UK sees use of blockchain as nonviable for welfare and benefits system
A trial proof of concept has indicated that use of blockchain was not viable due to limited take up potential and the expenses it would incur.
The UK parliament faces an increasing number of questions concerning cryptocurrencies and the technology behind them. The stance of the UK officials, however, remains cautious.
On Thursday, June 7, 2018, Kit Malthouse, Conservative MP of the House of Commons, had to respond to a question asked earlier by Martin Docherty-Hughes ( of West Dunbartonshire) about the potential applications of blockchain. He asked the Secretary of State for Work and Pensions, what recommendations were made to her Department as a result of the trials that GovCoin undertook on the use of blockchain technology for the welfare and benefits system; and whether the findings of those trails will be published.
Kit Malthouse answered:
“In 2016, DWP ran a trial proof of concept on a small scale and the findings concluded that it was not viable due to limited take up potential and the expenses it would incur. No other companies were involved in the trial and no benefit or personal data was shared with GovCoin (DISC) on claimants”.
The stance seems to be in line with the findings of experiments with distributed ledger technology (DLT) conducted by the Dutch central bank. The tests have shown that blockchain is not capable to respond to the needs of financial markets infrastructure (FMI). The biggest shortcomings are inadequate capacity, inefficiency due to high energy consumption and lack of complete certainty about having made a payment. Nonetheless, it appears that the resilience of a financial market infrastructure against external attacks could be increased by the use of blockchain technology, but this happens at the expense of capacity and efficiency.
Early this year, the UK Treasury Committee opened a new inquiry into digital currencies and distributed ledger technology (DLT). The inquiry examines the role of digital currencies in the UK, including the opportunities and risks that digital currencies may generate for consumers, businesses, and the Government. It looks into the potential impact of DLT – such as blockchain – on financial institutions, including the central bank, and financial infrastructure.
It also aims to scrutinise the regulatory response to digital currencies from the Government, the Financial Conduct Authority, and the Bank of England, and how regulation could be balanced to provide adequate protection for consumers and businesses without stifling innovation.