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BIT & COIN: Merging Digitality and Physicality
It’s time for the public sector to adopt a scalable blockchain as its IT backbone. In traditional systems, compliance and automation are at odds—manual checks slow down efficiency, while automation risks bypassing oversight. A scalable blockchain resolves this tension, uniting the two seamlessly.
Imagine processes being automated with verifiable, tamper-proof data and transactions, all free from self-interested intermediaries yet transparent to authorized inspection and always ready for extremely efficient auditing, potentially hundreds of times cheaper than the traditional auditing method.
It will deliver unmatched cost savings and robust compliance. From welfare distribution to tax collection, this shift will redefine governance, offering transparency and trust at scale.
Adoption hurdles need to be overcome. But the pain alone has accumulated to such a high level that is sufficient to overcome them. It is time.
Compliance and automation
Blockchain solves automation, which in turn solves compliance.
A scalable blockchain can help public sector balance compliance and automation, addressing traditional IT system conflicts.
Blockchain’s transparency and smart contracts enhance efficiency and regulatory adherence, with case studies supporting this.
The public sector has long struggled with aligning compliance and automation in its IT systems. Compliance often requires manual checks, slowing down processes, while automation aims for efficiency but can risk oversight. Scalable blockchain technology offers a promising solution, potentially transforming how governments operate by ensuring both compliance and automation work hand-in-hand.
Scalable blockchain, with its ability to handle large transaction volumes, can automate processes like tax collection and welfare distribution while embedding compliance rules into smart contracts. This means funds could be released automatically once conditions are met, reducing fraud and ensuring regulatory adherence. Case studies, such as South Tyrol, Italy, using blockchain for administrative processes, and Companies House, UK, enhancing data management, show real-world applications. These examples highlight cost-effectiveness and increased transparency, fostering public trust.
However, challenges exist, arising from misunderstandings.
Scalability misunderstood
First, the matter of scalability is widely misunderstood. Many consider a blockchain capable of a few thousand transactions per second “scalable”, not realizing that a true scalable blockchain must be able to handle millions of transactions, if not billions of transactions per second. A truly useful public blockchain must be nearly universal rather than application specific. Just because your one application might need only 100 transactions per second does not mean you only need a blockchain that can handle 1000 transactions per second. See The Necessary Scalability of Layer-1 on Blockchain.
Scalability refers to the ability to expand processing, storage, and consensus abilities to support mass adoption. Unfortunately people have misplaced their hope technologies such as sharding, which divides the network into smaller, parallel-processing shards, and layer-2 solutions like rollups, which process transactions off-chain before batching them on the main chain, have been pivotal. These do not offer true scalable blockchain solutions. Satoshi Nakamoto the blockchain inventor has originally offered truly unbounded scalability for Bitcoin blockchain. But the subsequent development has Calling in to wrong directions, causing the harmful crypto cancer and wasted at least a decade in developing a truly scalable blockchain.
The misunderstanding about the scalability has its theoretical root in the fallacious Doctrine of Blockchain Trilemma, which essentially dictates that true scalability cannot be possibly achieved on a decentralized blockchain. For more discussions on this matter, see Bitcoin Trilemma is a Fallacy.
However Satoshi’s idea has not died. It has been carried on further developed In the Bitcoin Satoshi Vision Blockchain which has demonstrated ability to handle over one million transactions per second.
Privacy and anonymity misunderstood
Second, privacy concerns arise with public ledgers, and public sector organizations may lack the technical expertise needed, requiring partnerships with tech providers. This is also a matter of choosing the right blockchain.
Not all blockchains can handle privacy and transparency together, especially in the context of compliance. Most blockchains Promote themselves with false narratives of anonymity, which contradicts with the required compliance. But the problem does not stop there. Paradoxically, It is precisely the false emphasis on the anonymity that has led to blockchains that have no ability to handle privacy when they come to interaction with the reality. Satoshi’s deep and nuanced understanding of anonymity, pseudonymity and privacy has been ignored or and even purposely sidetracked. (See Privacy & Anonymity)
While not without hurdles, scalable blockchain seems poised to revolutionize public sector operations, offering a balanced approach to compliance and automation. Its adoption could redefine governance, enhancing efficiency and trust, provided challenges are addressed.
The Public Sector’s Transition to Scalable Blockchain
The public sector has historically faced a significant challenge in reconciling compliance and automation within its IT infrastructure. Traditional systems often rely on centralized databases and manual oversight to ensure regulatory adherence, which can conflict with the efficiency goals of automation. This tension is particularly evident in processes like tax collection, welfare distribution, and supply chain management, where manual checks can lead to delays, errors, and inefficiencies. However, by March 6, 2025, scalable blockchain technology has emerged as a transformative solution, promising to harmonize these competing priorities.
The Problem with Traditional IT Systems
In the traditional IT paradigm, compliance and automation often contradict each other. Compliance requires rigorous manual oversight to meet regulatory standards, such as auditing financial transactions or verifying the origin of goods in supply chains. This manual intervention can slow down processes, increase costs, and introduce human error. For instance, in tax collection, matching income data with tax obligations manually can lead to delays and inaccuracies, undermining efficiency. Automation, on the other hand, aims to streamline operations by reducing human intervention, but it risks bypassing necessary compliance checks, potentially leading to regulatory violations. This dichotomy has long been a barrier to optimizing public sector operations, particularly in an era where efficiency and transparency are increasingly demanded by citizens.
