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Councils could be at forefront of ‘Bitcoin government’

27/01/16

Distributed ledger technology could change the shape of public services, the Government’s chief scientific adviser reports

Local authorities should be in the forefront of creating secure but decentralised information systems based on the technology underpinning the Bitcoin digital currency, the government’s chief scientific adviser has said.BC_Logo_

In a landmark report proposing a future role for distributed ledger technology, Mark Walport has told ministers that systems based on cryptographic block chains ‘have the potential to help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally assure the integrity of government records and services’.

A distributed ledger is an database of assets - usually financial or legal data - shared across a group of users and secured by cryptography. All members of the network have an identical copy, with any updates communicated in seconds. It relies on a tamper-proof chain of encryption known as a block chain.

Because many parties have a copy of the ledger and many parties can verify every record, a shared ledger has a high degree of transparency and very difficult for an attacker to compromise. A regulator or an independent body such as the judiciary can tell with confidence that the contents of a database have not been modified in a fraudulent way. Almost any information that exists on paper today could exist on a shared ledger.

Sharing potential

In his report, Walport stresses the potential of distributed ledgers in sharing health records and allowing people without bank accounts to enrol securely in services such as Universal Credit.

However, the report also hints at the technology’s potential to enable more fundamental changes in public services. Here, a model is the “unpermissioned” ledger supporting Bitcoin, which has no single owner such as a central issuing bank.

Without the need for a third party to oversee security, the report ventures: “it is possible to envision a future where this technology creates a form of ‘glass government’ that is more accountable to the citizen.” This could be demonstrated at a local, or at least a city, level.

Recommendations

It goes on to recommend that the Government:

  • Provide leadership through the Government Digital Service as a user of distributed ledgers.
  • Invest in research to ensure that distributed ledgers are scalable, secure and provide proof of correctness.
  • Support the creation of distributed ledger demonstrators for local government. "A demonstrator at a city level could provide important opportunities for trialling and implementing distributed ledger technologies," it says.
  • Consider how to put in place a regulatory framework for distributed ledger technology. The Department for Culture, Media and Sport Digital Economy Unit could take ownership.
  • Work with academia and industry to create standards, along with identification and authentication protocols.
  • Build capability and skills by setting up a cross-government community of interest.

Despite the enthusiasm - endorsed by Cabinet Office Minister Matthew Hancock and Digital Economy Minister Ed Vaizey, the report sounds a note of caution.

Walport says: “It is important to stress that these technologies are very early in their development and there are unresolved problems to tackle before these applications can be released, including issues of privacy, performance and scalability.”

 

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