British government considering blockchain for student loan payments

LONDON -- The British government is considering the use of blockchain technology, the backbone behind the Bitcoin currency, as a method of distributing taxpayers' money.

Blockchains, which act as a shared ledger verified by a network of computers, have already been used by banks who estimate the technology could save them huge sums. The idea has also been trialled by the government of Estonia, the Guardian reports, and has been considered by the U.S. state of Vermont to track government records.

Ministers in the UK believe the concept could be implemented for the distribution of grants or student loans.

In a speech Tuesday, Minister for Cabinet Office Matt Hancock laid out the government's plans to explore the idea.

"Government cannot bury its head in the sand and ignore new technologies as they emerge," he said, introducing a concept he termed "government as a platform," essentially another way to describe their planned digital transformation.

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Blockchains "are digital tools for building trust in data," he said.

"Rather than a single central authority demanding trust and declaring: 'I say this data is correct,' you have the distributed consensus of everyone in the chain, saying in unison: 'we agree that this data is correct.'"

"They bring with them built-in integrity and immutability. You can only write new data, nothing is ever removed or deleted."

Hancock conceded that blockchains won't work in every scenario, but pointed out two key areas that might benefit from the technology: student finance, where "the Student Loans Company [can track] money all the way from Treasury to a student’s bank account" and the Department for International Development tracking money right up to the aid organisation spending the country abroad.

Last year, a report from the Bank of England noted the potential of the ledger technology behind digital currencies.

"While existing private digital currencies have economic flaws which make them volatile, the distributed ledger technology that their payment systems rely on may have considerable promise," it said.

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