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Blockchain Anchoring of Public Registries: Options and
Challenges
Oleksii Konashevych
Erasmus Mundus Joint International Doctoral Fellow in Law,
Science, and Technology
LAST-JD.eu
European Union
a.konashevich@gmail.com
Marta Poblet
RMIT University,
Graduate School of Business and Law
124 La Trobe Street, Melbourne VIC 3000
Australia
marta.pobletbalcell@rmit.edu.au
ABSTRACT1
Governments across the world are testing different uses of the
blockchain for the delivery of their public services. Blockchain
hashing—or the insertion of data in the blockchain (anchoring)—
is one of the potential applications of the blockchain in this space.
With this method, users can apply special scripts to add their data
to blockchain transactions, ensuring both immutability and
publicity. Blockchain hashing also secures the integrity of the
original data stored on central governmental databases. e
objective of this paper is to analyse the use of data hashing
(anchoring) on the blockchain for public state-owned registries.
is paper starts by analysing possible scenarios of hashing on the
blockchain and assesses in which cases it may work and in which
it is less likely to add value to a public administration. Second, the
paper also compares this method with traditional digital
signatures using PKI (Public Key Infrastructure) and discusses
standardisation in each domain. ird, it also addresses issues
related with concepts such as “distributed ledger technology” and
“permissioned blockchains.” Finally, it raises the question of
whether blockchain hashing is an effective solution for electronic
governance, and concludes that its value is controversial, even if
it is improved by PKI and other security measures. In this regard,
we claim that governments need to identify pain points in
governance in the first place, and then consider the trade-offs of
the blockchain as a potential solution versus other alternatives.
CCS CONCEPTS
•Applied computing → Computers in other domains →
Computing in government → E-government
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ICEGOV2019, April 3–5, 2019, Melbourne, VIC, Australia
© 2019 Copyright is held by the owner/author(s). Publication rights licensed to ACM.
ACM 978-1-4503-6644-1/19/04…$15.00
https://doi.org/10.1145/3326365.3326406
KEYWORDS
Blockchain, hashing, e-governance, digital signatures, PKI
ACM Reference format:
O. Konashevych, M. Poblet. 2019. Blockchain Anchoring of Public
Registries: Options and Challenges. In Proceedings of the 12th International
Conference on Theory and Practice of Electronic Governance (ICEGOV2019),
Melbourne, VIC, Australia, April 3-5, 2019, 7 pages.
https://doi.org/10.1145/3326365.3326406
1. INTRODUCTION
In recent years, governments across the world have started to test
the use of the blockchain in different areas of their public sector.
Estonia was among the first countries expressing interest in
blockchain technology and launching several initiatives in that
direction. First, by embedding blockchain technology within the
data transfer platform X-Road. Second, by testing a “notarisation
on the blockchain” in a project with BitNation [11]. Third, by
piloting keyless authentication [6] supported by distributed ledger
technology [16]. Yet, the outcomes of these different initiatives
are still elusive: the integration of the blockchain within X-Road
has not been achieved [28]; the lack of regulatory background has
deprived “blockchain notarised” acts of any legal force [11]2;
details of the pilot on keyless authentication have not yet been
released. Some other countries have launched pilots [15]:
Honduras announced a blockchain-based real estate registry, but
the project was eventually discontinued [15] [7]; Chromaway—a
Swedish start-up—announced in 2016 promising plans to upgrade
the Swedish real estate registry by conducting deeds on the
blockchain [4]. Yet, two years later the third phase of the pilot has
been concluded but no results are yet available [22]. In the USA,
2 The link to the joint project of the Estonian government and Bitnation was active
during 2016-2017 and it eventually became unavailable. The “notarisation” on the
blockchain service contained the disclaimer that such legal acts had no legal force as
a notary act and users had still to apply to the public notary.
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GovernanceApril 2019 Pages 317–323 https://doi.org/10.1145/3326365.3326406
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O. Konashevych, M. Poblet
the project Velox.re in Cook County (Chicago) tested a transaction
outside of the real registry to imitate the use of the blockchain for
deeds with real estate [5]. The clerk’s office of the county issued
a report [17] but the project never went beyond the testing phase.
Ubitquity.io announced the project Bitland to implement a
blockchain-based real estate registry in Ghana with no further
continuity either [18], [3].
Other pilots are currently work in progress. Ukraine and the
Republic of Georgia announced their cooperation with Bitfury
[26] to apply distributed ledger technology and blockchain to their
cadastral registries.
