“Cryptocurrencies” refer to techniques for purely digital currencies. The most famous of these is Bitcoin, but since its creation numerous other currencies have also been created, relying on the underlying Distributed Ledger Technology (DLT) to create a publicly verifiable list of transactions: the blockchain.
In response to the growing interest in cryptocurrencies from the data science community, industry, government and beyond, the Alan Turing Institute recently convened a day-long workshop on the subject of blockchain technology.
Over 70 attendees, led by expert speakers from the Department of Work and Pensions, policy makers from the Bank of England and academics from UCL, University of Edinburgh and University of Oxford, joined the workshop to discuss potential new research directions raised by blockchain, and to debate the governance, societal and economic implications of this new technology.
What we learnt:
- Cryptocurrencies have a major disruptive implication for banks, threatening to displace their traditional role as a trusted arbiter of transactions — instead, they allow transaction settlement to be agreed by mutual consensus in a peer-to-peer network. There are advantages for cryptocurrencies compared to traditional settlements in terms of reliability and scalability, as the need for modernisation increases and the need for technology to be future proof to ensure monetary and financial stability.
- The associated downside of cryptocurrencies such as Bitcoin centres around it granting users a degree of anonymity. However, current research projects discussed include the design of digital signatures for physical assets that could then be tracked using DLT, such as tamper proof drugs. Currently billions are lost each year across supply chains due to counterfeit goods, which could be substantially reduced by these innovations. The idea that ownership and use of goods can be followed to identify and track nefarious activity has led to the notion of “blockchain for good”.
- There are major potential benefits for society and the economy; one speculative suggestion is the potential to design a DLT enabled device for citizens which connects government related data – for example; NHS files, tax codes, driving licence etc – unlocked by an identity key with a cryptocurrency address to share decentralised information directly between citizen and service. Such a system could also increase efficiency when distributing and collecting money such as benefit or pension payments, offering low cost transactions and increased speed of payments.
The workshop highlighted the huge potential that Distributed Ledger Technologies may have for transmitting value between people. It also reinforced the point that as government and business consider the use of cryptocurrency technology, we need to invest in research in order to move the UK forward.
A key driver to push this research forward is bringing together computer scientists, economists, statisticians, policy experts and businesses. The Turing Institute is an ideal convening space to bring together these diverse experts all at once, and we look forward to continuing the fascinating discussions around cryptocurrencies begun in our workshop as we start to map our research in this area. Follow up discussions are planned with the Home Office and Department for Work and Pensions about how blockchain ideas could be used in government.
Watch some of our videos from the day on our Youtube Playlist
Blog by Graham Cormode, Warwick University Liaison Director and Event organiser, and Shana Tufail, Communications and Marketing Manager.