Blockchain ledger technology got a boost last week with the UK government announcing it wants to use the technology to transform the way government payments are made.
The announcement by Matthew Hancock, Minister for the Cabinet Office and Paymaster General, was made in a keynote speech at the Digital Catapult networking event in London on April 26.
“We have worked very hard in recent years to transform government, to bring it up to date with the Internet age. We’ve made great strides, but there’s still a very long way to go,” Hancock said, according to a transcript of his speech.
“We’re exploring the use of a blockchain to manage the distribution of grants. Monitoring and controlling the use of grants is incredibly complex. A blockchain, accessible to all the parties involved, might be a better way of solving that problem,” he said.
A blockchain is the technology that underpins digital currencies such as Bitcoin. It is a type of distributed database that provides a verifiable and permanent ledger of digital events. In the case of Bitcoin, it records all transactions that have ever taken place.
Because of its inherent transparency and truth, blockchains are also seen as the future of cross-currency payments.
According to a recent independent report by MoneyMover, international trade is worth over £700 billion for UK SMEs, and is still a growing sector. Yet SMEs often don’t get good deals on fees when it comes to making cross-currency payments, particularly from banks.
“The problem is that most SMEs still use their bank for sending and receiving international payments,” states the MoneyMover report.
“In total, UK banks charge SMEs nearly £4 billion in hidden fees, which is around £2.7 billion more than they would pay with the best independent service providers.”
US-based Circle is one company that has recently introduced a zero-fee transfer service to send money instantly from the UK to the US using a smartphone app via the web. And they plan to expand the service to euro-zone consumers.
“As the first digital currency company in the world to be granted an E-Money license, Circle will also offer the benefits of digital money to Europe’s 500 million consumers, and ultimately enable anyone with sterling or euros to send and receive value for free and with an experience familiar to anyone who uses messaging or social media,” wrote Circle co-founders Jeremy Allaire and Sean Neville on their blog.
Their technology is also founded on the blockchain. “Rather than creating more proprietary, closed, centralised networks, we’ve embraced the ideas that have fuelled the digital age – open networks, open intellectual property and open source software, distributed and decentralised information and computing architectures, and a fundamental respect for privacy and security,” they write.