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U.K. Considering Government Applications of Blockchain Technology

Blockchain - U.K. Considering Government Applications of Blockchain Technology

U.K. Minister for the Cabinet Office Matt Hancock is persuaded that blockchain technology could transform the way government works. In a speech given at an event organized by Digital Catapult and Imperial College’s Centre for Cryptocurrency Research and Engineering (IC3RE), Hancock outlined some of the government’s current plans to leverage blockchain technology for government applications.

The “policy hack day” for government representatives was organized by Digital Catapult and the IC3RE on April 26 in order to help government officials identify possible applications of blockchain technology in public service delivery. According to an Imperial College press release, Hancock “reinforced the importance of digital technologies not just for digitizing existing processes but also for transforming the manner in which government services are delivered for the benefit of citizens.”

“Blockchains ‒ distributed ledgers, shared ledgers ‒ are digital tools for building trust in data,” explained Hancock. “Rather than a single central authority demanding trust and declaring: ‘I say this data is correct,’ you have the distributed consensus of everyone in the chain, saying in unison: ‘we agree that this data is correct.’”

Hancock added that data held in the blockchain comes with its own history, and that history is a fundamental part of proving its integrity. “This fact is enormously powerful,” he said. While cautioning against considering the emerging blockchain technology as a generally applicable solution for all problems, Hancock emphasized that the technology offers efficient solutions for important use cases.

To place distributed ledger technology in a historical context, Hancock invited the audience to consider parallels with older technologies ‒ typewriters and carbon copies. In fact, carbon copies revolutionized government work by providing more physical security and more protection against tampering, since multiple copies of a document could be held in different places. “The carbon copy gave you simple, instant, distributed, consensual data,” said Hancock.

Hancock recalled that Bitcoin ‒ the first operational application of distributed ledger technology ‒ proved that distributed ledgers can be used to track currency as it is passed from one entity to another. But the establishment of distributed consensus, permitted by blockchain technology, could have countless applications beyond payments. The U.K. government is committed to exploring nonpayment applications of distributed ledgers, with the goal of streamlining public service work.

“We’re exploring the use of a blockchain to manage the distribution of grants,” said Hancock. “Monitoring and controlling the use of grants is incredibly complex. A blockchain, accessible to all the parties involved, might be a better way of solving that problem.”

Similar applications could permit making all sorts of government expenditures more efficient and transparent, from student loans to humanitarian aid. “Think about the Student Loans Company tracking money all the way from Treasury to a student’s bank account,” said Hancock. “Or the Department for International Development tracking money all the way to the aid organization spending the money in country.”

The Guardiannotes that the U.K. has had difficulties with government information systems. Record-keeping problems have emerged in the passport agency, the tax credit system and the National Health Service, which was forced in 2011 to announce the abandonment of a multibillion pound scheme to computerize every patient record. These are the kinds of problems for which the government is beginning to envisage blockchain-based solutions.

Also at the policy hack day, the U.K. government’s Chief Technology Officer Liam Maxwell summarized other possible government applications for distributed ledger technologies, from identity management to automating contracts in local authorities, tracking provenance in food supply chains and even a blockchain-based Driver and Vehicle Licensing Agency (DVLA).

Hancock’s considerations are but the last of many endorsements of blockchain technology by high-profile representatives of the U.K. government. In January, Bitcoin Magazinereported that a new report produced by the U.K. Government Office for Science, edited by Sir Mark Walport, chief scientific adviser, explored how distributed ledger technology can revolutionize service and recommended specific government actions.

In 2015, the U.K. government launched a new research initiative to bring together the Research Councils, Alan Turing Institute and Digital Catapult with industry in order to address the research opportunities and challenges for digital currency technology, and increased research funding in this area.