Bitcoin's Blockchain Uses Could 'Transform Government'

bitcoin blockchain tax UK government Matt Hancock
Bitcoin's underlying blockchain technology could be deployed to track government grants, student loans and other tax spending. Their use is some way off but the British government is showing keen interest. KAREN BLEIER/AFP/Getty Images

The U.K. government is considering the use of blockchain technology—the underlying network of the digital currency bitcoin—to more efficiently track taxpayers' money.

Minister for the Cabinet Office Matt Hancock said on Tuesday that blockchain technology has the potential to "transform the way the government works," in the same way that typewriters streamlined the way business was done when they were first introduced.

"Once again technology is radically transforming the way we do things," Hancock said at a blockchain networking event in London. "Crucially, government cannot bury its head in the sand and ignore new technologies as they emerge. That's partly what happened with the web.

"Government lagged behind because it wasn't able to get to grips with the potential the web offered. We've fixed that now, but we cannot let it happen again by standing still."

Blockchain technology has the potential to cut costs, improve efficiency and increase transparency by replacing a single central authority with a decentralised ledger that can be verified by a network of computers. Major banks, such as Barclays and HSBC, are already researching ways it can be implemented to improve services.

Hancock said the government is exploring "any and all" possible uses that blockchain technology could have within government, including the management of grant distribution and monitoring student loans.

"Bitcoin proved that distributed ledgers can be used to track currency as it is passed from one entity to another," Hancock said. "Where else could we use that? Think about the Student Loans Company tracking money all the way from Treasury to a student's bank account. Or… tracking money all the way to the aid organisation spending the money in a country.

"These are just some of the ideas we're considering in government. We're still in the early days. That takes time, and a lot of careful thought."