Blockchain and public spending transparency

Imagine that every invoice, budget commitment and payment of a city government were recorded on a public blockchain. No one could delete anything. Anyone could check. Would corruption end?

The idea is appealing and comes up often in debates about technology and government. This article shows what pilots and reports from public and multilateral institutions have found so far. The short answer: blockchain solves one part of the problem well, the integrity of the record, and almost nothing of the other part, the truthfulness of what is recorded.

What blockchain promises for public spending

A blockchain is a type of database shared among several participants, in which records are grouped into blocks chained together by cryptography. Altering an old block would require redoing all the following ones, which makes tampering very difficult and easy to detect. If you want the details of how it works, see how the Bitcoin blockchain works.

Brazil’s Federal Court of Accounts (TCU, the federal audit court) summarized these properties in a 2020 survey. According to the court’s news release on Ruling 1613/2020, the core characteristics are transparency, auditability, distributed integration of information, disintermediation, process automation, availability and integrity. The same text highlights the possibility of recording and tracking transactions “without the need for a trusted third party”.

For public spending, this translates into three promises:

• Permanent record. Once recorded, a payment does not disappear from the history.
• Open auditing. Anyone can check the sequence of records, not just the agency that produced them.
• Automatic rules. With smart contracts, programs that execute rules stored on the network itself, it would be possible, for example, to release a payment only after certain steps had been recorded. See what smart contracts are.

The most studied case: public procurement in Colombia

The best-documented experiment is the one run by the World Economic Forum with the Inter-American Development Bank (IDB) and Colombia’s Office of the Inspector General. The June 2020 report describes a proof of concept, that is, test software, for tenders under Colombia’s School Feeding Program (PAE). The report describes the program as an area historically plagued by procurement corruption.

The choice of public procurement was no accident. The report cites estimates from the OECD and the United Nations Office on Drugs and Crime according to which 10% to 30% of the value of a public contract is typically lost to corruption. This is an estimate cited by the report, not a measurement from the pilot.

The system was designed on Ethereum, a public, permissionless blockchain: anyone can validate transactions and read the data. The focus was the bidding and supplier evaluation phase. Bids, criteria, scores and public comments would be recorded permanently.

What the report found:

• Real benefits. Permanent, verifiable records, bids that are hard to censor and system code open to inspection.
• Low scalability. The report points to low transaction capacity on the public network, a problem for a widely used procurement system.
• Supplier anonymity. Every transaction pays a fee in cryptocurrency, and that fee can reveal who submitted the bid ahead of time. Pre-funded temporary accounts had to be created, which in turn could be drained by attackers.
• Spam and permanent defamation. Anonymous public comments can flood the system or falsely accuse an honest supplier, and that accusation stays recorded forever.
• Integration with the official system. Colombian law requires every purchase to go through the state system SECOP II. The vendor of that system asked to be paid to open the connection, and the report notes that this left the rollout stalled as of the publication date.

The report’s own conclusion is cautious. Blockchain “is not a panacea”, it does not reduce corruption that happens outside the electronic system, such as bribery and collusion among suppliers, and the case for adopting it is described as “equivocal”, that is, ambiguous. The text suggests that hybrid systems, combining a network with authorized participants and a public network to record cryptographic summaries of the documents, may be the best balance today.

To understand this choice between networks, see public versus private blockchain.

What the OECD has observed in governments

The OECD has followed the topic since 2018. When its Observatory of Public Sector Innovation launched a guide on the subject, it counted at least 202 government blockchain initiatives in 45 countries. The most common category was “strategy and research”, ahead of identity and personal records.

Two years later, the tone had changed. The 2020 working paper The uncertain promise of blockchain for government states that blockchain has had “minimal impact in the public sector, where few projects have moved beyond small pilots”. The authors do not rule out future uses, but recommend that public managers keep an eye on the technology without expecting the transformations promised at the height of the hype.

As of the date of this article, our newsroom did not find a World Bank report dedicated specifically to blockchain in public procurement or budgeting. For that reason, it is not cited here.

What Brazil already has: transparency without blockchain

Before thinking about blockchain, it is worth remembering that public spending transparency in Brazil is already a legal requirement.

Complementary Law 131/2009, known as the Transparency Law, amended the Fiscal Responsibility Law. In its 2009 wording, it requires the release “in real time” of detailed information on budget and financial execution, through publicly accessible electronic means. For expenditures, this includes the case number, the good or service, who received the payment and, where applicable, the tender held. The law applies to the federal government, states, the Federal District and municipalities, and any citizen can report noncompliance to the Court of Accounts and the Public Prosecutor’s Office.

