Governments are facing a dual challenge. Their failure to keep pace with technological change has eroded their ability to deliver – and with it, the trust of citizens who increasingly feel their taxes are not funding a state capable of getting things done.
Sensibly embracing new technologies is one path to tackling both the policy challenge of delivery and the political challenge of trust: rebuilding state capacity and, in doing so, re-establishing belief in the social contract.
But governments cannot simply “plug and play” technologies such as artificial intelligence and expect them to solve deep-rooted problems. As the Tony Blair Institute for Global Change (TBI) has explored in Governing in the Age of AI: A New Model to Transform the State, AI has the potential to reshape how decisions are made and services are delivered, but it will also expose the fragility of the systems beneath it. Adopted on top of brittle, opaque or siloed infrastructure, AI could automate dysfunction rather than fix it – making services less accountable and citizens more disillusioned.
Building strong digital foundations is therefore essential.
Blockchain – a form of distributed ledger technology (DLT) – is best understood as part of a broader “digital trust stack”: technologies that help actors who do not fully know or trust one another to share data, verify information and coordinate action in reliable, auditable ways.
The political imperative is clear. As governments race to harness AI and other emerging technologies, the strength of this digital trust stack will shape whether technology renews the state’s ability to deliver or simply accelerates existing problems. Unlike many other technologies, blockchain does not just require governance – it can enable governance, because auditability and traceability are built into how it works.
This commentary offers a clear-eyed analysis that sets out:
What blockchain is and how it works.
How governments are already using it today – from verifying digital credentials to improving the reliability of cross-border trade.
What policymakers can do now to unlock the long-term value of blockchain and related technologies, from investing in strong data foundations to clarifying governance and regulatory frameworks.
Of course, blockchain is no silver bullet for addressing digital trust. But if properly designed and deployed, it can be a key component of the infrastructure that enables other technologies to be adopted, tested and scaled – creating the foundations of a state that innovates at the pace of the technological revolution.
Blockchain: What It Is and How It Works
Amid the global financial crisis of 2008 – a moment when trust in banks and governments was at a low point – a pseudonymous author, Satoshi Nakamoto, published a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System.[_] It proposed an electronic cash system that worked without banks, clearing houses or central authorities. Instead, it relied on a peer-to-peer network where everyone could verify the ledger for themselves.
At the heart of this system is the blockchain: a distributed digital ledger that lives on many computers across a network. Every time something new happens – a financial transaction, a property transfer, the issuance of a credential – the information is bundled into a “block” that is cryptographically linked to the block before it, forming a tamper-evident chain of records: a blockchain.
A useful mental model is a shared notebook. Anyone with the right permissions can write in it, everyone can read it and once something is written, it cannot be quietly rubbed out. Any attempt to alter a past entry leaves a visible mark.
Nakamoto’s key innovation was not inventing entirely new technologies, but combining existing tools in a way that created trust without a central authority. Each component replaces a traditional source of institutional mediation with a technical mechanism:
Cryptographic hashes. These are digital “fingerprints” that uniquely represent data. They link blocks together so that changing one record would require changing every subsequent block, making tampering immediately detectable.
Digital signatures. These are cryptographic proofs that a transaction was authorised by the holder of a private key. This allows users to verify authenticity and ownership without exposing sensitive personal information.
Distributed networks. Copies of the ledger are held across many nodes. No single actor controls the system, and there is no single point of failure. If one node is compromised, others can still verify the correct state of the ledger.
Consensus mechanisms. These are rules by which a decentralised network agrees on which transactions are valid and in what order, ensuring a single, consistent version of the truth. In bitcoin, this is a mechanism called Proof of Work, in which nodes compete to solve cryptographic puzzles to add new blocks. Other systems use alternative mechanisms such as Proof of Stake, which can greatly reduce energy consumption and increase throughput.
Together, these tools solved a problem that had stumped computer scientists for decades: the double-spending problem. In the digital world, information can be copied endlessly. Without a trusted intermediary such as a bank, how do you prevent someone from spending the same £5 twice? Bitcoin showed that a decentralised network, following clear rules, could do this automatically. Digital value could be transacted without a central mint or administrator.
