Unlocking Blockchain, a new report published by the UK think tank FREER, poses wide-ranging questions and suggestions regarding how blockchain and related technologies could help to review and redesign the UK’s data systems. FREER, a major new initiative from the Institute of Economic Affairs (IEA), aims to promote a more liberal economy and society. Their report, authored by UK housing minister Eddie Hughes MP, suggests that blockchain and distributive ledger technologies (DLTs) could reduce government spending and improve freedom and transparency for UK citizens.
Support for DLTs in the UK
According to The Telegraph, the Bank of England (BoE) set up a research unit focusing on cryptocurrencies in 2015. According to a BoE spokesperson, this unit aims to report back to the UK government this year, although there are no plans to develop a sterling-backed cryptocurrency. As reported by Cointelegraph, the UK’s Financial Conduct Authority (FCA) recently published details of the fourth round of its regulatory sandbox, citing that 40 percent of the 29 companies were using DLTs.
“Unlocking Blockchain” highlights the benefits of DLTs
Rather than seeking to design infrastructure, FREER’s latest report “poses wide-ranging questions and suggestions” about how DLTs could help improve efficiency and provide benefits to “both the public and private sectors”. The report begins with a short explanation of blockchain technology and outlines the primary benefits of DLTs. Suggestions for how DLTs could be applied to the retail industry, the financial sector and the potential environment and global development opportunities that may be realized.
Key proposals from the report
The report’s author, Eddie Hughes MP, concluded with four key proposals for the UK government:
- An international ‘blockchain competition’ should be established to help drive UK-based entrepreneurship and attract foreign investment.
- A ‘Chief Blockchain Officer’ should be appointed to coordinate the UK’s strategy.
- A one-percent efficiency saving should be set as a long-term governmental target, met through embracing DLTs.
- Blockchain should be used to empower individuals and give them greater control over their data.
Limitations of the report
The report is, by the author’s own admission, a series of “wide-ranging questions and suggestions” and is not intended to make specific infrastructure recommendations. The report’s central premise that embracing blockchain technology could lead to “reduced transaction and procurements costs” is neither well-supported nor seriously challenged. The report acknowledges that “the potential amount that could be saved is very difficult to calculate” and mentions “long-run costs in storage and electricity” but doesn’t elaborate. Given that the energy consumption of Bitcoin’s blockchain-based network could power an entire country (71.12TWh at the time of writing) these “implementation costs” could prove significant. Without a hint of irony, page 29 of FREER’s report casually proposes, “Could this technology be used to design out costs in the energy network, reducing bills, nationwide?”
As a way of raising awareness about blockchain and DLTs, FREER’s report provides a useful starting point for UK government ministers. The report aims to encourage digital entrepreneurship and highlight the opportunities for reviewing and potentially redesigning the UK’s data systems.