Local government 'should trial Bitcoin technology'

Written by Suzannah Brecknell on 19 January 2016 in News

Government should trial the use of technology that underpins the cryptocurrency Bitcoin to make welfare payments and protect cyber-infrastructure, according to a report published today by Sir Mark Walport, chief scientific adviser to the government.

The report explores how government can use and support development of distributed ledger technologies such as blockchain, the database which records Bitcoin transactions.

A distributed ledger is an asset database that can be shared across several networks, sites or institutions. All participants have their own copy of the ledger and changes made in one site are reflected across all copies.

This technology has “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,” says the report.

“Ultimately the best way to develop a technology is to use it in practice,” says the report, and it recommends that government establishes trials of distributed ledgers “to assess the technology’s usability in the public sector”.

These trials should be co-ordinated, reported and assessed “in a similar fashion” to clinical trials, “in order to ensure uniformity and maximise the rigour of the process”.

The report highlights three areas in particular – protecting national infrastructure, distributing money from The Department for Work and Pensions, and reducing market friction for small and medium enterprises. The report also recommends strong support for the “small number of officials who are already thinking deeply about the potential uses for distributed ledger technology by government”.

The report also suggests central government could support the creation of distributed ledger pilots in local government by incorporating a demonstrator project into one of the deals which see money and power passed directly to city regions. “A demonstrator and a city level could provide important opportunities for trialling and implementing distributed ledger technologies,” said the report.

The Government Digital Service should lead work to explore how distributed ledgers can be used by government, while the culture department’s Digital Economy Unit should lead work on how government can enable greater use of this technology in other sectors.

To build capability across government, the report calls for the creation of a “cross-government community of interest, bringing together the analytical and policy communities”.

It also suggests the government should use its purchasing power to encourage development of new technologies: “There are important opportunities for government to stimulate the business sector by acting as a smart customer in procuring distributed ledger applications.”

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