Blockchain has enormous potential for change and may be worth more than gold for small countries such as Denmark. There is still an open window where Denmark can go ahead. The government should push forward the development.
It is as fragile as glass, says the Danish National bank Director about bitcoins. Every day we see new billionaires in television and newspapers because of the digital cryptocurrency bitcoin did rise up thousands of percent in value. A new tulip bubble bursting at the seams, says the experts.
Bitcoin hype is all over the headlines, and in its shadow, we see most spectacular technology. That has the transformative potential of industries and governments, the underlying blockchain technology is enormous – and this has business and nations got wind of.
We see. How much private venture capital blockchain startups receive, on a global scale, venture capitalists since 2012 kicked 2.1 billion US dollars in the new technology. Through so-called “initial coin offerings” (ICOs is blockchain-based crowdfunding) has raised somewhere between 2.4 and 6.4 billion dollars.
Even Deloitte agree: that Blockchain will transform the public sector and society, in many ways.
Small highly educated countries such as Denmark, stands right now with the opportunity to join the front of the transformation and has the potential to streamline core functions within society. But what is needed is that the government sets an overall direction and strategy, initiates a process with a few select icebreaker projects.
A proposal from Deloitte suggests that Denmark is to launch a transformation of the VAT system where there is a huge potential to eliminate all VAT fraud and create enormous efficiency gains.
We must go back to the 1990s and the switch from letters to e-mails to see a similar transformative technology. But where emails can be copied, manipulated and get into the wrong hands, the blockchain has a much more significant security potential, thanks to the structure of blockchain technology as the risk of fraud fall to zero.
This means that the exchange of public data – e.g. health data or the data property – can be carried out safely. In a blockchain the exchanged data or digital values between two or more parties in a chain of transaction blocks. Data cannot be changed after the registration in the network, and the parties have access to the same information.
It offers great opportunities, especially where we are digitally behind in Denmark, and in areas where many different people need to look at the same data. For example, could the identity papers as a driving license, medical card, and digital identifications, be assembled in a blockchain, so could the citizen control who has accessed their documents.
We see that mentioned a particular potential in getting all of VAT into the state treasury. Every year the state missed billion in errors or embezzled tax. In the EU, the VAT fraud amounts to an approximated. 50 billion euros per year and we have seen major fraud cases in Denmark with worldwide implications.
Imagine if all businesses send and receive invoices in a single invoice register in a publicly controlled blockchain. So could tax settlement be made immediately? VAT Fraud would be a thing of the past. And companies should not spend time on tax settlement.
The Danish public digitization strategy for 2016-2020 includes a target of automatic corporate reporting including the field of accounting. But Deloitte’s proposal is that the blockchain technology should be the foundation.
The system must, of course, ensure the confidentiality of corporate financial data, although creating transparency for Tax offices and other relevant government institutions. It can be very simplistic done partly by encrypting data on the enterprise side and only publish the so-called digital fingerprint of the public blockchain, partly through new standardized invoice formats.
The potential for transforming societies established structures with blockchain solutions is large and can quickly be implemented and tested on a large scale in small countries like Denmark. This is because the Danes, in general, have confidence in the government and is confident in adopt rapidly new digital solutions. Denmark is ahead of many countries both digital identities and mobile payments.
Afterwards, a global test in some countries will show the possibilities of technology. The most popular fields are transferring digital currencies, land and property registration, electoral processes, ID management, traceability in the supply chain, healthcare data, and tax. Drawing on examples from Dubai where all public data are to be exchanged via blockchain from 2020. Japan, the developed a national e-currency. In Sweden, they are testing land and property registration through digital deeds. In the United States, they have tested digital ballots.
In Denmark, the process has started with the Danish Maritime Authority with projects related to the purchase and sale of vessels. The taxation service has tested the registration of cars. The Foreign Ministry has been testing blockchain technology for emergency assistance. Business Authority looks at block chains relevance for automatic business reporting.
The Danish initiatives are good. But Denmark lags behind the leaders when you look at whether there are a clear strategy and strong pilot projects. If we want to transform and be in the front, have to do better.
To attract brains, ideas and capital it is neither the “we must be best and greatest”’ approach as in Dubai or a hands-off solution that Switzerland tester in the crypto-valley in Zug.
But Deloitte suggests that the public testing on some important icebreaker projects and clearly identify the overall direction in which private actors can relate to. The public sector can be thought through with public demand to help drive blockchain development. Just as Denmark has done with renewable energy.
But Denmark must act now. Deloitte believes that there is a window of one to three years for Denmark to establish themselves in the lead in the blockchain development.
It requires political courage and high ambition. Blockchain technology is both an open the door to the giant power the key to making societies functions easy, while a ticket for Denmark to be one of the world’s developments centres.