LETTER | Malaysia needs to improve on its transparency, period. This is what I gather from talking to diverse people – intellectuals and laymen alike. Many feel that the level of bribery, corruption, embezzlement etc. in the country needs to be addressed urgently.

Transparency and accountability are urgent issues that need to be addressed by the government. Accordingly, for the coming GE14, the BN and the opposition Pakatan Harapan parties must tell the people what actions and measures they intend to take in order to increase the level of transparency and accountability in the country, and by when.

This should then be made one of the Key Performance Indices (KPIs) for the government, which would thereafter be monitored by the people to ensure that the government truly fulfils its promises, within a given timeframe.

In this regard, one new innovative technology that is promising in the area of transparency is the blockchain. Blockchain is an IT technology that uses some sophisticated cryptography to secure, record and store transactions.

Blockchain is also the technology behind the popular cryptocurrency bitcoin. It is a relatively new technology, that has been in existence for about a decade since bitcoin was introduced in 2009 but only now its worth and wider applications are becoming more obvious and appreciated.

Let us briefly outline how blockchain technology works. Prominently, opposed to common centralised databases, its storage is a public registry, i.e. a decentralised database where transactions are stored in all nodes (computers, laptops, mobiles etc.) within the network.

Hence, while most payment systems - like AliPay, Paypal, Applepay etc - are run by some third-party operators who store information in centralised databases, the blockchain technology uses a decentralised database where information is stored in all nodes, hence the term distributed shared ledger.

In the blockchain technology, participants transact using private keys and public keys that are secured through some complex cryptography. The private key enables one to initiate a transaction by issuing both digital signatures and public keys that allow others in the network to verify information and thereafter permit the execution of the requested transaction.

In the bitcoin system, the digital signatures and the ownership of bitcoins are verified by thousands of peers before a transaction is executed and stored.

Now comes the unique feature of blockchain technology that is responsible for disrupting many areas of human economic interactions. That feature is how the verified transactions are stored.

As mentioned earlier, transactions that take place within a time interval, say ten minute-intervals, are chronologically verified and stored in blocks.

In the bitcoin system, those who verify transactions are called miners and they compete to create new blocks of verified transactions and lock them for good, for which the system rewards them with newly created bitcoins.

Such information blocks are time-stamped, locked and interlinked using cryptography. The cryptography lock is a function of the information contained within the block.

Someone attempting to change a record in a particular block, for example, will have to solve all the cryptographic locks from the present block until that particular block, make the desired changes and return back before a new block is added by others in the network. This is almost impossible.

Additionally, altering records will also alter the cryptographic locks of that block and all subsequent blocks. All these make the transaction records irreversible. It is this irreversibility of data in blockchain technology that is considered an innovation and a significant contribution to the field of computer science.

“Blockchain is decentralised database that stores registry of assets and history of transactions across a peer-to-peer network, i.e. on every computer in the network. It is therefore a Public Registry of who owns what and who transacted what.

“Transactions are secured through cryptography and over time the transactions history is locked in blocks of data that are cryptographically linked together and secured, i.e. immutable, unforgeable, hard to temper-with.

“Blockchain can record not only money, like bitcoin but many other kinds of assets too – history of custodianship, ownership, location of assets, title of ownership, a certificate, a contract, real objects, personal identifiable information etc…(It is therefore) a revolution in the way money, assets and securities are stored, transferred, accounted for and reconciled.” - Bettina Warburg, a prominent blockchain advocator, TEDTalk

With such characteristics, blockchain is very secure and reduces uncertainty among non-trusting agents, and thereby promises to eliminate the middlemen in many economic interactions. This includes banking, finance, insurance, legal, real estate etc.

It is particularly suited for governments for building trust, beat bureaucracy, fight corruption, bribery, embezzlement, tax and GST evasion etc. Accordingly, many governments are now either considering blockchain technology for the management of the public sector or even already using it.

The governments of the US, Dubai, Sweden, Brazil and Netherlands, for example, are using blockchain to improve transparency, accountability and efficiency within the public sector. IBM, for example, has blockchain-solutions for a wide variety of applications, including government.

Areas of application include the following:

• Government-issued documents like birth certificates, IC, passports, visas etc.
   
• Asset registry – homes, vehicles, land, contracts etc. Frauds in these areas are frequently heard of. However, by registering assets and recording their ownership-changes on a distributed ledger, the desire for right to privacy and transparency can be reconciled. The Netherlands Vehicle Licensing Organisation (RDW), for example, registers vehicles together with their respective remote-control lock, geo-locator and owner. In a blockchain’s shared-ledger the police, local government, insurance company etc. can selectively access the information. As for real estate transactions, these can usually take as long as three months or more, before a transfer of property or land can be concluded. However, with blockchain and smart contracts the process can now be securely completed in a matter of hours only.
   
• Financial management – in procurement, for example, misappropriation of funds could be mitigated.
   
• Smart contracts – for secure and fast execution of standard contracts. For registration and management of trademarks, copyrights, patents and royalties.
   
• Cross-organisational information transfers - like across different government and military network domains.
   
• Greater voting transparency – with blockchain, secure, fraud-free, cost-effective and comfortable online voting is possible. FollowMyVote is one such blockchain-based voting platform. This can save a lot of money managing polling during election days.
   
• Supply chain management - information on the shared ledger is updated and validated in real time, with equal visibility of activities to everyone in the network. Hence, assets can be traced real time to reveals its location, ownership and the circumstances it is in.
   
• Government-issued cryptocurrency – if a government issues 100 percent cryptocurrency using blockchain technology, monetary frauds like corruption, bribery, tax evasion etc. would become almost impossible for anyone to do. Even a single ringgit donation would be recorded from whom to whom. This could itself double or triple the government’s revenue overnight.

One current shortcoming of blockchain as a technology, however, is that the private key must be kept private and secure at all times by the individual. If the private key is lost, one can lose all assets or information associated with it.

However, ways are being taken to address this issue. Also, with the advent of quantum computing, the security of blockchain cryptography could soon be breached. However, this new technology would also bring a solution along, i.e. quantum cryptography.

As the GE14 is just around the corner, I hope Malaysians would aspire for enhanced transparency, accountability and efficiency in all areas and thereby propel Malaysia towards a high integrity, high quality of life and inclusive economy that match the Scandinavian countries, within a reasonable timeframe.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.