Government agencies in the United Kingdom have started focusing more on blockchain, including a trial program to evaluate how it maybe able to help track payments within its welfare system. Others have shown an interest in the technology as well, with the actuary department recently publishing an assessment of blockchain’s advantages and challenges.
Its tenor is one of optimism, despite the current concerns regarding the technology that underpins bitcoin and some other cryptocurrencies. “There remain a number of significant obstacles in the way of progress, but in the coming years we may see the financial services industry becoming more streamlined and efficient if these fintech revolutionaries successfully navigate them,” wrote the U.K.s actuary department this month.
The agency notes that the value of individual bitcoins has been volatile since its launch in 2009, but the total value of those in existence surpassed $12 billion USD in the middle of 2016. That remains a drop in the bucket compared to the overall financial market, but the continued growth shows that a market exists — and its popularity is now one of its biggest problems.
“The cryptocurrency has been so popular that its major challenges at the moment concern how to allow for even more significant frequency and volumes of trades,” wrote the agency.
Despite its popularity and potential, the assessment acknowledges “significant stumbling blocks” to widespread usage. For one, its anonymity allows for illicit and illegal activity, which some fear is one of the factors leading to bitcoin’s growth.
The lack of regulation surrounding blockchain-based technologies also means it is hard for brand-name companies or major institutions to use confidently. This could be eased if the U.K.’s Financial Conduct Authority goes through with its idea to approve a few firms to use it. A decision on this concept remains uncertain, but clarity could emerge in the coming months.
Ultimately, the actuary department is left with the same view of blockchain that most have. But the very fact that it has published a perspective — and expressed what seems to be excitement about the possible FCA approval for limited use — is important.
“Blockchain and its competitors have the promise to revolutionize the currently expensive, inflexible, and slow administrative systems used in financial services,” wrote the agency. “However, a large proportion of organizations have yet to consider it seriously as an alternative to the status quo.”