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Blockchain Offers an Advantage for State Government, Experts Say

Illinois state and industry experts explained the value of the digital ledger technology to lawmakers and where it could improve state services.

(TNS) — Bitcoin, cryptocurrencies or blockchain might elicit thoughts of illegal deals or a financial bubble centered on fake digital money.

But, according to experts speaking to Illinois House members at a hearing on Tuesday, the technology behind Bitcoin could help make government more efficient.

Bitcoin, the digital currency, uses a digital record-keeping system called a "proof of work blockchain." Basically, it has hundreds of computers back up a large log of transactions involving the virtual currency. People can connect online to the chain and help process transactions.

This system is one of many ways a blockchain works, according to George Chikovani, an executive at the Innovation and Development Foundation, a Ukrainian tech firm with an office in Chicago.

"Blockchain is just two databases talking to each other," he said. "Maybe not two, but billions of databases. There are a lot of databases talking to each other giving reports on the same information."

Chikovani said instead of using a blockchain for currency, new blockchain systems could focus on other kinds of transactions, such as exchanging titles for houses, cars and more.

He argued that instead of relying on one government agency's computers, it could decentralize the whole infrastructure for these sales, making them faster and cheaper, compared to what would normally be a slow complicated trudge through bureaucracy.

Moreover, Jennifer O'Rourke, deputy director of the Illinois Department of Commerce's office of entrepreneurship, said the security system that makes up blockchains is so complex it would take an almost impossibly powerful supercomputer to crack it, at least by today's standards.

It's not foolproof, though. O'Rourke said other programs used in tandem with blockchains might be susceptible to breaches, potentially compromising the system.

John Mirkovic, deputy recorder in Cook County, gave examples on how it could help make his agency more efficient.

Because of the simple nature of the transactions, Mirkovic said it could require fewer servers to maintain databases for public records and that recorders in multiple counties could use the system.

"Instead, we could run 20 servers across the state and run blockchain that way," he said.

Mirkovic said an issue in his office is the need to constantly upgrade software. The most recent upgrade has taken four years and they're still only starting to copy records over from the old one.

"What this is about is government having the potential to innovate itself, instead of being on the other side of the coin where we're always the customers," he said.

Tyler Clark, chief of staff in the Illinois Department of Information Technology said governments in foreign countries such as Estonia and Georgia are already trying to use it for similar ends. But he believes more discussion needs to take place.

"I never said there would be no problems, and that's why we're here," he said. "That is the reason why we're here today, is to ask the legislature, which is the appropriate body, to guide this over the next five to 10 years."

©2018 The State Journal-Register, Springfield, Ill. Distributed by Tribune Content Agency, LLC.