In a recent research report released by the Bank of America (BAC), the bank named several US government agencies that have successfully adopted blockchain technology for efficiency and lower costs.
According to the report, the California Department of Motor Vehicles (DMV) tokenization project stands as an example of how companies and state and federal agencies in the US are using blockchain-based solutions to drive efficiencies and lower costs.
Notably, the Californian department intends to revolutionize its vehicle title and transfer management system by tokenizing the more than 14 million automobiles registered in the state. Additionally, it is going to issue vehicle titles as non-fungible tokens (NFTs), digital assets that represent ownership of virtual or physical items that can be sold or traded.
The ownership of these NFTs would be recorded on a private version of the Tezos blockchain. Tezos is an open-source blockchain that can execute peer-to-peer transactions and serve as a platform for deploying smart contracts. NFTs are digital assets that represent ownership of virtual or physical items that can be sold or traded.
Analysts Alkesh Shah and Andrew Moss assessed the tokenization of vehicle titles and the significance it holds. They wrote:
Tokenization of vehicle titles could also enable fractionalized vehicle ownership, allow holders to pledge vehicle-title NFTs as collateral in the real world or within decentralized finance (DeFi) protocols, and increase liquidity on vehicle marketplaces.
In the report, Bank of America writes that the Californian blockchain project might be helpful in the process of issuing and transferring vehicle titles, reducing the required timespan from weeks to minutes. Additionally, it would allow for more secure ownership transfer through smart-contract-enabled escrow accounts, decrease fraudulent activity and encourage automation to lower costs.
The note added that the project is seen as a first step with the potential for additional functionality. These additions might include the ability to record repairs within the NFT, to use stablecoins as the payment option for “atomic title transfers” and facilitate vehicle-licensing agencies from other states to join the platform so they can benefit from the same efficiencies as well as producing incremental efficiencies related to cross-state vehicle sales.
Reportedly, the bank in its report explicitly states that other federal and state agencies are also looking at blockchain-based solutions. Amongst these agencies, some names are the Federal Emergency Management Agency (FEMA), the Department of Homeland Security, and the California Department of Food and Agriculture.
As the developments in blockchain technology are becoming more eminent, government entities from across the globe are planning to lead the way for its adoption. In February, China announced the launching of the National Blockchain Technology Innovation Center in Beijing.
As per local media reports, the center will create a research network with local universities, think tanks and blockchain businesses to explore core blockchain technologies. The outcomes of this research will be used to further the digitalization of China and expand its blockchain industry.
In January, Turkey or Türkiye announced that it intends to adopt blockchain technology for logins to its online public services. Turkish individuals will be verified while logging into e-Devlet, the country’s digital government portal where they may access a variety of public services, using a blockchain-based digital identity.