Beyond money, this architecture opened up new ways to create online records and contracts that anyone could verify but no single actor could secretly alter.
When implemented appropriately, blockchain-based systems can provide:
Transparency. Participants can see the relevant part of the ledger or obtain verifiable proofs of its contents. Records need not sit in opaque back-office systems.
Immutability. Once recorded, entries cannot be changed without leaving a trace. This does not mean errors are impossible, but that corrections themselves are visible and auditable.
Decentralisation and resilience. No single ministry, bank or technology vendor can unilaterally manipulate the record, and the system can be more resilient to outages or attacks because it does not depend on a single database.
In the years since the financial crisis, blockchain has therefore been seen not just as a financial innovation, but as an institutional one: a new way of generating and maintaining trust in records and processes.
However, these benefits are not automatic. Blockchain is not always the right tool, and badly designed systems can be costly and cumbersome. The key policy question is: where does a shared, tamper-evident record genuinely add value over existing infrastructure?
Where Might Governments Use Blockchain?
The core political and policy question is how blockchain can help governments tackle the twin challenges of delivery and trust. Where multiple parties – ministries, private actors, other states or citizens – need to rely on shared records without fully trusting each other, blockchain components can improve transparency, accountability and resilience.
The best-known application is finance (see our case study for an overview): cryptocurrencies such as bitcoin, stablecoins such as USDC and smart-contract platforms such as Ethereum that enable programmable transactions (a digital agreement that automatically does what it is designed to do when certain conditions are met).
But over the past decade, blockchain has evolved from being seen as a single financial tool to a broader technology stack – a collection of interoperable tools, protocols and ideas that can be combined differently depending on the problem.
Underpinning all these examples is a central idea: because blockchain is inherently transparent and auditable, it can help build more trustworthy digital public services.[_],[_]
Welfare and Payments
Digital wallets built on blockchain infrastructure can be used to deliver payments and entitlements more transparently and efficiently, especially for those without access to traditional banking.
The UN’s World Food Programme has used blockchain-based systems to deliver assistance to refugees in Jordan, enabling people to buy essentials using digital identities instead of paper vouchers or cash.[_] This reduced costs, improved speed and strengthened auditability compared with manual reconciliation processes.
Programmable public money – whether via tokenised vouchers, stablecoins or other digital instruments – could enable rapid targeted distribution of aid during crises, such as Oxfam’s Unblocked Chain Project in Vanuatu, where programmable rules controlled how and where aid recipients could spend funds (for example, specifying allowable merchants or time limits).[_]
In India, the Ministry of Electronics and Information Technology has supported pilots that record disbursements of state payments and entitlements on distributed ledgers to improve transparency in welfare programmes such as the Public Distribution System.[_]
These initiatives remain experimental, but they demonstrate how blockchain can make public spending more traceable, reduce leakage and provide real-time visibility over where funds are going.
More Reliable and Secure Data Sharing
Modern states depend on data sharing across ministries and agencies. Yet many systems remain siloed, fragile or vulnerable to manipulation. Blockchain and related distributed-trust infrastructures can help log access, prove provenance and reduce single points of failure while preserving privacy.
In Estonia, the X-Road platform underpins secure data exchange between public and private entities, enabling citizens to access more than 1,700 services seamlessly.[_] Hash-based ledger techniques are used to timestamp and tag critical logs and data records, enabling authorities to prove that data have not been altered retrospectively and to verify records across systems.[_]
The European Blockchain Services Infrastructure (EBSI), an initiative of the European Commission and European Union member states, is building cross-border platforms for verifying credentials, from university diplomas to business registrations.[_] Unlike X-Road, which operates within a single national ecosystem, EBSI is designed for a multi-country environment, extending secure interoperability beyond borders.
Used well, these infrastructures allow governments to maintain verifiable audit trails, reduce the risk of undetected tampering, and make services more portable and user-centric.
International Trade and Supply Chains
Global trade still relies heavily on paper documents, fragmented IT systems and limited visibility across supply chains. This creates delays, costs and opportunities for fraud – problems that particularly harm small and medium-sized enterprises (SMEs).
