Trial to store benefits claimants' personal data on blockchain slammed

Could expose highly sensitive info, says Open Data Institute

A government experiment to store the information of benefits claimants using blockchain tech has been slammed by experts, who have warned it could expose highly sensitive personal data.

London-based fintech company GovCoin Systems has partnered with Barclays, RWE npower and University College London to trial blockchain technology for UK’s Department for Work and Pensions (DWP).

Minister for Welfare Reform at the DWP, Lord Freud, said: "Claimants are using an app on their phones through which they are receiving and spending their benefit payments. With their consent, their transactions are being recorded on a distributed ledger to support their financial management.”

The trial is of 30 people and follows a report by the UK's chief scientific advisor into distributed ledger technology earlier this year.

Controversially, the report stated the technology could also impose spending restrictions through the technology. "It would be possible - with agreement from the benefit claimant in question - to set rules at both the recipient and merchant ends of welfare transactions," it said.

However, non-profit body the Open Data Institute, has said the irreversibility and transparency of public blockchains mean they are "probably unsuitable for personal data.” In its own report into the application of the tech, the body warned its use could infringe on people’s privacy, particularly given increasing issues around doxing, identity theft and the right to be forgotten.

"Some of the proposed uses for blockchain – such as to record auditable benefits payments – threaten to expose this kind of information about a much wider range of people, the benefits they receive and with whom they spend them,” it said.

Jeni Tennison, deputy CEO of the ODI, said the idea of using blockchains for benefit payments is "very concerning" even if, as DWP suggests, this is being done on the basis of a voluntary trial.

She said: "It is important to try out new technologies, but as we highlighted in our report, experimenting with putting highly personal data in immutable data stores is fraught with danger.

"To avoid undermining trust in government’s use of data, DWP should be much more open and transparent about the policy objective of these trials, the safeguards they are putting in place to limit the risks, and the lessons being learned through the trial.”

Director of Policy for the Gingerbread charity for single parents, Dr Dalia Ben-Galim, said there was also a concern that GovCoin could place further restrictions on claimants.

Ben-Galim added: “Of greater concern than GovCoin is the decreasing level of welfare support for families across the UK. Single parents are already disproportionately hit by welfare cuts, with analysis showing that child poverty in one-parent families is set to double by 2020."

A spokesman from the DWP said: “We will continue to monitor new innovations in the marketplace which would represent value for money, safeguard information and protect and improve payments to customers.

“This trial is designed to explore how distributed ledger technology could help support financial inclusion and budgeting support through the anonymous capture of data and does not place any restrictions or limits on what a claimant can spend their welfare payments on.” ®