UK government takes the lead in trialing blockchain welfare payment system

The UK government’s Department for Work and Pensions is leading a blockchain trial aimed at applying the technology to the distribution of welfare payments.

The government department is understood to have established partnerships with British financial institution Barclays, the UK arm of German group RWE, fintech startup GovCoin, and University College London.

The project was unveiled by David Freud, the minister for welfare reform, during a payments conference this month. He said the success or failure of the project would be determined by its impact on welfare recipients, according to PaymentsCompliance, a provider of regulatory data.

"We're going to start with a small trial in the North West to see if we can use this technology to deliver welfare payments and, more importantly, see if people who are dependent on welfare will benefit from this approach," Floyd reportedly told attendees.

Before using the system, one must download a mobile app, and its blockchain system will be responsible for recording the transactions of welfare recipients.

It is worth noting that an important report released by the UK Government Office for Science in January called on the government to use blockchain technology to experiment with the welfare payment system.

The report refers directly to a hypothetical system for administering welfare benefits for the Department for Work and Pensions and highlights the importance of building in its potential security.