Blockchain can help by acting as a shared ledger for tracking goods and documents, while enabling faster, programmable payments.
TBI has worked with the TWIN Foundation to explore how blockchain-based records can lower barriers to trade in Africa by providing trusted digital documentation accessible to multiple parties.[_]
In Singapore, the government-led TradeTrust framework uses blockchain to authenticate and exchange electronic trade documents across jurisdictions, supporting faster customs clearance and reducing fraud risks.[_]
Major economies such as the EU and China are exploring how distributed ledgers can support digital trade corridors, streamline cross-border documentation and provide near-real-time visibility across ports, carriers and customs systems.[_],[_]
These systems are still in development and many pilots remain small in scale. But the direction of travel is clear: trusted shared records can reduce friction in trade, strengthen resilience and support more inclusive participation in global markets.
Property Rights and Asset Ownership
Property and land registries are the bedrock of economic security. Yet in many countries, records are incomplete, paper-based or vulnerable to manipulation. Blockchain-related technologies can provide tamper-evident registries where ownership histories are transparent and easier to audit.
In Georgia, the national land registry has experimented with blockchain to record property transactions, aiming to give citizens greater confidence in ownership records and reducing opportunities for fraud.[_]
In the United Kingdom, the Digital Securities Sandbox (run by the Bank of England and Financial Conduct Authority) allows firms to test DLT-based market infrastructure, and the government’s Digital Gilt Instrument (DIGIT) pilot is exploring the issuance and lifecycle management of government bonds on distributed ledgers. [_],[_] These initiatives signal how tokenisation – representing real-world assets as digital tokens – could modernise securities and other asset markets.
Tokenisation can, in principle, allow assets such as land, infrastructure or securities to be divided into fractional digital units, broadening the pool of participating investors and improving market efficiency. But the policy challenges – from investor protection to prudential regulation – are significant and require careful design.
Improving Trust in AI-Driven Applications
As governments deploy AI, they face growing pressure to ensure systems are transparent, accountable and secure.[_] The integration of AI, blockchain and smart contracts is still nascent but could enable more trustworthy automated decision-making.[_]
In principle, governments could record model versions, key training-data characteristics and performance logs on distributed ledgers, creating tamper-evident audit trails while using privacy-preserving techniques to protect sensitive data. This would support better oversight of how models evolve over time, stronger evidence for regulatory compliance and clearer accountability when decisions are challenged.
Some early pilots – for example in South Korea and within EU-funded research projects – have explored blockchain for AI data governance and digital content authentication, particularly in areas such as disinformation and deepfake detection.[_],[_]
These examples are early and should not be overstated. But they illustrate a broader point: blockchain’s institutional significance for policymakers lies less in any one use case, and more in the fact that transparency, reliability and auditability are built into how it works.
Case Study
The Stablecoin Market: Current Landscape
Blockchain technologies are reshaping payments, especially across borders – offering faster and cheaper alternatives to the traditional financial-system actors.
Stablecoins are the most established of the different forms of digital money, now exceeding $300 billion in circulation (up from $200 billion in 2024), with projections of $500 billion (and in some optimistic cases up to $2 trillion) by 2028.[_],[_]
New US regulation has given additional momentum to the stablecoin market this year, with established firms such as Bank of America, JPMorgan Chase and Citigroup publicly exploring how to participate. The EU, Singapore and Hong Kong have also enacted different models of stablecoin regulation, while in countries such as the UK the stablecoin regime remains in the consultation phase.
At the heart of this varied regulatory landscape lies a complex policy trade-off: regulators are attempting to safeguard consumers and preserve financial stability while also harnessing the potential benefits of digital-asset innovation, including faster payments, financial inclusion and reduced transaction costs.
Key Benefits
Lower cost. Transaction costs can be significantly lower. Cross-border payment fees today average 1.5 to 2.5 per cent (and over 6 per cent for remittances),[_] whereas live stablecoin deployment (for example, MoneyGram’s use of the Stellar blockchain to move funds) shows sub-five-second settlement with fees below 0.1 per cent.
