Navigating Blockchain in Governance: Transparency and Security Misconceptions

Understanding the “101% Hack-Free” Myth

Blockchain technology has become synonymous with safety and security. However, the assertion that blockchain systems are “101% hack-free” is alarming for cybersecurity professionals. The reality is that no system can claim absolute invulnerability. Over the past several years, prominent failures in the blockchain ecosystem have highlighted this vulnerability.

Take, for example, the staggering loss of approximately $1.5 billion from the crypto exchange Bybit in February 2025 due to a wallet hack. This was not an isolated incident; in March 2022, nearly $615 million was stolen from the Ronin bridge associated with Axie Infinity. Other exploits, like the $610 million theft from the Poly Network in August 2021, underscore a consistent theme: as long as there are human interfaces, software, and complex interactions, there exists an attack surface.

Cybersecurity is fundamentally about risk management. It focuses on minimizing exposure, rapidly detecting breaches, and designing for recovery rather than offering guarantees of safety. A government agency’s casual use of “hack-free” claims does little to inspire confidence among experts, casting doubt on the seriousness with which they manage risk.

The Misapplication of Blockchain for Transparency

The conversation around using blockchain for government budgets often misconstrues the technology’s potential. When officials suggest that budget data will be “on blockchain,” they frequently mean merely archiving PDF documents or placing document hashes on a blockchain. While technically feasible, this approach falls vastly short of true transparency.

Blockchain’s real strength lies not in document storage but in event recording. This includes documenting approvals, fund movements, and the authorities behind those decisions. Simply storing a document hash on the blockchain only confirms that a file existed at a certain point in time; it does nothing to clarify decision-making processes or the checks involved.

Understanding this nuance is crucial in the context of governance. Misplacing trust in mere document hashes overlooks the deeper issues of accountability present in government processes. It’s not just the absence of wrongdoing within files that should concern us, but the entire decision-making trail leading up to the expenditure of public funds.

Concerns Over Public Layer-2 Networks and Sovereignty

Another layer of complexity arises with the choice of using public Layer-2 networks, such as Polygon, for storing document hashes. While it may initially seem practical, this approach raises fundamental questions about data sovereignty.

Public Layer-2 networks operate within governance frameworks shaped by their own validators and market economies—factors that fall outside of Philippine control. Every transaction on these networks contributes to their legitimacy and market positioning, which implicates governmental processes within a broader ecosystem that may not align with national interests.

For sovereign entities, relying on an external system for core functions brings significant risks. If foundational public infrastructure depends on networks governed elsewhere, it compromises national sovereignty and raises questions about long-term viability and control over future decision-making.

Grant Incentives and Risks of External Funding

Recent discussions regarding a substantial grant, potentially around $10 million, tied to initial document minting efforts, merit serious scrutiny. In technology ecosystems, such large incentives are seldom neutral; they often serve as strategic levers to ensure platform adoption or validate relationships that could shape future tech standards.

This situation underscores the need for transparency related to grant terms and conditions. Governments must critically assess the implications of accepting external funding—not just regarding operational costs but also regarding potential influences on future procurement decisions or the technology’s long-term direction.

Public trust hinges on clear communication of incentives and obligations tied to any public infrastructure built using external financial support.

Choosing Competence Over Buzzwords

It’s vital to separate the potential of blockchain from the mere buzzwords that often accompany its promotion. When implemented thoughtfully, blockchain can enhance accountability and traceability within public finance. However, without a clear grasp of how to leverage these technologies responsibly, we risk degrading their effectiveness into mere slogans.

For genuine transparency, the focus should remain on documenting decisions and tracing the flow of funds. When discussing security, it’s essential to confront risks candidly rather than shy away from uncomfortable truths. Moreover, to ensure national resilience, it’s critical to evaluate technology choices through the lens of sovereignty.

As we navigate this evolving landscape, the Filipino people deserve not just catchy phrases but robust, well-structured systems designed with prudence and transparency at their core.