The blockchain has many applications for the public sector that can improve the quality of government services, safeguard property rights, prevent fraud, and cut red tape while improving transparency. However, what is not often discussed, is that malicious governments could also use blockchain technology to oppress its citizens.

This article highlights how governments could potentially misuse the blockchain to reduce the individual liberties of its citizens and suppress those with opposing views.

When a Sovereign Digital Currency Means Tracking All Financial Transactions

Blockchain-based decentralised digital currencies have the potential to enable economic, political and social freedom. Conversely, the emergence of sovereign centralized “cryptocurrencies” – issued by central banks – contradicts everything that bitcoin and the blockchain stand for and hoped to fix.

The main goal of cryptocurrencies was to decentralize power, not to boost existing authorities. With centralized state-run blockchains, power is heavily concentrated as governments maintain control over the entire network.

Government-controlled cryptocurrencies could impose dangerous limitations on citizen’s civil freedoms, including pervasive anti-privacy measures.

By being able to track every single financial transaction, citizens would lose their financial sovereignty and the personal freedom that comes with spending one’s money on whatever a citizen wants.

Having every single transaction tracked would inevitably lead to mass financial data collection to determine behavioural and spending patterns of each individual in the country, which could be used against them, should they become at odds with the government or someone with close government ties.

When Blockchain-based Digital Identities Are Used to Track Digital Footprints

One of the most impactful developments in the blockchain industry has been the advancement of secure digital identities. Identification is needed for everything from voting to health care. For the over one billion people worldwide who do not have a legal form of identity, digital identities can provide a much-needed solution.

Digital identities can be stored on a blockchain, which can then be used to handle information such as a patient’s medical records, which can be easily and safely accessed by a health care provider when they are seeking care.

However, if a malicious government has full control of the digital ID system and all its citizens’ data, it could use this to track each citizen’s digital footprints. For example, if the social media accounts, financial services, mobile payment firms accounts of citizens are bound to their digital identity, the government could very easily track individuals’ movements in real-time.

This already happens to a degree in countries like the U.S and U.K. as we learned from Edward Snowden’s NSA leaks. Every day, intelligence agencies collect hundreds of millions of emails, texts, and phone calls and can collect and sift through billions more. The surveillance technology for tracking and identifying people is booming as is governments’ appetite for it. Add in the current digital tracking systems with facial recognition software and digital identities, and this endangers citizen’s right to privacy.

Blockchain-based digital identity systems thus need to be implemented with care and the oversight of the network should not be limited to the government as the potential for misuse is huge.

When Digital Identities Are Used to Create a Social Credit Scoring System

Credit scores dictate a person’s involvement in the financial system, including loan or mortgage approvals, interest rates, and insurance rates. It can impact someone’s ability to rent an apartment or secure a credit card, for example.

China’s latest surveillance efforts include a social credit system that aims to rate each citizen’s social value according to their actions.

Drawing data from government agencies, court verdicts, and even mobile payment firms, the scheme assigns each person an individual score. Failure to repay debts or smoked on a train, you could land on a blacklist posted on a public website. The plan is to rate citizens by their financial and legal histories, their online behaviour, education records, and employment activities.

If such an oppressive social credit scoring system is implemented and interlinked with blockchain technology, the data stored on the system would become immutable and easily shareable with permissioned third parties, such as corporations, who could, in turn, limit low-ranking individuals’ ability to live freely even further.

Such a system could be used by governments to oppress its citizens especially those seen as having a lesser value or those that threaten its power. The blockchain could potentially amplify the oppressive nature of such a social credit scoring system.

Keep Your Leaders in Check

While the blockchain was created to decentralize power, the unfortunate reality is that as the technology has evolved, there are now ways it could be used to make oppressive governments more powerful.

Hence, it is important to stay mindful of how the blockchain can be misused when you hear of your government implementing a new blockchain initiative and to speak up if the initiative could go turn into a tool of oppression.