The federal government of the United Kingdom and the Government Chief Scientist Mark Walport will be investing in the blockchain technology to analyze the potential of its application in the conventional finance sector.
The blockchain technology, also known as the distributed ledger technology enables anyone on the network to securely settle transactions and the transfer of assets with substantially low costs. Over the past few months however, an increasing number of firms and startups have begun to explore the potential of the blockchain technology as a distributed data sharing and storage platform.
Due to its peer to peer nature, data stored or embedded in the blockchain is irrefutable and unalterable. Thus, the UK government will actively look into the potential of the blockchain technology in reducing financial fraud, error and the cost of paper intensive processes. The federal government hinted the implementation of the blockchain in developing an incontrovertible platform for recording ownership of goods and intellectual property.
“Distributed ledger technology has the potential to transform the delivery of public and private services,” stated Walport. “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. Any new technology creates challenges, but with the right mix of leadership, collaboration and sound governance, distributed ledgers could yield significant benefits for the UK.”
Before creating an established blockchain-based platform for the entire population and community to utilize, the UK government plans to develop an application which will be used within government and public agencies. Walport and his team of researchers will collaborate to integrate the distributed ledger technology in governance, government privacy and security.
However, the UK government is defying the general concept of a distributed ledger system by trying to establish a set of “rules” which will be implemented in their blockchain network. The government emphasizes that the concept of mathematically protected blockchain network is a “misconception,” and that the involvement of the government in the lawmaking of digital currencies and blockchain networks is crucial.
“Unpermissioned distributed ledger systems are sometimes thought to exist independently of human rule-making, and governed only by mathematical algorithms. This is a misconception,” reads the report of the UK government.
The report further explained that an update in a distributed ledger system like Bitcoin is “controlled” by its core developers and therefore, it is important for the government to regulate this process. Excerpt:
“They are governed by ad hoc processes, usually centring on a handful of software developers who produce the system’s software code. If these systems are to grow in value and influence, they will most likely need to develop more robust internal governance processes. The lack of a central legal entity also makes it more challenging for public regulators to regulate distributed ledger systems via legal code. Governments should therefore also consider ways of regulating distributed ledger systems by influencing the technical code that defines their rules.”
Despite their positive attempt to understand and invest in the blockchain technology, the UK government fails to embrace the decentralized and transparent nature of the Bitcoin blockchain technology.