The government could soon use cryptocurrencies such as Bitcoin in following a significant declaration of support for the technology that underpins such transactions.
Cabinet Office Minister and paymaster general Matthew Hancock MP said Whitehall is looking in to how blockchain technology could be used to manage and keep track of the distribution of public money, such as grants and student loans.
Commenting that such a system could “foster a new culture of trust,” Hancock added that the government, “cannot bury its head in the sand and ignore new technologies as they emerge,” in what is one of the most high-profile shows of backing for blockchain to date.
Although he added that the use of blockchain and other cryptocurrencies are, “just some of the ideas we’re considering in government,” Hancock said that previous projects had proved that Bitcoin in particular could be of use.
Along with using distributed Bitcoin ledgers to track currency as it is passed from one entity to another, Hancock gave possible examples of the Student Loans Company tracking money all the way from Treasury to a student’s bank account, or the Department for International Development tracking money all the way to the aid organisation spending the money in country.
“Now blockchain technology is not going to solve every problem, or work in every context,” Hancock added, “When a trusted body already exists, for example, that can hold canonical data, that’s often the best solution.
“But the fact that data held in the blockchain comes with its own history, and that history is a fundamental part of proving its integrity, this fact is enormously powerful.”
The use of blockchain technology, particularly Bitcoin has become increasingly popular in recent years as companies and organisations alike look for a more secure, digital-friendly way of completing transactions.
This includes Microsoft, which recently revealed it would allow Bitcoin purchases in its online marketplaces, as does top gaming platform Steam. In the financial world, Barclays has said that it would be supporting research into using Bitcoin in the UK as part of a major investment in burgeoning technology firms.
Last year, it was also reported that the NASDAQ stock exchange was also evaluating blockchain, the underlying technology behind Bitcoin, in order to see if it could be used in trading of shares in private companies.
This is despite the Bank of England raising its suspicions about Bitcoin last year, warning that the digital currency could pose a threat to financial stability in the UK should it see widespread adoption.
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