Faster settlement. Moving from multi-day correspondent banking to instant or near-instant settlement reduces counterparty risk and releases working capital for businesses.
Programmability (automation and compliance). Stablecoins allow conditional, programmable payments – for example, funds automatically released when shipment or customs data are verified – linking payment, compliance and documentation within a single digital workflow, reducing administrative friction and error.
Resilience through diversification. For some countries, blockchain-based payments provide a credible alternative to legacy cross-border systems that rely on specific countries, supporting national financial resilience and sovereignty.
Financial inclusion. By enabling low-cost, near-instant transfers without traditional intermediaries, stablecoins can expand global market access for SMEs and suppliers, which would be especially powerful for developing economies.
Other Considerations
Blockchain-enabled payment systems support faster, cheaper and more inclusive payments – but only if governments make these systems safe, reliable and economically useful. Governments should focus on three key areas of risk to enable this to happen:
1. Consumer protection
The programmable, borderless nature of blockchain transactions brings powerful advantages, but it also introduces new considerations and risks. Irreversible transfers and a reliance on private platforms – with varying levels of security – expose users to fraud, scams and operational failures. Governments can strengthen user confidence by setting standards for secure custody of backed assets, robust identity-verification rules and clear redress mechanisms so users are protected without stifling innovation.
2. Financial stability
While stablecoins have the potential to strengthen digital financial infrastructure by enabling efficient, programmable and globally interoperable payments, they could also create liquidity pressures or lose their peg during stress events, especially if reserves are opaque or low-quality. To ensure they remain reliable, clear standards around reserve quality, transparency and routine stress testing can help maintain confidence and stability. Well-designed frameworks not only mitigate liquidity risks but also support the development of robust, trustworthy stablecoin markets that complement the broader financial system.
3. Monetary and regulatory integrity
The growing use of stablecoins creates opportunities to modernise payments and expand financial access. However, heavy use of foreign-denominated stablecoins may weaken domestic monetary control, and unclear rules push activity offshore. These risks vary depending on a country’s local economic conditions, especially around inflation stability and financial openness. Proportionate, predictable and context-sensitive regulation can help preserve monetary sovereignty while also keeping responsible innovation benefits onshore.
Overall, building simple, secure and low-cost digital payment rails will be central to future economic growth – requiring swift regulatory clarity, continued experimentation with digital currencies and the integration of blockchain into a trusted digital infrastructure.
Ensuring Pro-Innovation Governance for All Blockchain Technologies
Governing blockchain technologies does not mean blocking innovation, but enabling productive innovation and high-impact adoption. Three overarching principles should steer this:
Use blockchain only where it adds real value. Governments should adopt distributed ledgers only when doing so would clearly improve trust, auditability or cross-institution coordination. In many cases a well-governed centralised system may be simpler and more efficient, so blockchain should be a deliberate choice, not a default one.
Prioritise integration and data quality. Blockchain systems must connect smoothly to existing infrastructure, and because immutable records can lock in mistakes, strong data governance, correction mechanisms and clear technical standards are essential to keep systems accurate, fair and workable in practice.
Balance performance with clear governance. Newer blockchain architectures improve efficiency but trade-offs remain, so governments need to select technologies with realistic performance characteristics and establish unambiguous rules on liability, responsibility and oversight to ensure systems remain resilient and accountable at scale.
Policy Priorities for Governments
Blockchain is not a cure-all for problems related to data, trust or service delivery. But perfection should not be the enemy of progress. Governments do not need to wait for flawless systems to begin unlocking value.
Drawing on lessons from pilots around the world, four policy priorities stand out.
1. Match Tools to Problems
Technology adoption should be driven by problem-led demand, not by the supply of technology for its own sake. Blockchain is most useful where:
Multiple, potentially mistrusting parties need to maintain a shared record of state, and there is scope for a new intermediary or process to build trust among the transacting stakeholders.
Improved data auditability, programmability and resilience would create measurable public value.
Before choosing a blockchain-based approach, policymakers should ask:
Could a conventional database or API-based integration (coupled with strong identity access management and cyber-security protocols) meet the need more simply?
