As governments all over the world continue to adopt blockchain technology to solve various problems and enhance public services, the Chilean government also appears to have jumped on the blockchain bandwagon. According to a recently published press release, the government of Chile is looking to launch a treasury blockchain to help improve public payment processes. This project is under the supervision of the Chilean General Treasury of the Republic (TGR), a public institution which functions as a subsidiary of the Ministry of Finance. The TGR is responsible for handling tax collection within the country.
The Audit Problem
When citizens pay tax contributions or patent fees, the TGR has always operated as a mere observer as the money flows from the banks to the municipalities. Despite this, the TGR is responsible for balancing the books of the bank, the treasury, and the municipalities every month. The monthly auditing often reveals data discrepancies. These discrepancies may simply be data errors but it could also be the evidence of data manipulation or some other form of fraudulent activity.
The Chilean Treasury is committed to provide authenticity and transparency in its operations. Incongruity in data, no matter how small, makes it harder for the institution to carry out its objectives.
Speaking on the issue of delivering quality service in the digital era, a treasurer had this say:
“The Digital Transformation is an enormous opportunity that the General Treasury of the Republic has, for our role, our mission and for the quality of service we have to deliver to our taxpaying users and our officials.”
Chilean Treasury Blockchain Initiative
The Chilean Treasury blockchain platform was conceived during the first meeting of the TGR stakeholders in October 2018. The Digital Government Division of the Chilean Ministry General Secretariat discussed methods for improving taxation and other public payment processes. At that time, officials announced that they would begin working on a blockchain platform which will connect citizens, financial intermediaries, and suppliers.
Details in the press release revealed that this proposed blockchain system has officially been launched. With this new blockchain platform, Chilean public institutions can now use blockchain technology to process more efficient and transparent transactions like patent fees or tax payments.
How does it work?
The blockchain is another database technology for storing important information. However, what makes blockchain attractive is its inherent attributes of decentralization, immutability, and transparency. These properties allow the creation of trustless and more secure database systems. The new Chilean Treasury blockchain platform uses these attributes to enhance public payment services.
The TGR blockchain platform consists of an automatic system which functions via a network of multiple nodes that help authenticate data in real time while ensuring the collection of accurate information. In this environment, nodes which participate in the process are mandated to approve each transaction before recording it on the blockchain. This information is then transmitted to all participating nodes, allowing each node to have an unalterable version of the same transaction data.
TGR hopes that this system will create a common database for the government, institutions, and banks. The Chilean institution believes that such a system will not only provide adequate security for personal data, but it will also help promote payment efficiency, curb expensive operational costs, and eliminate data discrepancies.
Other Blockchain Projects in Chile
Aside from enhancing public payments, the government of Chile has been exploring blockchain applications for other sectors like energy and finance. Chile’s national energy regulation organization announced in April 2018 that it was working on a blockchain project for recording data from Chile’s energy sector. This project will utilize the Ethereum blockchain network and aims to provide security and transparency to the industry, as opposed to the more typical centralized database system which is prone to manipulation and man-in-the-middle attacks (MITM).
In October last year, it was reported that the Chilean parliament was analyzing a bill proposing that the government carries out more studies on the merits of adopting blockchain-based security protocols and energy solutions.
The rise of these blockchain pilot projects and the introduction of blockchain friendly legislation will allow Chile to position itself as a pro-blockchain nation. These initiatives will attract tech-savvy investors and entrepreneurs leading to the development of innovative blockchain-based solutions for various industries within the country.