Point From Dr. Xiao Feng: Blockchain and Governance of Global Public Affairs

On 31st Jan.2020, Beijing time, WHO announced coronavirus as a Public Health Emergency of International Concern, officially upgrading it to a global public affair. Just like many other global public affairs, fighting with coronavirus turned out to be an uphill journey where we frequently had to go against our wishes.

What makes the effective governance of global public affairs almost a mission impossible is that it usually involves plenty of stakeholders whose relationships are complicated and goals distinct.This is especially true in this age of information under the complex background brought by the Internet. China’s rapid development of bullet trains in recent years has enabled people to travel fast around the country. More importantly, the Internet, particularly the SNS, has led to the explosion of information and its dissemination, making us realize that it is more and more difficult to control global emergencies like SARS in 2003 and COVID-19 with a hierarchical governance mechanism.

Moreover, complicated social phenomena came along with this information age are also bringing new challenges as well as new tools like AI, Cloud Computing and Blockchain to the governance of global public affairs.

But what on earth can Blockchain contribute to preventing diseases and disasters?

Build Trust

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Firstly, the governance of public affairs requires timely, efficient and reliable communication, verification, sharing and trust among multi-parties at a low cost. Leveraging blockchain to make information transparent, verifiable and traceable in the governance of public affairs is the best choice, as information on blockchain, added and agreed upon by multi-parties, is unalterable and irrevocable. Sophisticated blockchain solutions have already been employed to trace charity funds, the origins of medicines and food and the process of other programs.

Any public emergencies definitely catch the eyes of a great number of people in a very short time. For example, 20 million Chinese closely followed the construction of the temporary hospitals in Wuhan when COVID-19 broke out. The best way for the whole society to build trust and reach consensuses is to provide a reliable and transparent proof in numbers. The proof in numbers allows everyone to check whether it is the correct answer by solving the math problem by themselves. It is just like everyone in the world will agree that 1 plus 1 equals 2. Blockchain has been applied to build trust in many cases. Examples of this kind are easy to find.

Bring Effective Collaboration

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Secondly, poor collaboration among multi-parties usually leads to inefficiency in the governance of public affairs. Blockchain is designed to be a “General Ledger System” where every stakeholder can participate in recording and managing information in the ledger. Just like Ethereum aims to build collaborative network for computers around the world. Though Ethereum has yet to make its goals come true, blockchain has been working smoothly as a general ledger system.

The centralized governance model, commonly seen in companies, does not work in the governance of public affairs and may give rise to at least the following 3 problems:

1. As decision makers are not familiar with external participants, they can hardly collaborate with each other in efficient ways.

2. Decision makers may fail to response timely to or even have no idea about the marginal emergences.

3. The governance of public affairs asks for various resources and abilities that one centralized decision-making mechanism can hardly offer.

These problems were vividly reflected in how Wuhan Red Cross Association dealt with global donations to the victims of COVID-19. Even hospitals are not equipped with the expertise in storing, transporting and distributing medical supplies. How could Red Cross Associations develop such capabilities in an urgent time?

As a distributed general ledger system, blockchain can facilitate large scale collaboration by allowing all parties to play their professional roles and share and verify all data in the system.

Provide Effective Incentives

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Thirdly, the benefits of all participants must be taken into consideration so that they will all take an active part in the governance of public affairs. As stated by Professor Jia Xijin at Tsinghua University, responsible governments and voluntary social members are two complementary and indispensable elements in allocating the resources for the governance of public affairs. But if governments plays a central role in deciding the responsibilities of volunteers, they will become less active in doing voluntary jobs. As we can see many social volunteers went extremes to get rid of Hubei provincial government’s allocation system to send donations to specified beneficiaries even with helicopters.

The governance of public affairs are non-profit, so it need not be controlled, evaluated and allocated by central organizations like what is commonly seen in economic activities whose purpose of attracting active participants is to make profits. The motivations of social volunteers might be compassion, love for their hometowns, reputation, philanthropy, individual heroism, the influence of corporate cultures etc. but making profits.

The allocation mechanism following one single principle dominated by governments can hardly make the best of diversified motivations of different social volunteers, while the incentive mechanisms of blockchain are designed to meet various demands of different stakeholders.

Blockchain was born in a time when the world is becoming more and more flat, social relationships more and more virtual, organizations more and more horizontal and socioeconomic activities more and more digitized and is destined to make decentralized governance more efficient. In this connection, the incentive models of blockchain are pretty inclusive to various motivations that may incentivize different stakeholders.

Besides, it is infeasible to incentivize participants in the governance of public affairs by economic means, as the process itself must be non-profit. Therefore, the key to the success of public affairs governance lies in finding an incentive model that considers the motivations and demands of all participants.

Reliably Protect Privacy

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Lastly, stakeholders in the governance of public affairs usually come from different industries, even countries, with different professions. For example, the storage, transportation and distribution of medicines and medical equipment drove Wuhan Red Cross Association mad while Jointown Pharmaceutical Group is very experienced in dealing with this stuff. Over 70 out of the 100 people diagnosed with COVID-19 in Japan were visitors from an international cruise. Chinese Disease Control Bureau asked for global cooperation from the beginning of the break by reporting China’s situation and the analyses of virus’ genes to WHO and major countries in the world.

Stakeholders in the examples mentioned above are strangers in different organizations. It may not be that difficult for them to cooperate in dealing with global public emergencies, but they will have to cope with problems in data swapping and collaborative computing when they get into substantial cooperation. Needless to say, every country, industry and individual need to claim their ownership to their data sovereignty and assets and protect their data privacy, which is prerequisite to the large scale cooperation among them.

Blockchain can be the best solution to difficulties in global cooperation by providing core technologies like the distributed ledger, consensus models and incentive mechanisms as well as cryptographic algorithms like hash function, zero knowledge proof, homomorphic encryption, verifiable computing, secure multi-party computation, etc.

At this critical moment of fighting with COVID-19, blockchain practitioners are wondering what blockchain can contribute to this effort. You can, of course, donate money or material supplies, but leveraging blockchain to trace the donation process at the same time might be even better. We believe that blockchain can play a larger role than we have expected in the governance of public affairs in the future!

*Chinese version of this article was published in Wanxiang Blockchain’s Wechat official account on Feb 13th, 2020.

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Wanxiang Blockchain is dedicated to building an open platform and offering resources to develop blockchain and promote its application in different industries.

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