Blockchain as a Solution: Key Features and Mechanisms
Blockchain technology offers a decentralized, transparent, and immutable ledger that can address this tension. At its core, blockchain records transactions in blocks linked chronologically, ensuring data cannot be altered without network consensus. This immutability provides a tamper-proof record, ideal for compliance purposes. Additionally, smart contracts—self-executing contracts with terms coded into them—enable automation based on verifiable information. For example, a smart contract could automatically disburse welfare funds once eligibility criteria, verified on-chain, are met, ensuring both efficiency and compliance without manual intervention.
The trustless nature of blockchain, where transactions do not require an interested third party, further enhances its suitability for public sector use. By eliminating intermediaries like settlers or auditors, blockchain reduces costs and speeds up processes. This is particularly relevant for applications like land registries, where transparency and verifiability are crucial, or vaccination records, where quick validation can automate access to benefits.
Defining Scalable Blockchain and Its Importance
Scalability has been a historical limitation of blockchain, with early networks like Bitcoin struggling to handle high transaction volumes compared to centralized systems.
Scalability is also one of the most misunderstood issues about blockchain (see above paraguay “Scalability misunderstood“).
For the public sector, scalability is critical to handle the volume of transactions in areas like tax collection, social security, and public procurement. Without it, blockchain would be limited to niche applications, unable to meet the demands of large-scale government operations. Recent developments, such as the activation of Savanna, a new consensus algorithm for EOSIO-Taurus in September 2024, highlight ongoing innovations, as noted in TechTarget’s Top Blockchain Platforms.
Case Studies and Real-World Applications
Several public sector entities have piloted blockchain to improve compliance and automation, providing valuable insights:
South Tyrol, Italy: In collaboration with SAP, the state government implemented blockchain to streamline administrative processes for building and modifying cell towers, as detailed in Semantic Scholar’s Case Study. This initiative reduced bureaucratic overhead, enhanced transparency, and improved citizen trust by automating compliance checks.
Companies House, UK: A proof of concept using a hybrid public-private blockchain architecture was developed to enhance data interoperability and integrity, as discussed in ScienceDirect’s Public Service Efficiency Study. This improved operational efficiency without disrupting existing data management practices, demonstrating blockchain’s potential for regulatory compliance.
Vaccination Records: Blockchain is being used to record vaccination data, enabling quick validation by schools, insurance, and medical providers. This automates access to benefits and ensures compliance with health regulations, with smart contracts triggering micropayments based on medical status.
These case studies illustrate how blockchain can automate processes while maintaining compliance, reducing costs, and enhancing transparency. The global adoption, particularly in regions like Asia-Pacific, is fueled by government support.
Benefits of Scalable Blockchain in the Public Sector
The adoption of scalable blockchain offers several benefits:
Cost-Effectiveness: By automating processes and reducing the need for intermediaries, blockchain can lower operational costs. For instance, smart contracts can manage loan disbursements without manual oversight, cutting administrative expenses.
Improved Compliance: The immutable ledger ensures a tamper-proof record, facilitating audits and regulatory adherence. This is particularly valuable in financial transactions, where blockchain can match tax data with income, as seen in Deloitte Malta’s Compliance Insights.
Transparency and Trust: Citizens can audit public spending in real-time, enhancing trust in government operations. This is crucial in less transparent regimes, where blockchain can reduce corruption, as highlighted in BlockApps’ Global Case Studies.
Market Growth: In addition, public sector adoption may also drive rapid market expansion in private sectors. A scalable blockchain has transformative potential beyond one type of applications into broad transactions and governance.
Verifiable truth layer: The benefit is not limited to transactions but more fundamentally to offer a verifiable truth layer of data. See Blockchain as the New Global Data Network’s Authentication Layer.
Challenges and Considerations
Despite its promise, adopting blockchain in the public sector faces several challenges:
Regulatory Frameworks: Existing laws may need updates to accommodate blockchain’s decentralized nature, as noted in TrustCloud’s Regulatory Compliance Impact. This includes addressing jurisdiction and cross-border data sharing, particularly in e-government applications.
Privacy Concerns: Public ledgers, if not set up properly, can expose sensitive data, raising privacy issues. Solutions like zero-knowledge proofs, which allow verification without revealing underlying data, are being explored, but implementation remains complex, as discussed in ScienceDirect’s Blockchain Governance Framework.
Technical Expertise: Many public sector organizations lack in-house knowledge for blockchain development, necessitating partnerships with tech providers, as outlined in GovPilot’s Blockchain in Government. This can increase initial costs and delay adoption.
Knowledge and education: More than sixteen years after the creation of Picom Blockchain, The public knowledge about blockchain is still not only shallow but in fact often erroneous. The unfortunate crypto cancer has contributed to that misunderstanding significantly. Lack of education made it even worse. High-impact influencers High-level government officials are no exception. Recent political developments, such as the U.S. administration’s friendlier stance toward cryptocurrency in 2025 without any sign of proper understanding of blockchain technology is one example. See Trump is being misled into promoting crypto scams; and They are using memes to hack humanity. These factors add complexity, requiring a collaborative approach between policymakers, legal experts, and technologists.
Conclusion
In 2025, the public sector stands at a pivotal moment to adopt scalable blockchain technology, offering a pathway to reconcile compliance and automation. With case studies demonstrating success in streamlining processes and enhancing transparency, and market trends indicating robust growth, blockchain seems poised to redefine governance. However, challenges like privacy, regulatory updates, technical expertise, and education, must be addressed to unlock its full potential. A truly scaleable and efficient blockchain according to Satoshi’s original vision offers a future where blockchain enhances public service delivery, fostering efficiency, trust, and citizen engagement.
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