Ukraine for interaction between the society, the government, and technological startups in e-government area. In order to reduce risks of corruption and underhand dealing in e-government, he said, the platform shall be based on distributed technologies and open data.

“Open data is a lifeline for electronic management. The state generates data, creates registers, updates them and provides access to them all the time, including that via API, in order to let social and commercial structures use those data,” he said.

Stefanovych described the problem to be solved by the platform as follows: “there is a strategy, there are startups, but they aren’t meant to be together.” The new platform is intended to make it a two-way traffic: downwards, from government strategy to tactics; and upwards, from startups to forming government strategy.

“I urge you to find a way to use blockchain in Electronic Ukraine,” Stefanovych said.

As for implementation of IT projects in public management, the government’s representative exemplified centralized electronic platform for government procurement, ProZorro:

“There was no law concerning ProZorro. The project just showed up, claimed its necessity, and we started writing a law for it, we started using it. Now, the blockchain auction is set to show that ProZorro is so last day. It acted as a ram and showed one could go from a system to a law, not from a law to a system.”

Oleksii Konashevych, the representative for Reanimation Package of Reforms, spoke about platform E-Vox, an electronic system for voting based on Ethereum’s blockchain.

Initially, the platform will be used for advisory votes, which are not regulated mostly, and to create local petitions. The pilot launch of the platform is to be performed in Kyiv and Odesa regions. In case the project proves successful, the experience will be employed in the service of electronic petitions to the president, and then during real elections, like those parliamentary. However, there are some urgent issues to be solved first.

“First, we have to develop a voting system for groups where no one can control a server singlehandedly. Second, there’s an identification issue, so that votes could be legally binding. Electronic signature or biometry could work here. Finally, we have to enhance anonymity, so that no one would be afraid to cast a vote,” Konashevych said.

Anyway, if the government decides to switch to online elections, a ready-made and well-tested blockchain-based system would allow them to use its advantages at once, instead of laying the implementation on a shelf.

Meanwhile, the cabinet of ministers vocalized their intent to find a use for the platform once it is created.

“We do count on the pilot version. We’re ready to take it and implement in public management at once,” said Yegor Stefanovych, the Head of IT department at Ukraine’s Government Secretariat.

A speech by Lasha Antadze, a specialist from Innovations & Development Fund, was one of the conference’s highlights. He presented the final version of eAuction 3.0, a decentralized auction platform for state property sales. The platform was finalized this February.

Evolution of e-auctions as presented by IDF innovators

Antadze noted that, while the system is blockchain-based and transparent, the project still depends on external factors. For that reason, he said, the following limitations have to be considered:

the national cadastre contains records on land titles
property rights ledger contains records on property rights for real estate on the land in question
notaries act as intermediaries to verify property transfer
the transaction’s currency is defined by the central bank.

However, government officials themselves are often interested in interaction with the platform.

“Government entities themselves come to the conclusion that something’s got to be changed. The most important thing now is to give it the right direction, and show them the way,” Antadze said.

Ukraine’s continuing reforms on public management decentralization aimed at broadening of local authorities’ powers also provides new opportunities for shifting government ledgers to decentralized rails.

“Back when we just started, there was only the Odessa region participating. Earlier this year, the number of participants has grown: now it’s Odessa region, Sumy region, the land cadastre, the ministry of economy, and there’s interest from different levels, both municipal and central. We launched a small project just to show people how good it could have been, and now, all of a sudden, there are so many people,” Antadze added.

In the course of discussion, the speaker has outlined his own philosophy behind development of decentralized solutions for public management:

“Generally, I stand against any government intervention in those realms. I personally see a peer-to-peer society, and it completely lacks state regulators, arbiters, and so on. That’s just my opinion. However, we all have to get them into our game and use the law to decentralize the central server in Kyiv, and to give the ledgers to local communities. Blockchain will allow us to unify the ledgers informationally. It could be a small step for a ledger, but a giant leap for the future.”

In the wake of the conference, March 23, a memorandum on implementation of decentralized online auctions at municipal and regional levels was signed by the initiative’s authors, state officials, politicians, and businesspeople. The pilot project will be tested for transfer of property leasing rights.

by Eugene Muratov

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Tags: blockchain, e-gov, Ukraine