Different organisations in the EU and UK have recently
released reports on the use of the blockchain [5] [10] [27]. ese
reports generally express positive views about the impact of the
technology and its value in the development of the informational
society. Yet, they are much less specific about the design of
blockchain-based e-government systems and how to implement
blockchains in particular areas.
Blockchains and other distributed ledger technologies (DLTs)
can be applied to a vast range of domains, but no technology
comes as a panacea. In this paper we signal some caveats about
the use of the blockchain for public—state-owned—registries. Our
objective is to assess the potential use of data hashing (anchoring)
on the blockchain for public state-owned registries. To do so, we
compare blockchain hashing—the process of securely storing hash
sums (checksums) of data—with the existing infrastructure of
digital signatures using standardised PKIs (Public Key
Infrastructures) such as eIDAS in the European Union [24]. We
contend that the present lack of regulatory frameworks and
standards makes the adoption of blockchain hashing contentious,
as in some cases it could undermine e-government services and
public interest in general. We conclude that governments should
identify and address pain points in the administrative processes
before making decisions that involve blockchain adoption.
2. HOW DOES HASHING ON THE
BLOCKCHAIN WORK?
A cryptographic hash function is a mathematical algorithm that
maps data of arbitrary size to a bit string of a fixed size (a hash)
and is designed to be a one-way function, that is, a function which
is infeasible to invert. e function takes an input (or 'message')
and returns a fixed-size alphanumeric string. e string is called
the “hash sum”, “hash value”, “message digest”, “digital
fingerprint”, “digest” or “checksum”. e ideal hash function has
three main properties: (i) it is easy to calculate a hash for any given
data; (ii) it is extremely difficult (computationally) to calculate an
alphanumeric text that has a given hash; (iii) it is extremely
unlikely that two slightly different messages will have the same
hash [20].
In addition, if the same hash function is applied to the same
data, it always gives any user acting independently the same hash
sum as the result at any time. In terms of public registries, if the
hash sum of an entry is securely stored, then it allows to reveal
any further changes in the original entry. Thus, it is useful in
exposing forgery, although it does not protect the data itself.
Data insertion is one of the first useful applications of the
blockchain beyond the hype of cryptocurrencies. Broadly, hashing
on the blockchain refers to inserting a hash sum in a blockchain
transaction. Insertion implies that data is “published in the ledger
and cannot be censored or retracted and will be permanently
available to the world” [21]. Sward, Vecna, and Stonedahl offer a
comprehensive analysis of different methods of data insertion in
Bitcoin [21]. Fig. 1 below shows the principal data insertion
scheme in the blockchain.
Figure 1: Blockchain data insertion
e method of hashing is recognised as a way of securing
public data on the blockchain. Each entry of the central database
of the public registry is hashed and casted to the blockchain. Some
governments, as the example below shows, are considering this
method to secure their cadastral data.
2.1. Hashing Cadastral Data in Ukraine
An example of blockchain hashing is the project by Bitfury in
Ukraine, developed in partnership with Transparency
International (TI) and the Ukrainian government. The project,
launched in 2017, applies Bitfury’s distributed ledger technology
“Exonum” [13] for hashing records of the geocadastral registry
[26].
Authorised nodes that are controlled by the government cast
hashes to the Exonum-based ledger. e hash of the current state
of the ledger is periodically anchored on the public blockchain.
Initially, this public blockchain was Bitcoin, but it was later moved
to Emercoin [8]. TI keeps another node, which plays the role of
the observer and has permission to read the ledger only. e
scheme is explained in Fig. 2 below:
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Figure 2: Hashing on DLT Exonum
Exonum is just an example of a private permissioned
distributed ledger technology. Nodes in Exonum must be
authorised to access the network and create blocks. e
administrator keeps the private key and grants permissions to
nodes. Exonum uses a Byzantine Fault Tolerant consensus
algorithm—resistant to malicious behavior or failure of one or
several nodes—that requires the approval of 2/3 of authorised
nodes to accept new blocks. If the nodes reach such consensus, the
new block is added to the chain. Technical details are described
on the site of the project [13], [8] and [12].
3. DIGITAL SIGNATURES
The idea of an asymmetric public-private key cryptosystem is
attributed to Whitfield Diffie and Martin Hellman, who published
this concept in 1976 [9]. This idea was developed and laid down
in the patent by Ron Rivest, Adi Shamir, and Leonard Adleman in
1977 [19] and has been further improved by other cryptographers
over the last decades.
In public key cryptography—also known as asymmetric
cryptography—digital signatures consist of a pair of keys: public
and private. e public key is a code string that uniquely identifies
a certain individual or company. e private key must be kept
absolutely secure and not shared, whereas the public key can be
shared with anyone [1].
