USING blockchain to track government spending could pose more problems than solutions, given its complexity and vulnerability to tampering, experts warned.
During the joint hearing of the House Committees on Science and Technology and on Finance, experts and academics raised doubts about embedding a blockchain system under the proposed ‘Citizen Access and Disclosure of Expenditures for National Accountability,’ or ‘Cadena’ (Tagalog word for chain).
Undersecretary David L. Almirol Jr. of the Department of Information and Communications Technology (DICT) explained Cadena is being created as ‘a transparency digital portal where people can not only see the budget, but they can see even the movement and the statuses of this budget moving forward.’
Chiming in, Sen. Paolo Benigno ‘Bam’ A. Aquino added that Cadena aims to strengthen public trust and fight corruption through transparent records of government spending by way of embedding a blockchain in the management of the national budget.
However, Adolfo Jose A. Montesa of the People’s Budget Coalition (PBC) raised concerns over whether a blockchain system is appropriate for the management of government funds.
‘I feel like some of the aspects here might, de facto, lock us into blockchain. Everything that I’ve heard so far, it seems like blockchain is the only technology that meets these standards right now,’ Montesa said during the hearing.
He added that the blockchain technology might prefer market dynamics and certain vendors over end-users like budget watchdogs and citizens.
But Aquino said lawmakers want to keep ‘it technology neutral because we understand in a year or two years from now, it may not be the gold standard anymore.’
‘Currently, that seems to fit the bill in terms of what we want to see,’ he added.
A blockchain is a decentralized digital ledger that records transactions with a network of computers, where each transaction is saved as a block linked to the previous one, and is secured by cryptography.
‘I understand that a number of our watchdogs and a number of our citizens aren’t well-versed in blockchain. Naintindihan ko yan. But it’s not new,’ Aquino said.
According to Gail Concepcion Cruz-Macapagal of the Blockchain Council of the Philippines, this wouldn’t be the first time the technology has been used in the country. Macapagal said that up to 145 companies use blockchain technology.
She cited a local startup that created a digital-signature technology using blockchain. The startup’s technology, which was partly-funded by the Department of Science and Technology, was branded as ‘safe and legally binding.’
Macapagal noted that the startup’s digital-signature technology saves cost by cutting the signing cycle from up to two weeks to just 40 minutes.
Expanded coverage
CURRENTLY, documents covered by the bill include disbursement data like agency financial statements, fund release documents, audit reports, and more. Some experts, however, proposed expanding the coverage of the bill.
Macapagal is pushing for the bill to add donations given in the aftermath of natural disasters like typhoons.
‘I saw with my personal eyes na may mga donations na binawi after mag-picture taking, so I want to know kung saan ‘yun manggagaling, saan mapupunta, at sino ang tumatanggap,’ she said during the hearing.
Montesa also pushed for the inclusion of ‘ayuda’ lists, which then raised concerns regarding the data privacy of recipients.
But BCP’s Mark S. Gorriceta said that the reference of the Data Privacy Act could be misused to hide project beneficiaries, supplier names, or fund flows.
‘I’d like to reinforce the principle that public money is public data, and let’s limit exceptions strictly to national security,’ Gorriceta, who is also a lawyer, added.
His view was supported by Sen. Aquino, who said that because government is ‘spending hundreds of billions in our dole-out programs; mahalaga na makita nati na totoong tao talaga at totoong nangangailangan ang pinagbibigyan ng ayuda ng gobyerno.’
The proposed policy covers all public-private partnerships and foreign-assisted projects using public funds and extends to all national government agencies and government-owned and state-controlled corporations.
Additionally, the bill also encourages local government units to adopt the framework voluntarily.
De-centralization
AQUINO further explained that by using a decentralized system like blockchain, public financial records could be more resistant from tampering.
The solon added that to further emphasize decentralization, he also plans to hand control of the blockchain nodes not just to the government, but to private and media organizations, schools, and even budget watchdogs like the PBC.
Goricetta pushed the idea further by proposing data embassies, which are data nodes hosted off-shore but still under Philippine control that can be used for data backup and other critical services.
Edmundo ‘Toti’ G. Casiño of the Philippine Computer Society proposed establishing the data embassy in Iceland to manage the temperature and water resources needed for maintenance.
How much this would cost taxpayers, Casiño didn’t mention.