By Matthew Broersma
The government's chief scientist has urged the United Kingdom to take an active role in developing distributed ledgers—such as the "block chain" technology that drives the digital currency Bitcoin—for use in the public and private sectors.
Bitcoin's block chain is the best-known implementation of a distributed ledger, forming a permanent record of all transactions carried out in the currency. New transactions are immediately replicated on all copies of the ledger, which are cryptographically protected from unauthorized modifications.
Government chief scientist Sir Mark Walport said the approach could be used to help deliver services, both in the government and the private sector, superseding centralized systems that may be more vulnerable to attacks or failures.
"Distributed ledger technology has the potential to transform the delivery of public and private services," Walport said in a statement. "It has the potential to redefine the relationship between government and the citizen in terms of data sharing, transparency and trust and make a leading contribution to the government's digital transformation plan."
The technology can help governments "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" and could aid the NHS in delivering services and sharing records securely, according to a new report prepared by Walport's office, "Distributed ledger technology: beyond block chain."
It can help individuals to control access to personal records and know who has accessed them, it finds.
The importance of the financial and services sectors to the British economy mean it is "essential" that the United Kingdom position itself at the leading edge of digital ledger technological development, the report argues.
It recommends a number of actions, including ministerial leadership on governance, privacy, security and standards issues, the establishment of trials, the creation of technical test demonstrators for local government, and investment in research on scalability and security issues.
A "close partnership between the public and private sector" is necessary for the development of the technology and the "huge opportunity" it represents, the report argues.
It also recognizes, however, that there are a "series of 'grand challenges'" that remain to be addressed around the technology.
For instance, if any party is able to introduce a seemingly legitimate change into the system, the change will be modified across all copies of the ledger, the report notes.
"Ensuring the security of distributed ledgers is an important task and part of the general challenge of ensuring the security of the digital infrastructure on which modern societies now depend," it states.
One of the leading developers of Bitcoin last week emphasized such challenges, declared the currency a "failure" and argued "the fundamentals are broken".
Mike Hearn, who helped develop the technology over the past five years, said Bitcoin's block chain distributed ledger system had proven unable to cope with the demands placed on it by a large-scale financial network.
The report notes that some governments, such as Estonia and Honduras, are already exploring implementing distributed ledgers for service delivery.
The approach has been adopted by prominent companies, including Microsoft.