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Investigating, deploying & regulating blockchain within the public sector

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In a fireside chat at the Blockchain for Saudi Vision 2030 Summit, Dr Khalid Alshatheri, General Manager of Emerging Technologies, Communications & Information Technology Commission (CITC) of Saudi Arabia spoke about the implementation of blockchain technology in different government projects and the effort to regulate blockchain as an emerging technology. 

We invite you to watch the session on our YouTube channel, or read the transcript below.

Investigating blockchain for government applications

By Dr Khalid Alshatheri

I work for the CITC, the regulator for the I.T. and Telecom sector that was focussing mainly on the I.T. and Telecom market until 2018. We noticed that these markets, I.T and Telecoms started off by serving themselves with emerging technologies – AI, blockchain and IoT. Now that they’ve gotten a hang of it, they’re serving other sectors by providing, for example, blockchain for banking, identity management and medical records

We realised we needed to pivot the regulator’s vision to include these technologies, so we decided to establish a new department to focus on emerging technologies. The goal was to determine how the CITC can make use of these technologies, and should approach regulating and encouraging the adoption of those technologies. 

One of the prominent technologies we’re focussing on is blockchain.

Deployment: Blockchain-based metering system

Around 2018, after several years of discussing how to apply emerging technologies for the electricity sector, the CITC reached out to the Ministry of Energy as well as the Saudi Electricity Company. We discussed employing IoT to advance the sector and decided that the best pilot would be smart metering based on a blockchain infrastructure. 

Most countries are still measuring electricity consumption by sending employees to the premises of the customer to read meters and record the data. Our idea was to use IoT to replace manual metering systems, but also to develop the new cases by integrating the system onto blockchain.

We deployed the project in collaboration with the energy organisation starting from 2019. And that’s when the COVID-19 pandemic broke out. 

We had a major decision to make: Should we execute the project as planned, or should we postpone the project until the pandemic was over? 

We decided that we wouldn’t let anything prevent Saudi Arabia from deploying such a valuable technology. 

In one year, we managed to replace 10 million meters with smart meters. The project didn’t only entail installing the smart meters, but also building an ecosystem around it, so other applications can interact with the data the smart meters recorded to the blockchain.

It was a great success for all the stakeholders: the CITC, the MCIT, the Ministry of Energy and the Saudi Electric Company.

Using blockchain as a network of trust

Now that we have all these smart meters deployed that are collecting data and recording it to the blockchain, we see the potential for several applications to plug into the system.

Blockchain is about building trust between parties that don’t know anything about each other. In our case, we have multiple use cases in mind where interactions can take place between people and entities, without them having to know each other. 

But in order to guarantee privacy of individuals and prevent fraud within the system, you have to make sure a person is who they say they are or an entity is legitimate. Current systems are unable to do this. 

With blockchain, I can trust that identities and entities have been vetted and are unalterable. I can simply join the blockchain network, and I’ll be in a good position to start interacting with other people and entities.

Regulating: CITC on blockchain policy

It’s a challenge to decide how to regulate blockchain. Do we jump in from day one and implement strict regulations? 

When it comes to the IoT sector, the CITC decided to start regulating it by 2016. But when the time came, we realised it was too early for us to intervene. We decided we would give the sector more time to develop so we wouldn’t stifle innovation. We put regulation on hold for three more years. 

By 2019, we received so many requests from investors asking us to make the sector more transparent and increase integration with the CITC. That’s when we decided to publish an IoT framework. 

For the blockchain sector, we are in the phase of monitoring it closely to decide when regulation should be implemented. We have an annual review process, and I suspect that we’ll introduce our first blockchain framework by the end of 2022. 

Preventing SMS fraud with blockchain

At the CITC, we’ve started an internal process asking ourselves whether there are any systems that can be improved by using blockchain technology. The CITC is there to serve the Kingdom, and so we want to use blockchain wherever it can help us to better do that.

The first project to mention is one aimed at solving the issue of SMS fraud, and I believe it will be up and running by the end of 2022. The solution that the CITC is working on is to use the blockchain with multiple vendors and parties to block fraudulent SMS’s from reaching users. This is one of the CITC’s internal blockchain projects. 

Factors to consider before employing an emerging technology in the public sector

We also have multiple blockchain projects in cooperation with government entities where we’re investigating deploying and utilising blockchain systems. We’re working with the Ministry of Health, Ministry of Energy and two other ministries to establish clear blockchain use cases

But there are factors to consider before implementing emerging technologies like blockchain in a government project.

The first one, which is the most important one, is that all parties agree on the identification of the problem and are convinced that blockchain is the solution. All parties must agree that it will benefit the users more than traditional technologies. 

The challenge is that blockchain is new and therefore difficult to understand. If the Ministry of Health doesn’t see the value of using blockchain rather than the traditional systems, they will never adopt such technology. 

Secondly, but closely related, we have to make sure the project’s goals are aligned with the higher management of the customer, for example, the Ministry of Health. Without their support and involvement, a project’s success will be in danger.

The third consideration is whether the new system you’re implementing will be interoperable with other systems serving the same customers. You don’t want any system, IoT or blockchain, to operate like an island when it can enhance service delivery in related areas.

Blockchain for government and enterprises

Dr Khalid Alshatheri’s comments on the topic of self-sovereign identity originate from his participation in the Blockchain for Saudi Vision 2030 summit. To stay abreast of similar summits and presentations in your geographic location, bookmark our events page.

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