Is blockchain not suitable for storing personal information? The British government's blockchain welfare payment system is accused of information leakage

About a week ago, the British government launched a blockchain experiment to use the technology to distribute welfare benefits. However, some experts said that this experiment is very dangerous and can easily leak personal information.

The project was initiated by the UK Department for Work and Pensions (DWP) and authorized London financial technology company GovCoin, German RWE Group (RWE) and University College London to jointly carry out the project.

Lord Freud, the UK's Minister of State for Welfare Reform, said: Recipients can receive and spend welfare benefits through a mobile app. As long as they agree, their transactions will be recorded on a distributed ledger, which can help them manage their finances.

Earlier this year, the UK Government Office for Science published a report on distributed ledger technology (download the full text), which laid the foundation for this experiment.

The report states that blockchain technology would implicitly set limits on how welfare benefits can be spent.

Blockchain welfare payment systems would likely set limits on transactions between beneficiaries and merchants.

The non-profit Open Data Institute (ODI) said that the public blockchain is immutable and completely open and transparent, so it is not suitable for storing personal information and is likely to cause information leakage. After all, human flesh search and identity theft are rampant now.

Some blockchain use cases, such as recording welfare payments, are prone to information leaks. Both the payer and the recipient's information is potentially at risk.

ODI acting CEO Jeni Tennison said that although the DWP said the experiment was voluntary, the potential risks of using blockchain for welfare payments were still great.

It’s good to try new technologies, but storing personal information on an unchangeable platform is always risky.

To prevent government experiments from being exploited by criminals, the DWP must make public its policy objectives, protection measures against potential risks, and some lessons learned when conducting such technological experiments.

Dr Dalia Ben-Galim, policy director at Gingerbread, a charity working on single-parent families, said the trial was likely to lead to more restrictive terms for who could receive the aid.

Single-parent families in the UK already receive very little in the form of benefits. Data shows that the number of children living in poverty in single-parent families will double by 2020.

A DWP spokesman said: "We will continue to pursue new technologies while ensuring information security and improving payment methods."

The purpose of this experiment is to explore the application of distributed ledger technology in inclusive finance and provide financial services by anonymously obtaining data. We will not set any restrictions, and recipients can freely trade on our payment system.