To illustrate this, let us present two scenarios involving Alice
and Bob—the two most famous characters in the cryptographic
world. In the first scenario, Bob wants to send Alice a message,
and Alice needs to be sure that the message came from Bob. So,
Bob uses his private key to encrypt the message. Alice can then
validate that the message came from Bob by decrypting it using
Bob’s public key. In the second scenario, Alice wants to send Bob
a message that only he can read, so she encrypts it with Bob’s
public key. en the only person who can decrypt it is Bob, using
his very well-protected private key [1].
3.1. Digital signature vs hashing on the
blockchain
The signing of a blockchain transaction is based on asymmetric
cryptography as well [2]. In that respect, cryptographic signing of
data is not different from signing blockchain transactions.
e main difference between the two methods is that hashing
on the blockchain adds another layer of data. With digital
signatures, users insert their data as an input to the cryptographic
function; with hashing on the blockchain, users insert payment
data along with the required data, as it is schematically shown in
Fig. 3.
Figure 3. Typical digital signing vs DLT based digital
signing
Digital signatures have not been used for public purposes in
this basic form. For this to happen, the system needs to be
supported by a Public Key Infrastructure (PKI) and a set of
standards. PKI consists of technologies, procedures and actors that
enable deployment of public-key cryptography-based security
services [25]. Within PKI, one provider—known as Certificate
Authority (CA) or Trust Service Provider (TSP)—is responsible for
the provision of identity services, while other providers—
Timestamp Authorities (TSA)—authenticate time and date
information. Blockchain hashing, in contrast, does not require a
centralised TSA since all blocks are chronologically stored.
Timestamps are embedded in the blocks, and it is not possible to
alter them due to the inherent immutability of the blockchain.
At present, PKI benefits from a complete infrastructure with
regulations, standards, and procedures. For example, a roadmap of
standards in the EU is described in the ETSI publication TR
119 000 [30]. The paper contains the list of all standards relating
to trust services and signatures and grouped together by a
numbering scheme, as shown in Fig. 4.
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O. Konashevych, M. Poblet
Figure 4: Framework of eIDAS trust service related
standards
Each clerk imposing a signature can be identified because they
use qualified electronic signatures with certificated hardware
devices for digital signing (or signatures with the similar level of
security and identification). is is the case in the European
Union, Switzerland, Ukraine, and many other counties.
As compared with typical PKI, there is no standardised
protocol establishing the procedures of authentication to the
permissioned blockchains. There are no procedures for
authorising nodes and operators (clerks) either. Clerks use private
keys, but there is no standardised protocol if these keys are
compromised. More generally, there is no standard for a
permissioned distributed ledger technology (DLT).
As it obvious from this analysis, blockchain/DLTs can be
augmented either by typical PKI standards or PKI-similar to
achieve required identification, authentication and authorization
procedures.
DLT and the blockchain, in summary, are not fully equipped
yet. e only feature “out of the box” is a timestamp. Timestamps
are an integral property of the blockchain, because transactions
are chronologically saved in an strong chain of blocks of records
and secured by cryptography [2] [29]. us, any transaction has
its immutable place in this chronology.
While other infrastructural solutions are not in place by
default, hashing on the blockchain without regulations, standards,
procedures, and certifications can only work in limited
environments, under supervision and, presumably, for research
3 Originally in Section “Privacy” [2] Nakamoto uses word “anonymous”. However,
as anonymity can hardly be achieved due to various specific reasons, the term
“pseudonymous” is preferable.
purposes. is is definitely not a scalable approach for
e-government at this moment in time.
3.2. How hashing on the blockchain should
work?
There are at least three issues that must be addressed to leverage
hashing for improving the security of centralised public registries,
for example, of properties, real estate, finances, etc. These are (i)
identification, authentication and authorization; (ii) bi-directional
relations of entries in the database and hashes on the blockchain;
and (iii) standardisation.
3.2.1. Identification, authentication and authorization
The blockchain was designed in a way to provide for
pseudonymity 3 of both nodes owners (“miners”) and owners of
blockchain addresses (“users”). Therefore, authentication requires
here only a user’s private key.
For public use to add trust to blockchain records, the original
blockchain or other DLTs must be supplemented with overlaid
solutions for identification, authorisation and authentication with
the component of trust services where necessary.
DLT means that the administrator of the system is on top of
the system hierarchy. e administrator keeps the key to the
system and grants permissions. erefore, standards and
procedures for managing keys and accesses must be applied here
as a part of a standard protocol.
