Comment: Blockchain technology is useful, but not for everything
The Government Chief Scientific Advisor is exploring blockchain technologies. We welcome the focus on data infrastructure but call for more scrutiny of risks, less hype and a focus on using blockchains to solve challenges
We welcome Government Chief Scientific Advisor Sir Mark Walport’s report ‘Distributed Ledger Technology: beyond blockchain’, which explores blockchain technologies.
It is great to see so much thought being put into how we manage data.
Data is infrastructure. It is essential to the operation of a society, and it is vital that we learn how to build, maintain and strengthen our data infrastructure.
In our own research on blockchains and distributed ledgers at the ODI we have seen continued excitement about the possible uses of blockchains, but too little consideration about the risks, or whether blockchain technology even brings any benefits in such cases.
New technologies go through a hype cycle. The challenge near the beginning of that cycle is to identify the uses and applications that will stand the test of time. Like most new technologies, blockchains could cause significant damage if used indiscriminately.
To better understand the applications of blockchain technologies, we have been getting to grips with both the concepts and the technology. This has helped us begin to cut through the hype and understand the real potential.
We agree that blockchains could be used to build confidence in government services, through public auditability, and could also be used for widely distributed data collection and publishing, such as supply chain information. Smart contracts also hold great potential; what if your train tickets were smart contracts that meant you paid less for delayed trains?
However, in our research we have seen cases where people are trying to bolt old, failed or impossible policy and business ideas onto the new technology or to unnecessarily reinvent things that work perfectly well. Many other cases show familiar organisational models being rebuilt as permissioned ledgers based on blockchain technologies, but this ignores the core innovation of the technology and its promised transformation.
We’ve seen many ideas that would put new personal data into blockchains but learnt that, if misused, this will create significant new privacy issues. The core problems that blockchain technologies help to address – of distributed maintenance by collaborating organisations – is of growing importance and an area that shows some promise, but few people are thinking about it.
The Blackett review makes sensible recommendations for further exploring blockchains, understanding challenges and discovering potential use cases. We think that the government should go further and think about how it can convene sectors (such as finance, agriculture, or health care), identify common challenges in those sectors and then determine which technology approaches – whether blockchains or not – are the most appropriate in helping to address them. Blockchain technology is a new tool in our toolbox. We need to use it when it is the right tool for the job at hand.