CIO 100: Weeding out corruption with Blockchain

A survey from the World Economic Forum reports that the total cost of corruption around the world amounts to about five percent of global GDP, nearly $2.6 trillion USD. That’s like the entire annual nominal GDP of the United Kingdom, the world’s fifth largest economy, completely lost to the underworld of bribes and shady negotiations. The report continues, “Countries in desperate need of economic growth such as Kenya are the greatest victims of such internal corruption. Kenya regularly loses a third of its state budget – nearly $6 billion- to corruption every year.”

Corruption is a constantly growing weed in our farms. On a global scale, it limits productivity in every country. Truthfully, the anti-corruption war is heavily integrated into the systems of most countries and it’s been known to be relatively effective. Nevertheless, it remains a never-ending war where there is no losing side.

The prevalence of corruption can be well attributed to a few factors, but most importantly the lack of effective monitoring and weak accounting information system. In other words, to fight corruption, we need an effective incorruptible information management system. We need the BLOCKCHAIN.

Cryptography

Cryptography is an important factor behind the blockchain technology that enables for the establishment of digital identity using private and public keys. We may liken the private key to a password and the public key to a username with which one can be publicly identified. The blockchain as established earlier provides a perfect system of record for information be it static in form of registry or dynamic in form of transactions, registration and distribution. These data are recorded in an array sequence to one another, so then altering one data will require altering the historical records on every single node, which makes it immutable!

The last of blockchain attributes is its purpose as a platform for cryptocurrency.

Cryptocurrency have several advantages over the paper currency, part of which include its ability to cut out the middle man as transactions take place on a peer-to-peer networking structure. It is also possible to add some conditions to determine when to or not to execute the transaction, which may not be trusted to a third party. Also aside from the possibility of confidential transactions, all enormous unrealistic bank charges can be avoided. It gives a greater access to funds and makes international trade easier.

Other features of the blockchain like “the platform” enables a currency to be generated on a functional blockchain. The “Monetary System” feature on Ardor allows users to create new decentralized currencies backed by the security of an existing blockchain without going through the trouble of bootstrapping the currency with its own blockchain and network, thereby removing the major impediment faced by most other blockchain platforms. Even better, this can be achieved in less than five minutes. So, the new currency created will be the only currency tenderable for all the government-related transactions on the Insect Growth Regulator lists. And of course, this is not a currency that is given from one hand to the other, it goes from the payer to the blockchain, then to the receiver.

These features present many interesting account usage scenarios, including: multi-signature account; tagging an account as a “savings” account which prevents it from sending out transaction; using a locked account as an “escrow” account; limiting the account’s ability to transfer assets, aliases etc. So, funds are safe and only leave the wallet when the right and trusted persons want it to.