I've written this week about how we need to start with key problems citizens are facing that government can help with, and THEN see if blockchain tech is the right tool. There seems to be a growing consensus one of those problems is establishing and maintaining your identity.
Governments typically provide various proofs of identification (drivers' licenses being the most common) so that people and institutions like retailers, banks, health service providers, employers hiring new workers, and fellow citizens can interact with each other confidently in terms of who we all are and who we say we are.
The current tools for identification are far from perfect, and they are scattered among many different agencies (licenses, benefits cards, health insurance cards, et al). Blockchain COULD (the jury is still out) provide a centralized repository where various pieces of your identity could be validated and stored and available for use as needed in the right transaction. This article gives a good summary of where we are, at least in the U.S., in approaching this problem.
Blockchain’s distributed nature presents a more complex attack surface for bad actors, disseminating risk and limiting the likelihood of a single hack taking down an entire set of records. It also makes auditing records much more transparent, with every node of the system maintaining a copy of the ledger.