Implementation of Blockchain Powered Smart Contracts in Governmental Services

Abstract

Blockchain, the rapid developing technology behind Bitcoin, is increasingly becoming popular. Blockchain is a distributed ledger technology that distributes digital transactions peer-to-peer to a decentralized network of nodes that verify the transactions and keep a cryptographic secured copy of the entire history of transactions. The network automatically reaches consensus about the correct history of records, which makes the database transparent and immutable. This consensus role makes it possible to take away the third party in certain processes, such as the bank or the notary. Blockchain also enables digital payments and smart contracts. Smart contracts are digital contracts that can be executed automatically by the blockchain. This enables digital registration of for example identity, birth certificates and votes. But smart contracts have many more automation applications that can be coded in computer code, which has the potential of making many processes in both the public as the private sector more efficient and less costly. Governmental services are especially applicable for blockchain, as they could become more efficient and can even be made obsolete in some cases.

Project teams that develop blockchain powered smart contract applications have to work with nascent tools and technology, and a lack of real life use cases. This leads to a lack of empirical knowledge on how to implement smart contracts in governmental services. An overview of guidelines that assist developing project teams is non-existent, which slows down the implementation process. Blockchain technology is not well-researched and smart contract implementation research is even more scarce. A comprehensive overview that shows design phases, design principles and design dilemmas is non-existent, but could greatly assist project teams that implement smart contract applications. Such an overview would speed up the implementation process and can lead to an acceleration of use cases. Therefore, this research focused on answering the main research question: “How can blockchain powered smart contracts be implemented in governmental services?”.

We used the design science approach in order to answer the main research question. The design science approach allowed us for using several sub methods. We started with a literature review and desk research to understand and analyze blockchain technology and smart contracts, followed by a literature review in order to draft the first version of design principles. These were improved by conducting four case studies. With the second version of the design principles, we built the first version of the design framework. These were assessed by six experts, which allowed us to refine the design principles and design framework into a final version.

The 36 design principles are guidelines to aid project teams that implement smart contracts in governmental services. We incorporated these design principles in a framework, that shows which design principles are applicable in the following five phases of smart contract implementation: exploration, conceptualization, testing, implementation and expansion. Each of these phases has its own results and applicable design principles, which is comprehensively indicated in the framework. However, various pairs of principles affect each other, which we call design dilemmas.