In World Leadership I posit that computer technology will become the basis for the next governance infrastructure. I even highlight blockchain as a technology that could enable internet voting someday. A recent article in Kellogg Insights, Northwestern University’s business school magazine, notes how blockchain is not only the technology behind online currencies such as bitcoin but also a potential tool for improving governance, particularly in developing countries.
Blockchain is a computer network technology that maintains an open ledger of transactions. Any kind of exchange transaction can be tracked: money, stocks, property, material hand-offs in the supply chain, etc. Technology updates the ledger automatically and instantly whenever a transaction occurs (what was exchanged, how much was exchanged, who gave, who received, when it occurred, etc.). The ledger is available for all on the network to see so transactions are transparent. Because it is automated, no intermediary institution is involved—no bank, no brokerage house, no government agency: trust in the institution is replaced by trust in the network.
While blockchain has many applications, one in particular may help developing nations. Developing nations are often plagued with corruption, largely because their constitutions are immature and do not have adequate checks-and-balances. In that environment, corrupt officials can exploit gaps in laws and regulations for personal gain, siphoning society’s wealth into their own pockets. However, if blockchain could be applied in key places, it could reduce corruption. Because it displays transactions openly, fraudulent government contracts, illegal campaign donations, or money sent to offshore accounts would be harder to hide. Because no institution is involved in keeping the records, there is no one to bribe.
Of course, making this happen will require further technology development and a legal system to support it; but it does offer societies plagued by corruption the hope that they can leap-frog out of their situation and more squarely embrace rule-of-law and all of its benefits.
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