Who are the parties that need to trust – or verify – the record?
How will users challenge errors, and what recourse will they have?
Publishing short case studies of both successful and unsuccessful pilots can help future teams avoid repeating mistakes and clarify where blockchain genuinely adds value.
2. Build Robust Digital Foundations
Blockchain pilots succeed or fail largely based on the broader digital foundations in which they are embedded. Investment in the following key areas is essential not only for blockchain but for digital government more broadly:
Digital identity: trusted systems for verifying who people and organisations are, and for issuing, storing and verifying digital credentials including decentralised identity solutions.
Foundational registries: reliable Civil Registries and records of land, companies, vehicles and other core assets.
Interoperability and secure data exchange: platforms and standards that allow systems to talk to one another safely.
Cyber-security and resilience: robust protection against breaches and attacks.
Legal recognition of digital records and signatures: clarity on the evidentiary status of digital documents.
Governments are uniquely positioned to provide these shared infrastructures. They can also adopt open standards that allow multiple vendors and solutions to interoperate, preventing lock-in and enabling local innovators – especially SMEs and startups – to build services without hoarding user data in proprietary formats.
3. Conduct Transparent Pilot Evaluations
Many blockchain initiatives remain stuck in pilot mode, with lessons lost in internal reports or private vendor decks. To build institutional capability, governments should:
Establish simple, standardised frameworks for pilot design and evaluation.
Require public documentation (even if brief) covering:
Purpose and scope. What problem was the pilot meant to solve, and for whom?
Technical design and integration. How did it connect to existing systems? What interoperability challenges emerged?
Cost and resource use. What budget, skills and infrastructure were required?
Governance and accountability. Who was responsible? What legal or regulatory questions arose?
Data governance. How were data quality, integrity, privacy and links between on-chain and off-chain systems managed?
Outcomes and metrics. What worked? What failed? What conditions would be needed for scaling?
Publishing even short summaries can have outsized benefits. For example, UK pilots in areas such as digital trade documentation and regulatory reporting have highlighted not only the promise of distributed ledgers, but also the importance of legal recognition of electronic documents and the difficulty of translating complex legal rules into code.[_] Sharing such insights avoids repeating mistakes and refines future designs.
4. Establish Clear Governance and Regulatory Frameworks
Blockchain introduces new roles (validators, token issuers, node operators), new risks (from immutability of incorrect data to novel financial instruments) and new regulatory questions (for example, applications operating across borders, as we highlight in the case study).
Governments should:
Clarify responsibilities, liabilities and the legal standing of on-chain records, including how they interact with existing laws on contracts, evidence and data protection.
Ensure that regulatory frameworks are technology-neutral but capable of accommodating decentralised architectures, cryptographic proofs and privacy-enhancing technologies.
Provide guidance and, where necessary, regulatory sandboxes (for example, safe-harbour environments) where public bodies and firms can test blockchain-based systems under supervision.
Interpret privacy and accountability principles in a way that enables privacy-by-design, for instance through encryption, zero-knowledge proofs and selective disclosure, rather than seeing blockchain and data protection as inherently in conflict.
Done well, regulation can be an enabler of responsible innovation rather than a barrier to it, providing the certainty that serious public-sector deployments require.
Conclusion
Blockchain is best understood as part of the infrastructure of digital trust. Combined with strong digital-identity ecosystems, interoperable data platforms and sound governance, it can help governments deliver faster, fairer and more accountable services – while strengthening the integrity of markets and cross-border flows.
The choice facing governments is not whether to “adopt blockchain” in the abstract. It is whether to build the institutional, legal and technical foundations that allow tools such as blockchain to be used where they add genuine value – and to say no where they do not.
Jurisdictions that focus on real problems, adopt principled yet innovation-friendly regulation and invest in shared digital foundations will be best placed to turn promising pilots into lasting institutional capability. In doing so, they can not only harness new technologies, but also rebuild the trust and effectiveness on which the social contract ultimately depends.
Acknowledgements We are grateful to all external experts from industry and academia who have provided feedback on earlier versions of this paper, including Coinbase – which is a member of TBI’s Global Network for Change.