What should the government do with blockchain?

Today I’ll be asking the government what they have learnt from an ongoing trial in which benefits are paid to people via a system using blockchain (or distributed ledger) technology. A blockchain is an asset database that can be shared across several networks, and the trial – run by fintech company GovCoin and researchers at University College London – pays participants through an app on their smart phone which connects them to various services.

I passionately believe in the potential for technology to transform our lives for the better and think it essential that both government and society start from the point of a considered can, rather than a fearful can’t. I hope that learning more about the Govcoin trial will help us all understand, and be part of, the changes that are coming. I also believe the government needs to look wider than the Department for Work and Pensions for applications of this technology; across Whitehall and the whole public sector and also seriously consider the move from proof of concept to pilot to scale.

Advances in technology can absolutely be about empowering, enabling and creating closer more effective relationships. Distributed ledger techonology, if applied properly by seriously addressing issues of privacy, security, identity and trust, can offer incredible benefits to us all, including, but not limited to, reduced costs for government (and taxpayer) and better services for individuals.

As a member of the Lords Committee on Financial Exclusion our report, published this weekend, found that more than 1.7m people in the UK do not have a bank account, further estimates suggest at least 600,000 older people are financially excluded. A combination of  distributed ledger technology and developments such as the Payment Services Directive 2 (PSD2) could lead to greater financial inclusion of people currently on the fringes of the financial system. These are serious and tangible benefits.

Another significant area of potential is the transformation of the relationship between government agencies and citizens. Greater transparency and trust should lead to a more equal, connected and far closer relationship. But this will not happen as a matter of course and there needs to be a principles-based, appropriate framework that is underpinned by an understanding of the philosophical, psychological and legal issues at play.

The best way for the government to move ahead with the work is to adopt clear, honest communication with the public. There must be clarity about what the government is trying to do and how to get there – and crucially how it’s a joint endeavour. This means a further shift towards user-centric service design and co-production that sees people as active parties, rather than passive recipients. People must understand the value of their data and have ownership of it. The Digital Economy Bill, currently making its way through parliament, offers a start in dealing with some of these questions and considerations but lacks ambition and has provoked understandable concerns regarding privacy and data sharing powers.