Distributed Ledger Technology and the UK’s Public Sector

The UK has long been viewed as accommodating toward cryptocurrency and blockchain technology, with a number of blockchain startups based therein as well as the creation of conducive regulatory conditions, such as the FCA’s FinTech sandbox. However, the country is also looking to distributed ledger technology to better its public services, with the most recent effort concentrated towards the justice system.

Britain’s Public Sector and Blockchain Technology

The UK has long lent its support to fostering growth in the blockchain industry through favourable legislation and funding research geared towards understanding and exploiting opportunities presented by digital currencies and distributed ledger technology.

However, the government has been slower to adopt blockchain technology into its public sector. Though the private sector has been growing consistently, it was only in early 2016 that the government published a report titled Distributed Ledger Technology: Beyond Blockchain, which explores how the technology could improve public services.

In the report, Sir Mark Walport, the government’s chief scientist, expressed confidence in the ability of the technology to improve service delivery:

“Algorithms that enable the creation of distributed ledgers are powerful, disruptive innovations that could transform the delivery of public and private services and enhance productivity through a wide range of applications.”

As evidenced in the successes achieved in the private sector through blockchain technology, both in Britain and globally, Walport explained that the technology’s inherent features make it applicable to different government offices.

“Distributed ledger technologies have the potential to help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally ensure the integrity of government records and services,” he stated.

The report also highlighted the blockchain’s inherent security features that make it ideal for storing and sharing the sensitive information associated with government offices such as an individual’s private data. “In contrast, distributed ledgers are inherently harder to attack because instead of a single database, there are multiple shared copies of the same database, so a cyber-attack would have to attack all the copies simultaneously to be successful. The technology is also resistant to unauthorised change or malicious tampering, in that the participants in the network will immediately spot a change to one part of the ledger. Added to this, the methods by which information is secured and updated mean that participants can share data and be confident that all copies of the ledger at any one time match each other.”

Referencing the Estonian government’s use of the blockchain, the report concluded that the use of the technology would result in better data security as well as quicker service delivery.

“Governments are starting to apply distributed ledger technologies to conduct their business. The Estonian government has been experimenting with distributed ledger technology for a number of years using a form of distributed ledger technology known as Keyless Signature Infrastructure (KSI), developed by an Estonian company, Guardtime. KSI allows citizens to verify the integrity of their records on government databases. It also appears to make it impossible for privileged insiders to perform illegal acts inside the government networks. This ability to assure citizens that their data are held securely and accurately has helped Estonia to launch digital services such as e-Business Register and e-Tax. These reduce the administrative burden on the state and the citizen.”

Following the report in April 2016, Matt Hancock, the Minister for Cabinet Office, reiterated the government’s belief in blockchain technology. Referencing the Internet, Hancock said: “As it grew in the late 90s and the 2000s, government lagged behind, because it wasn’t able to get to grips with the potential the web offered. We’ve fixed that now. But we cannot let it happen again by standing still. Since 2010, we’ve been working to make government more efficient and using technology as a vital tool for achieving that. The problem in 2010 was that the internet had, in the preceding years, become part of the fabric of the nation, but it was not part of the fabric of government.” This expressed a commitment by the government to leverage cutting-edge technology in all applicable use cases to better service delivery.

Real World Use Cases

The Police Foundation has revealed that the blockchain, used in conjunction with other digital technology, could be used to address many challenges facing the justice system. The judicial sector has been facing a number of challenges such as budget cuts and decreasing public confidence.

Since the blockchain automatically updates its entire ledger for everyone when changes are made, fewer people are required to keep records thus decreasing costs. The blockchain’s inherent immutability also makes it ideally suited to combat any fraud or corruption in the sector as well as ensuring data privacy.

The author of the report, Liz Crowhurst, said:

“At a time when justice agencies are under pressure to reduce costs, even as the complexity of cases increases, digitization offers significant opportunities to radically improve services while increasing cost-efficiency and transparency. This, in turn, will deliver improved outcomes for victims, witnesses, defendants and offenders.”

In addition to improving the justice system, the government is also exploring ways blockchain technology can be used in grant processing. “We’re exploring the use of a blockchain to manage the distribution of grants. 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,” said Matt Hancock.

The government has also referenced the blockchain as a way to track student debts and developmental aid, both of which are use cases detailed in the chief scientist’s report. “Think about the Student Loans Company tracking money all the way from Treasury to a student’s bank account. Or the Department for International Development tracking money all the way to the aid organisation spending the money in country,” explained Hancock.

With distributed ledger technology revolutionising major business sectors such as supply chain management, money transfer services, and provenance, it is quite possible that it can achieve great levels of success in the public service sector as long as there is adequate governmental support.