How bitcoin tech could spark a revolution in government services

The block chain technology which underpins the cryptocurrency could be put to use by governments.

Bitcoin technology has many uses.

Image: CNET/CBS Interactive

The bitcoin digital currency is underpinned by a distributed ledger based on block chain technology: in this case the distributed bitcoin ledger ensures that the bitcoins are authentic. But the basic block chain approach can also be modified to incorporate rules, smart contracts, and digital signatures, which could make it a handy tool for government services.

Those who have been attracted to bitcoin largely because it is perceived to be free of government control may be surprised to see the underlying technology enthusiastically promoted by government, but a new report 'Distributed Ledger Technology: Beyond block chain' from the UK government's chief scientific adviser Sir Mark Walport said that distributed ledger technologies have the potential to help governments.

Areas of opportunity include help "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".

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It said in the NHS, block chain could improve healthcare by improving and authenticating the delivery of services and by sharing records securely, while it could also give patients a way to control access to personal records and to know who has accessed them.

Block chain technologies could help keep personal data private. While existing databases typically rely on large legacy IT systems, these highly-centralised systems present a high-cost single point of failure, which may be vulnerable to cyberattack and where data is often out of sync, out of date, or simply inaccurate.

In contrast, the report said: "Distributed ledgers are inherently harder to attack because instead of a single database, there are multiple shared copies of the same database, so a cyberattack 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.

The report also suggested other uses for block chain technology, such as securing critical infrastructure by applying it to the operating system and firmware to ensure they hadn't been tampered with. A distributed ledger could also monitor the state and integrity of the software for illicit changes, the report suggests.

More controversially, the technology could be used to control how those on benefits spend their money, the report suggests.

"Through the innovative application of such technologies, it would be possible -- with agreement from the benefit claimant in question -- to set rules at both the recipient and merchant ends of welfare transactions. This may present the opportunity for ministers to consider options for achieving better policy outcomes from the distribution of welfare support by agreeing or setting rules around the use of benefits."

The report said the UK government should start trials of distributed ledger technology and invest in the research required to ensure distributed ledgers are scalable, secure, and able to prove their contents are correct.

bitcoin may have created block chain technology but that connection is also a challenge for adoption by government, says the report: "bitcoin creates suspicion amongst citizens and government policymakers because of its association with criminal transactions and 'dark web' trading sites," it said.

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