Illinois issues promising first report on blockchain in government

The State of Illinois has released its first report about blockchain, just over a year after it first announced its intention to investigate the distributed ledger technology.

The report, released on Jan. 31, is primarily accessible on the InterPlanetary File System, a blockchain-based file storage system, as a nod to the task force’s confidence in the utility of the growing technology. (The report is also available as a direct PDF download here.) 

The task force concluded that “blockchain technology and its built-in encryption can facilitate highly-secure methods for interacting with government and keeping paperless records, increasing data accuracy and providing better cybersecurity protections for Illinois residents.” The report continues: “Though the technology still needs refinement, government has an opportunity to help shape and adopt innovative solutions.”

Illinois has consistently been at the edge of technology innovation, especially in distributed ledger technology. In late 2016, a number of state and county agencies convened to create the Illinois Blockchain Initiative, a group with the stated goal of determining “if this groundbreaking technology can be leveraged to create more efficient, integrated and trusted state services, while providing a welcoming environment for the blockchain community.” 

The initiative published an RFI in late 2016 to gather public knowledge and insight about the technology and appointed Jennifer O’ Rourke, deputy director at the Office of Entrepreneurship Innovation & Technology, as leader of the initiative and the state’s first blockchain liaison. The initiative evolved into a task force of lawmakers, agency representatives and public entities that began meeting in September 2017 to produce the Jan. 31 report. In early 2018, a subcommittee on blockchain and distribution ledger technology in the Illinois House of Representatives was also announced.

In a statement released along with the report, the acting secretary for the Illinois Department of Innovation & Technology, Kirk Lonbom, said he felt confident the state’s resources had been placed well.

“Blockchain offers Illinois the opportunity to advance the state’s overall digital transformation and continue the establishment of Illinois as the nation’s first “Smart State”,” Lonbom said. ”Blockchain can play a key role in creating a highly efficient, hyper-connected and secure government, which translates into better services for our citizens. We are excited to further explore the value-add capabilities that blockchain technologies could provide.”

Multiple use cases for blockchain were identified in the report. Waste management, disaster recovery grant distribution, improved tax credit visibility and social welfare distribution were all proposed as areas that could benefit from blockchain technology. 

The potential to use Illinois as a testing ground for the technology was also addressed in the report, with the conclusion that Illinois was well-suited for financial innovation due to its access to talent and support for entrepreneurship. Officials also emphasized the Illinois Blockchain Initiative’s connection to the industry, noting that the initiative had become members or participated with blockchain companies and organizations including the Chamber of Digital Commerce, R3, Hyperledger, Enterprise Ethereum Alliance and the Chicago Blockchain Center.

The report offers eight proposals for blockchain legislation, all of which are focused on property law and public recording. The report establishes this as a section of law based on “archaic standards and paper-based regulatory guidance” and thus concludes “that an overhaul of these sections could provide impetus and direction to lawmakers interested in carrying similar updates into other Sections of law.” Some of these include self-notarization, which would be possible via blockchain’s hash value timestamping system, and an opportunity for Illinois to align itself with the Uniform Electronic Transactions Act of 1999, which gives standards for retention of electronic records and the validity and use of electronic signatures.

In addition to producing the report, the task force also compiled a database of more than 200 “blockchain and distributed ledger technology pilots, projects and strategies announced by public sector entities.” According to the report, the database, which looks at blockchain uses from governments all over the world, is an overview of how public sector entities are “employing blockchain technology in their efforts to govern, improve the competitiveness of their economy and also deliver high-quality services in a more efficient manner.“