In the case of hashing on the original blockchain a public
ledger is used instead. is raises two issues: free access by anyone
and anonymity of addresses. erefore, when any data is
published, no one knows who did that: an authorised officer or an
aacker. us, before that happens, the address must be either
identified or the inserted data must contain an identifiable digital
signature. Moreover, if the private key to the blockchain address
is stolen or compromised in another way, there is a need to have
a procedure for a stop list where such an address is added to the
special database and any further action from the address is
considered invalid. So, as we see again, this takes us back to the
need for the PKI based on known and proven principles.
3.2.2. Bi-directional relations between databases
The probable attack scenario we are facing here is that the record
on the central database is changed or replaced with a new one,
and if there is no reverse relation with the hash stored on the
ledger, a new hash can be created for the corrupted record and
published in the distributed ledger, and so presented as a correct
one. Apparently, such use of the blockchain does not add any
value in terms of the security.
e problem is that hashing does not protect the data itself
from being deleted and changed, it just helps to reveal the forgery
if the user still keeps in their hands the original record. If the
database is closed and centrally controlled (that’s how it basically
works in the public administration), such manipulation inside the
database is still possible.
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e issue is illustrated in the Fig. 5. Here the observer did not
have access to the original record and the hash which is published
on the blockchain has no pointer itself to the original record.
Whoever sees the hash sum on the ledger, even if it matches the
record in the central DB, still cannot know if the record itself is
authorised or not.
Figure: 5. The issue of unauthorised change of DB
Traditionally, in government registries changes are addressed
by a multilayered system of security measures, logs, and
management of access.
One of the possible ways to use the blockchain is to build a
central registry in the style of “chain of blocks” (chain of records,
actually) similar to the blockchain, either public or private, or just
to move the registry on the blockchain. us, the complex use of
the blockchain for public administration implies both the transfer
of the central database to the blockchain (and not just hashing)
and the use of PKI for identification.
As an example, this could be implemented using the Name
Value Storage (NVS) technology. NVS is a complex technology for
managing data. First developed by Namecoin and then
significantly improved by Emercoin, NVS works as a build-in
protocol in the blockchain. NVS records are designed to store
arbitrary data of users in the blockchain, but this is not just data
insertion. e user publishes the data in a form of pairs [name ->
value], where “name” is a key (unique searchable index field) and
“value” is data that specifies the key or simply, any data that the
user wants to add. Aer publishing the NVS record, the use can
update it using their private key to the blockchain address.
As a result of such an update, a new record is created where
“name” remains the same, but “value” is changed. Because this is
made on the blockchain, the whole chronology, i.e. “chain of
records,” is stored on the blockchain. Nobody else can create the
record with the same “name.” erefore, NVS ensures an
unbreakable chain of records where the next record is connected
to the previous NVS record with the same name. Fig. 6 shows the
basic NVS scheme, where “Name” remains the same
interconnected through the blocks and can play the role of any
pointer (for example, a cadastral number) and “Value” is updated
when necessary (Bob to Alice).
Figure: 6. NVS in Emercoin/Namecoin
Of course, both PKI and some additional measures of security
are still required in the architecture of such registry. is is just
one example, but the emerging variety of blockchains and overlaid
technologies gives a wide scope for solutions.
3.2.3. “Permissioned blockchain,” standardisation and state policy
The recent hype about the blockchain may lead to some confusion
when it comes to adoption by governments. The alleged
achievements in blockchainisation of e-government services tend
to refer to “permissioned blockchains”. However, these
“permissioned blockchains” may lack some of the key features of
the blockchain. To illustrate this point, we need to distinguish
between the blockchain and other distributed ledger technologies
(DLTs).
e blockchain, famously introduced as “Bitcoin” by Satoshi
Nakamoto in 2008 [2], is a decentralised peer-to-peer system
underpinned by cryptographic functions. All nodes in the
blockchain network are hierarchically equal and have the same
rights in creating (mining) blocks of data with transaction records
(ledger).
DLTs are oen used as a general term referring to a subset of
technologies that use some elements of the blockchain. As
opposed to the original blockchain, DLTs can be architecturally
centralised with a hierarchical system of nodes. is is the case of
the so called “permissioned blockchains.” In our view,
nevertheless, the use of the notion “blockchain” or “permissioned
blockchain” to refer to a centralised system can be misleading.
