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Government trial to store data using blockchain technology has been cancelled

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July 12, 2016

Experts at the British government have decided to cancel a trial program that would have stored the data of benefits claimants using blockchain technology. They warned it could expose highly sensitive personal information of the claimants involved.

London-based GovCoin Systems has partnered with Barclays, RWE nPower and the University College in London to test-drive blockchain technology for the U.K.’s Department for Work and Pensions.

The minister for welfare reform at the DWP, Lord Freud, said-- "Claimants are using a mobile app on their phones through which they are receiving and spending their benefit payments. With their consent, their transactions are being recorded on a distributed ledger to support their financial management.”

The trial is of thirty people and follows a report by the UK's chief scientific advisor into distributed ledger technology earlier this year.

The report initially stated that the technology could also impose spending restrictions using that solution. "With the agreement from the benefit claimant in question, it would be possible to set rules at both the recipient and merchant ends of welfare transactions," the report asserted.

But the non-profit body 'The Open Data Institute' has said the irreversibility and transparency of public blockchains mean they are "probably unsuitable for personal data.”

In its own report in the application of the technology, the body warned its use could infringe on people’s privacy, particularly given the increasing issues around information broadcasting, identity theft and the right to be forgotten.

"Some of the proposed uses for blockchain, such as to record auditable benefits payments, threaten to expose this kind of data about a much wider range of people, the benefits they receive and with whom they spend them,” it added.

Jeni Tennison, deputy CEO of the Open Data Institute, said the concept of utilizing blockchains for benefit payments is "very concerning" even if, as DWP suggests, this is being performed on the basis of a voluntary trial.

She added-- "It's very critical to try out new technologies, but as we highlighted in our report, experimenting with placing highly personal information in steadfast data stores is probably filled with potential security issues and could open a real pandora box.

"To avoid undermining trust in the government’s use of personal data, the DWP should be more open and transparent about the various policy objectives of such trials, the safeguards they are putting in place to limit the risks involved, and the lessons being learned through those numerous tests.”

The director of 'Policy for the Gingerbread Charity for Single Parents', Dr Dalia Galim, said there was also worries that GovCoin could place further restrictions on claimants other than the ones discussed already.

Galim asserted-- “Of greater concern than GovCoin is the decreasing level of welfare support for families across the United Kingdom. Single parents are already disproportionately hit by welfare cuts, with analysis showing that child poverty in one-parent families is largely expected to double in less than four years from now."

A spokesman from the DWP added-- “We will continue to monitor new innovations in the marketplace which would yield better safeguards to personal data and protect claimants from potential attacks.

“This trial is designed to explore how distributed ledger technology 'A la Bitcoin' could help support financial inclusion and budgeting support through the anonymous capture of data and does not place any restrictions or limits on what a claimant can spend their welfare payments on,” he asserted.

Source: GovCoin Systems.

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