The DWP is trialling a new app based on bitcoin software as a way of paying benefits, Lord Freud has announced, raising fears that claimants spending could be closely monitored and controlled.
Blockchain is the technology which powers the virtual currency Bitcoin and it is now being incorporated into many other applications. The DWP have begun a six month, small scale trial of the system under the name GovCoin.
The trial was announced by Lord Freud, who told a technology conference:
“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.”
A former member of the Government Digital Service has told the BBC that he has serious concerns about putting highly sensitive data on a shared ledger, which can never be changed even if it is inaccurate.
He also told the BBC that the technology could be used to monitor benefit spending and force claimants to only spend their benefits on approved items.
The DWP have denied that there any plans to replace current payments systems and describe the trial as an attempt to find ways of offering budgeting help.