At the federal level, the main channel is the Transparency Portal, maintained by the Office of the Comptroller General (CGU). In a presentation on the portal’s 20th anniversary, the CGU reports 227 million visits between 2004 and 2024 and 364 million data requests through its application programming interface (API) in 2024, through November. The same presentation shows that the recent overhaul of the section on parliamentary budget amendments responded to a Supreme Federal Court (STF) decision that found the information “scattered and disorganized”.

This detail helps reveal the real problem. The difficulty pointed out by the STF was not that someone deleted records. It was that data from different sources did not connect and was hard to find and cross-reference. Blockchain does not solve that by itself: integration, standardization and plain language are data management work.

What the TCU and BNDES are testing

Brazil is also experimenting with the technology, with stated caution.

In 2020, the TCU published a guide for public managers with a decision tree to assess whether a project really needs blockchain and an inventory of risks. The court warns that “the excitement generated by a new technology can also lead to the waste of public money” and cites the risk of “technological fads”. The 2020 ruling required the government to carry out feasibility studies before adopting the technology.

In 2022, the TCU and BNDES (Brazil’s national development bank) launched the Brazil Blockchain Network (RBB), a public, nonprofit network in which only member institutions operate the computers that validate transactions. In other words, it is a network with authorized participants, not an open network like Bitcoin’s. To understand the differences between validation models, see how consensus mechanisms work.

At BlockchainGov in November 2025, BNDES representatives said the RBB had been operating “stably” for a year, with 16 institutions. The case presented, called “Dinheiro Carimbado” (“earmarked money”), ran on the lab network, not in production. The court’s news release does not report public spending applications in production on the RBB, and our newsroom did not find that information in any other official source.

The limits that still stand

Wrong data recorded forever

This is the most important limit. The NISTIR 8202 document, from the U.S. standards institute, explains that blockchain works very well with data inside the system itself but has no way of knowing whether the information entered reflects the real world. People can record false information, intentionally or not. The technical name is the oracle problem: an oracle is any external source that feeds data into the network.

In public spending, this means: if the invoice is a sham, if the public works project does not exist or if the price is inflated, the blockchain will store the fraud with the same integrity it would give an honest expense. It proves the record was not tampered with afterward. It does not prove the record was true. The article Blockchain against record fraud explores this distinction in depth.

Privacy

Public spending involves personal data: civil servants, beneficiaries of social programs, individual suppliers. A 2019 study by the European Parliamentary Research Service describes the tension: data protection laws assume that someone is accountable for the data and that it can be corrected or deleted; blockchains are designed precisely to make unilateral alteration difficult. In our newsroom’s reading, the same tension exists with Brazil’s General Data Protection Law (LGPD), although the study deals with the European rules.

Cost and governance

The Colombian report showed costs that do not appear in the sales pitch: transaction fees in cryptocurrency, supplier training, protection against attacks and integration with legacy systems. On networks with authorized participants, another question arises: who chooses the validators and what stops them from colluding? The report lists these governance questions as central.

Corruption that happens outside the system

Bribery, price-fixing among competitors and tailoring tender notices happen in conversations, not in records. The World Economic Forum report says explicitly that the technology does not reach these behaviors.

What the channel discussed on the topic

The video on this page, “E se TODO gasto público estivesse na Blockchain?”, is a clip from Token & Tech, in Portuguese. According to its description, the conversation covers how blockchain principles such as immutable records, verification and transparency could reduce fraud and increase trust in public and private systems, and the potential of recording public expenses, invoices, payments and revenue on a network anyone can audit. It is an opinion conversation that proposes a scenario. This article complements the discussion with what pilots and reports found in practice.

Another clip from the channel, also in Portuguese, “Blockchain acabaria com a corrupção?”, starts from the same question, imagining a city government with every invoice, payment, contract and transaction recorded for auditing, and invites viewers to draw their own conclusions.

Key takeaways

• Blockchain protects the integrity of the record: once recorded, the data does not change without leaving a trace. That has real value for auditing.
• It does not verify whether the data is true. A sham invoice recorded on a blockchain is still a sham invoice.
• The documented government pilots, such as Colombia’s, showed integrity gains but also problems of scale, privacy, cost and integration, and few made it past the testing phase.
• In Brazil, the real-time transparency requirement has existed since 2009. In our newsroom’s assessment, today’s bottlenecks lie more in the quality, integration and usability of the data than in the possibility of someone deleting it.
• If an agency proposes blockchain, the useful questions are the TCU’s: does the problem really require this technology? Who validates? Who ensures the quality of the data at entry?