Is Blockchain the most important IT invention of our age?
By John Naughton, January 24, 2016
The government of Estonian prime minister Taavi Rõivas has already started using blockchain technology. Photograph: Vesa Moilanen/AFP/Getty Images
Sunday 24 January 2016 04.00 EST
There are not many occasions when one can give an unqualified thumbs-up to something the government does, but this is one such occasion. Last week, Sir Mark Walport, the government’s chief scientific adviser, published a report with the forbidding title Distributed Ledger Technology: Beyond Block Chain. The report sets out the findings of an official study that explores how the aforementioned technology “can revolutionise services, both in government and the private sector”. Since this is the kind of talk one normally hears from loopy startup founders pitching to venture capitalists rather than from sober Whitehall mandarins, it made this columnist choke on his muesli — especially given that, in so far as Joe Public thinks about distributed ledgers at all, it is in the context of Bitcoin, money laundering and online drug dealing. So what, one is tempted to ask, has the chief scientific adviser been smoking?
A blockchain is essentially an incorruptible ledger of blocks of data, and that data can be just about anything
Before we get to that, however, some background might be useful. A distributed ledger is a special kind of database that is spread across multiple sites, countries or institutions, and is typically public in the sense that anyone can view it. Entries in the database are configured in “blocks” which are then chained together using digital, cryptographic signatures — hence the term blockchain, which is really just a techie name for a distributed ledger that can be shared and corroborated by anyone who has the appropriate permissions.
Most of the early examples of distributed ledgers have no “owner”. Instead anyone can contribute data to the ledger and everybody who has access to the ledger has an identical copy of it at any given time. This means that no individual can prevent someone from adding data to the ledger, and so it can constantly be updated. But it also means that all those in possession of copies of the ledger have to agree that the updates have happened.
Blockchain technology appeared first as the cryptographic engine that powered Bitcoin. In that case the ledger maintained a record of transactions in the currency to ensure that updated records of who owned which coins were maintained and publicly verified. But Bitcoin’s notoriety had the effect of distracting attention from the blockchain that underpinned it. So it took a while for the penny to drop (if you will pardon the numismatic metaphor) that the blockchain was far more important than Bitcoin. After all, a blockchain is essentially an incorruptible ledger of blocks of data, and that data can be records of just about anything.
Like records of land ownership. Creating and maintaining incorruptible registers of land titles is a huge — and mostly unsolved — problem for developing countries. So when the government of Honduras launched an investigation into whether a blockchain-based land registry could solve it, the non-geek world sat up and began to take notice. The unmistakable message was that this technology could be much more useful than merely securing cryptocurrencies. It might actually turn out to be one of the biggest IT inventions of our time.
The chief scientist’s report suggests that the UK government has woken up to this possibility. “Distributed ledger technologies,” it claims, “have the potential to help governments to 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. In the NHS, the technology offers the potential to improve health care by improving and authenticating the delivery of services and by sharing records securely according to exact rules. For the consumer of all of these services, the technology offers the potential, according to the circumstances, for individual consumers to control access to personal records and to know who has accessed them.”
The report makes eight recommendations on how to turn enthusiasm for blockchain technology into reality. There needs to be serious ministerial buy-in, for example, which — given our current collection of technologically illiterate tribunes — might be a bit of a stretch. We need working pilot schemes at local and national level. Academia and industry should be co-opted to address the security and other challenges that large-scale deployment will throw up. And of course there is a “need to build capability and skills within government”, not to mention “a cross-government community of interest… to generate and develop potential ‘use cases’ and create a body of knowledge and expertise within the civil service”.
All good stuff. The problem is that the supertanker that is the British state takes a long time to change course. Which is why small countries with techno-savvy administrations like Estonia are already experimenting with blockchain technology. They can turn on a sixpence, or even a Bitcoin. We do things differently here. Still, full marks for vision to Sir Mark and his team.
Originally published at www.theguardian.com on January 24, 2016.