Chuy Cepeda
- Nov 2, 2022
- 4 min read

What is the role of WEB 3 in the digital transformation of the State?

By Lucas Jolías, Ana Castro y Jesús Cepeda

First stage of the Web

In the context of the modernization of the State and Public Administration, the first stage of the web was characterized by the initial efforts of Digital Government. The web was seen as another means of communication, where governments had a presence for communication purposes rather than offering services. At that time, official government portals were managed by government communication and press departments, with very few cases where specific technology or innovation teams existed. IT teams were seen as support for the usual operations of a government (which is why they commonly depended on the Treasury or Economy departments). In this "pre-digital" world, governments operated inorganically, with little communication between departments and with stagnant processes.

Emergence of Web 2: advances and limitations

Web 2 brought about the growth of online services in the State, as well as the need to use new technologies as a means to generate a new relationship with citizens (Open Government). This led to the boom of public innovation secretariats or departments, state modernization, Open Government, or similar entities, forming a central part of many governments in planning and implementing public policies.

The mass use of the Internet forced governments to offer a greater number of online services, and government portals ceased to be seen as a communication channel, becoming instead instances of interaction and transaction with citizens. However, the Web 2 model of public administration has been a state-centric model, where the emphasis has been on solving the bureaucratic problems of the State, whose main challenge lies in interoperability, but without substantial citizen intervention. At best, we have fragmented digital governments today, with multiple systems that do not communicate with each other, or duplicate and incongruent databases. This translates into citizens having dozens of digital profiles, logins, or users, one for each public organization they interact with. Each organization has been concerned with imposing its own digitization standards, rules, or policies, and citizens have had to adapt to the rules imposed by each organization. In this Web 2 model of Digital Government, the citizen is a passive beneficiary of government digitization strategies and must adapt to the requirements, standards, and norms imposed by the public institution.

As in the private sector, the advent of the Web in the State generated positive changes as it allowed thousands of citizens to access online services, reduce bureaucratic burdens and the time spent on procedures, and improve their relationship with their public administration. These centralized models have worked very well in small and unitary countries, where the rules and regulations imposed by a central body are enforced on other organizations or jurisdictions. The most successful cases are Estonia worldwide and Uruguay in Latin America. However, this model of public data governance has not had the same impacts in large and federal countries such as Mexico, Argentina, or Brazil. There, the logic of interoperability is completely different, as the verticality of decisions does not have the same force as in unitary countries, and problems of interoperability between organizations, centralization of public information, and the need to put citizens at the center have generated the need for a new model of public data governance, a more decentralized one.

Web 3: the opportunity for digital transformation of the State

We are witnessing a new era of the internet, where data would be hosted on a network of computers using blockchain instead of centralized and corporate servers. We are still in a very early stage, in the future, the internet will probably have the same appearance but the activities we do online will be represented by a cryptographic wallet and websites hosted through decentralized applications (dApps). The idea is to build on the blockchain infrastructure a new offering of financial, cultural, social, and even governmental services. Web 3 will be a huge opportunity to solve these historical interoperability problems in public administration, both within a country and at a regional level. The clearest example was seen during the COVID-19 pandemic and the need for recognition of vaccination certificates among various countries and regions. The fact that digital identities are managed by States (centralized) and with credentials issued with similar characteristics, means that each country must make agreements with its peers to recognize protocols, standards, or databases, so that a person's credential can be recognized and verified in another country. But what if we had a decentralized infrastructure where all States could corroborate the information and credentials issued by other peers in a standardized way? What if States were validators of an ID but not issuers of them, and the identity was owned by the person through a decentralized infrastructure?

This decentralized identity is one of the great promises of Web 3, simplifying the relationship between citizens and the various organizations they interact with. To achieve this, it is necessary to advance the idea of single sign-on, which allows a single authentication method in different agencies, instead of individual logins for each site. Unlike the single sign-on proposed by companies like Facebook or Google, this single sign-on will not require you to give up control of your personal data. By being registered on the blockchain, all transactions on the blockchain are public, so technically, everyone can see the assets and data assigned to a specific wallet. The fact that the identity is owned by the citizen and not the issuing organization (State) will allow for the construction of a complementary model of public data governance, putting the citizen at the center of government operations and services.

It is now the time to "connect your wallet," which has spread from the financial world to other areas such as art, real estate, and also government. The crypto world brought at least one positive externality: the possibility of extending a public key / private key scheme to a large number of people. While States have promoted digital signatures for decades with fairly modest results worldwide, the advent of cryptocurrencies allowed the possibility of rapidly expanding the ability of millions of people to have their own public key. This opens the possibility of having unique identifiers globally, breaking down the territorial barriers of digital identities granted by States, thus being a promise not only of interoperability but also of sovereignty.