Invisible welfare is nowhere to hide. Blockchain can revolutionize welfare and reduce poverty

Blockchain technology has long fascinated technology enthusiasts, and recently the real world has paid more and more attention to it. It is no longer a technology that only the crypto security field and technology utopians pay attention to. Big companies are attracted by its disruptive potential. Big companies have developed new applications based on its technology. These companies include companies like IBM, institutions like MIT, and recently mining companies, big banks on Wall Street, and even some government departments. From China's municipal business to New York's energy grid, experiments are being carried out to outsource the government's complex business to distributed software.

Right now, an interesting experiment is underway in the UK: using blockchain technology to track welfare spending.

This is a weird thing in the history of blockchain. In the past, whether it was applying blockchain to stock trading or driver ride-sharing platforms, these things were all done by us before, but blockchain was used to make such things simpler, faster, safer, and less manual. What we are discussing now is completely new: using software to replace government departments, using software to assign "government departments" to achieve a new level of social awareness and social management.

The experimental topic is actually very simple: using a blockchain-based system to monitor where welfare recipients spend their money. However, this solution is feasible in a small scale. But it is difficult to become a widespread policy for two main reasons: 1. There are too many welfare recipients, and monitoring operations are difficult to implement; 2. People have an instinctive resistance to having their financial lives monitored.

Blockchain technology can indeed solve the first factor, but can the second one be solved?

In terms of security issues, the security mechanism of the distributed ledger is that it is publicly visible and stored in a distributed computer network. However, no security mechanism is perfect, and even if it is flawless now, in the future, technological breakthroughs may expose the information of those who no longer receive benefits.

The above security issues can be solved simply by replacing the welfare recipients in the ledger with non-identifying labels. These "label-legal name" data are protected by a traditional database that is not connected to the ledger. In this way, an attacker must obtain information from both ledger databases at the same time to launch an attack. If the security of the traditional government database is problematic, then we will not be worried about welfare tracking information.

Surveillance issues are nothing new to Westerners, and the biggest problem at that point is corruption, which occurs among those who have access to this information.

A more serious problem than data security is how the data is used. Therefore, tracking the path of welfare spending aims to punish those who abuse welfare funds, reduce unnecessary spending and waste, and provide more funding for the poor to buy necessities.

According to a report published by the UK government earlier this year,

"The Department for Work and Pensions spends £166 billion of taxpayers' money every year to support welfare policies, of which £3.5 billion is lost to fraud (£1.2 billion), plaintiffs' claims (£1.5 billion) and official errors (£700 million), with only £930 million recovered."

Those who are completely opposed to this experiment may have completely misunderstood welfare. Welfare does not mean that the poor can get money at any time, but to ensure that the poor have the necessities of life. If the idea of ​​this experiment is to allow the poor to obtain the necessities of life in the most efficient and humane way, then it is reasonable to check whether the funds have played the role they should. If some people are accustomed to using welfare funds to buy dispensable things, then through the inspection, only the checks for purchasing these non-essential items can be cancelled.

However, given the current enthusiasm for personal privacy and data freedom, large-scale implementation of such a spending tracking system may require complete anonymity. In this way, the system can count welfare spending trends, track anonymous data, and view population consumption habits. Although such a system has various applications, it cannot record who bought what.

The fact that there is a computational time when distributed ledger technology is donated means that cryptocurrency is integrated into this system. Many people think that blockchain technology guarantees the existence of Bitcoin, and it can also be said that Bitcoin activates blockchain technology. Cryptocurrency is linked to real-world currency transactions, which incentivizes users to do their best to maintain cryptocurrency as currency and its security.

This welfare distribution scheme means that welfare recipients have to use cryptocurrency to make welfare purchases. Popularity is not a problem, because in theory the government can require merchants to accept the cryptocurrency they supply. In this way, it is not easy for drug dealers or welfare fund abusers to exchange the government's crypto banknotes, but it is relatively easy to exchange them for shopping vouchers in supermarkets and children's clothing stores.

Food stamps have a negative side, and both receiving and using them can be a little insulting. Digital stamps could alleviate that, as they work just like Apple Pay. They also remove the limitations of physical vouchers, allowing recipients to find better deals online without having to use a debit card.

The people who should be most interested in this technology are those who are classified as the lowest income brackets, and there are some bureaucratic institutions that are most strongly opposed to this technology solution, and they are often involved in corruption and consumption in government projects. However, sufficient progress in distributed ledger technology will solve such problems, and by then, privacy and security will become very important.

At present, the initial development of this technology can start from reducing its cost. It uses encryption technology to ensure the security of transactions while consuming a lot of electricity. If the distributed ledger system itself is not improved, it will be difficult for other applications based on it to be popularized on a large scale. However, as the problem of energy being produced more efficiently is solved, we can consider the use of this disruptive technology.