Distributed Ledger Technology: beyond block chain (UK government report)

Wednesday 17 February 2016

The UK government has published a far-reaching report about the nature and potential of DLT - blockchain tech - and how it might be used in a wide range of applications. Here’s a summary of their recommendations.

The progress of mankind is marked by the rise of new technologies and the human ingenuity they unlock.

In distributed ledger technology, we may be witnessing one of those potential explosions of creative potential that catalyse exceptional levels of innovation. The technology could prove to have the capacity to deliver a new kind of trust to a wide range of services. As we have seen open data revolutionise the citizen’s relationship with the state, so may the visibility in these technologies reform our financial markets, supply chains, consumer and business-to-business services, and publicly-held registers.

This is not the kind of sentiment we have learned to expect from governments, which have generally been slow to engage with bitcoin specifically and the shared ledger technology that underpins it more generally. I’ve been pleasantly surprised with the report and its recommendations, which display an openness to innovation and exploring new technologies and new ways of delivering services. Whilst I'm frankly sceptical about the benefits of the financial sector using (permissioned) blockchains - or, at least, of the likelihood of those benefits being experienced by end users - the use of DLT in the provision of public services is extremely promising.

The report is optimistic about the far-reaching applications of DLT, or blockchain-based solutions

The government has published eight recommendations in its report, as follows.

  1. The Government Data Service (GDS) should lead the way in government itself being a user of DLT.
  2. The UK should invest in the research required to ensure that distributed ledgers are fit for purpose, including in terms of speed, scalability and security.
  3. At the city level, local government could provide a testing ground for DLT application.
  4. Government needs to put in place a suitable regulatory framework, which evolves in parallel with the emerging application of these technologies.
  5. Government should work with academia and industry to specify standards for the integrity, security and privacy of distributed ledgers and their contents.
  6. In conjunction with this, we need effective and usable identification and authentication protocols for both individuals and organisations - alongside the development of international standards.
  7. Trials should be established to use the technology for real-life applications within the public sector.
  8. Build capacity and skills within government, convening a ‘community of interest’ made up of a broad cross-section of competencies.

The report acknowledges the disruptive potential of blockchain technology, including some of the challenges posed by bitcoin and other forms of virtual currency. However, it is in general highly positive, and it’s clear that the UK is showing initiative in positioning itself at the forefront of a new era.

We are still at the early stages of an extraordinary post-industrial revolution driven by information technology. It is a revolution is bringing important new benefits and risks. It is already clear that, within this revolution, the advent of distributed ledger technologies is starting to disrupt many of the existing ways of doing business.

The earliest accounting records of humans date back to Babylon, Assyria and Sumer, over 5000 years ago. Many clay tablets have survived as a record of the early technological revolutions in the development of writing, counting and money. It is less clear whether digital records will have the same longevity as clay tablets. But, leaving that aside, it is clear that there is a huge opportunity for the UK to develop and use distributed ledger technology for the benefit of citizens and the economy.


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