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How the public sector can reap the benefits of distributed ledger technology

Posted 22 Apr 2021

Distributed ledger technology (DLT) first became part of global discourse as the technology behind cryptocurrencies like Bitcoin. Beyond this understanding, however, few in the public sector have realised its potential for innovation to the benefit of the people and industries they serve.

What is DLT/blockchain?

In essence, distributed ledger technology is a way to create a single source of truth (SSOT) across a decentralised group of stakeholders. There is no need for a controlling authority – the ledger of these transactions is shared, updated and instantly verified by every participant. Each update to the database is timestamped and digitally signed with an unforgeable signature. The result is a synchronised, auditable and permanent record of any exchange in assets or data.

Its inherent security makes it ideal for cryptocurrencies, which use it in the form of a blockchain. Because each transaction is verified and known across the entire network, it is immediately apparent when the data has been tampered with – accidentally or intentionally. Batches, or ‘blocks’ of verified data are linked in a sequential chain from the first to the latest, so that every update is provable as part of a shared SSOT.

Public value beyond currency

While cryptocurrency has stolen many of the headlines, blockchain and DLT have a huge range of applications. They are demonstrating real-world potential for streamlining processes, tracking and verifying goods across complex supply chains and removing the need for centralised bodies when it comes to authentication, integrity and compliance.

With the public sector plagued by fragmented organisational structures and data sharing challenges, the possibility for DLT to alleviate some of these issues is enormous.

As far back as 2017, the British government recognised DLT’s potential application in the public sector. While cybersecurity and counter-fraud were perhaps areas that could intuitively benefit, the government also highlighted taxation and benefits, public procurement, border control, patient records and food traceability amongst many other opportunities.

Finding the social and public good of DLT

As part of the DLT4EU accelerator programme, Digital Catapult has joined a consortium that includes Metabolic from the Netherlands and Ideas for Change in Spain. Together, they aim to identify and develop DLT solutions that will benefit society, the environment and the European economy.

These applications have been split into two focus areas: circular economy and digital citizenship.

A circular economy benefits businesses and society without irreparably damaging the environment – decoupling economic growth with the consumption of finite resources. DLT applications being explored include supply chain and reverse supply chain traceability, ownership transfers in secondary markets, end of life compliance and the management of public infrastructure and urban green space.

On the other hand, digital citizenship encompasses the use of digital technology to help citizens engage more effectively with public decision-making, service improvement and social impact initiatives at a local or national level. Here, DLT4EU is examining the challenges of digital inclusion and accountability of aid, civic innovation, financial inclusion, personal data management, and community currency models.

Addressing commercial and operational challenges

Digital Catapult has also created DLT Field Labs to bring together leading tech businesses with industry partners, researchers and business experts. Focused on an industry-specific topic of interest, each DLT Field Lab provides a collaborative process and framework to de-risk practical experimentation for new DLT applications.

So far, Digital Catapult has created DLT Field Labs for the oil and gas, construction and nuclear decommissioning industries. Each one is run in iterative, agile cycles to test and pivot around key barriers and opportunities. All findings are then shared with participating organisations, including technical, business model, value proposition, legal and governmental challenges.

In all three cases, the Field Lab has developed a roadmap for implementing change based on DLT as part of the advanced digital technology stack.

So what do some commercial applications look like?

Simplifying and solving construction contract disputes

Weather-related contract disputes cost the global construction industry billions of pounds every year.

The Weather Ledger, an Innovate UK-funded project, is exploring the potential for collecting accurate, localised weather data which feeds into smart contracts running on a distributed ledger shared by all parties to a worksite.

This immutable shared data is both transparent and auditable. Automation of contract clauses based on this trusted shared data will save time and reduce, or even eliminate, costly and wasteful disputes.

In addition to providing DLT expertise during the 12 month project, Digital Catapult is also supplying internet of things (IoT) technologies and helping develop standards in smart contracting.

Requiring simple governance rules, no GDPR-sensitive data and no sensitive company data, it is hoped The Weather Ledger will set a precedent for further application of distributed systems in the construction industry

Creating a decentralised, end-to-end digital supply chain

The aim of DIY4U is to create an FMCG supply chain in which consumers are able to personalise the design of their products, which are then produced on-demand in small-scale manufacturing workshops known as fab labs.

Among other responsibilities, the Digital Catapult team is advising on the platform development, bringing together relevant stakeholders and working to understand user needs and requirements.

Consumers will be able to customise a huge range of attributes via the DIY4U digital platform, designed using a hybrid distributed network combined with secure multi-party computation protocols.

It is expected that the transition from large-scale industrial manufacturing to the DIY approach will help transform engineering solutions across the entire European value chain.

While the vast majority of DLT applications remain in the early stages of development, the potential benefits are undeniable. Especially for a public sector continually searching for safer, more efficient methods of governance.

To learn more about our involvement with distributed ledger technologies, explore our current projects or read how DLT4EU is using blockchain technology for social and public good.

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