Arguably, what system can qualify as a blockchain is still under
discussion: What are the main properties that give us the right to
call any specific network the blockchain? Original Bitcoin-like
networks only? Decentralised systems based on other types of
consensus mechanisms? A mix of them? Ultimately, governments
need to rely on shared conceptual frameworks and standards to
make the appropriate technology choices. Otherwise, we may end
up with scenarios where different departments use different types
of conflicting blockchains, or use blockchain protocols with only
a few nodes (that are unable to maintain the required level of
security of the network), or use DLTs that are not blockchains at
all.
Another risk associated with the lack of standardisation is that
governments must keep the list of public blockchains whose
technologies are proven trustworthy. Yet, such lists of “trusted”
blockchains can lead to discrimination, arbitrarily excluding
potentially appropriate networks and technologies.
Standardisation is a beer way to ensure fair competition and
stable development.
Public policy and clear roadmap are the most preferable
scenario, otherwise, we are at risk to see voluntarism and mistakes
which are unacceptable for public data.
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Finally, the consistent state policy regarding the use of the
blockchain must contain the recognition and legitimisation of
cryptocurrency. Cryptocurrency is the blood of the system, the
main mechanism and incentive that allows the creation of a large
sustainable network. Nodes can claim some amount of crypto
when creating blocks. Likewise, nodes can also receive
cryptocurrency as a fee from the user when performing
transactions. e alternative to cryptocurrency is that the
government must create an infrastructure that, ultimately, it is a
way to centralisation.
4. Conclusion
Since 2017, ISO is considering the first blockchain standard [14].
However, standardisation of the blockchain domain is still in the
early stages. For this reason, we consider that hashing on the
blockchain may be premature for public registries. Rather, the
alternative option of PKI supported with standards, regulation and
complex measures of security seems more plausible solution at the
present stage.
In summary, the discussion is still open. Why, and what for,
should we use the blockchain in e-government? To improve
security? As we have outlined, the security of traditional
centralised databases has worked reasonably well so far.
Arguably, governments will need to rethink the nature of
relations around public databases and look in the direction of
decentralised applications (DApps). Technically, a registry is a
database. In developed countries registries are usually digitised or,
at least, have both actual realisations, i.e. exist in paper and in
electronic form. However, in the spatial sense, registries reflect
large domains of specific regulated relations.
For example, a land registry is framed by laws and regulations
of property rights and procedural acts. e infrastructure includes
bodies of acknowledgement of deeds (notaries public, aorneys,
title agents, etc.), recording offices and clerks and mediators,
which are professionals in the market (brokers, escrows,
insurance companies, etc.). Markets of professionals are usually
regulated by statutory laws, licensing, and include the system of
regulatory and control bodies, professional unions and
associations.
Each land deed triggers some certain mechanism of this large
infrastructure. Each element of this infrastructure has its own
purpose to add some sustainability in the domain, i.e. most
regulations and institutions exist to prevent misunderstandings in
legal issues, or prevent fraud and corruption.
Such state-level "paper" registry or centralised electronic
system is based on understanding that the centralised form of
governing is the only way to organise large relations in the scale
of a country.
e use of DApps is not about “securing data.” Rather, it is
about changes in public administration, in governance, and in
regulations. ere many examples where the clerk is no longer
needed. Why does the government need clerks for registering a
business? Businessmen could file the company automatically by
online submission of an entry controlled and guided by the
“smart” system where fields of the online application form would
be algorithmically verified, and errors excluded. Such systems
could work even beer and exclude human errors, which typically
occur on both sides of the process: citizens and governments.
We can even think in terms of the necessity of a traditional
registration of the business and securities. e registration is
aimed to record the fact, but the blockchain is the register itself.
So why would we need to record twice the issue of shares in the
Securities and Exchange Commission and ICO on the blockchain?
All these questions remain open for further research.
If we think in the direction of the second generation of the
blockchain technologies, smart contracts [23] and DApps, we can
leverage much more useful functionalities than data insertion
(blockchain hashing) which is primitive and does not unleash the
full potential of the blockchain. inking in the direction of
automation of manual work of clerks using “smart” algorithms we
can define the following goals:
reducing fraud and corruption;
raise in the level of data security;
reducing costs for public administration (work of people
costs more than work of machines);
reducing human-generated mistakes;
reducing bureaucracy and so incentivisation of economic
activity.
ACKNOWLEDGMENTS
This paper is an outcome of the PhD research performed inside of
the Joint International Doctoral (Ph.D.) Degree in Law, Science
and Technology, coordinated by the University of Bologna,
CIRSFID in cooperation with University of Turin, Universitat
Autònoma de Barcelona, Tilburg University, Mykolas Romeris
University, The University of Luxembourg.
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