Distributed Ledger Technologies in Public Services

11. Glossary

Bitcoin

A type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Bitcoin can be used for online transactions between individuals, and addressed the "Double spend" problem to prevent the same account balance being spent more than once.

Blockchain

Specifically, blockchains are distributed ledgers in which records are linked and secured in a growing chain using cryptography, making it ever more difficult to modify retroactively.

This immutability makes blockchains useful for record keeping applications.

Consensus

In a distributed ledger each peer must follow consensus rules to ensure every copy is correct and identical.

Such consensus strategies are designed to make distributed ledgers robust against faulty or rogue peers.

Digital identity

A digital identity is a set of claims made by one digital subject (a person, an organisation, or a device) about itself.

The subject is unique and enhanced with specific attributes which provide information and validity. Digital identity is how we present digital subjects and demonstrate they have the required attributes, as proven by the owner or custodian of those attributes, to confirm the subject's validity.

Distributed ledger

A shared database spread across multiple sites and operators. Often such ledgers have no single central administrator, but are instead owned, updated and monitored by every operator, or "peer", with each maintaining a copy.

Distributed ledgers are useful for applications where no single central authority, or intermediary is available or desirable.

Encryption

Encryption refers to the operation of disguising plain text information so that it is concealed. The set of rules to encrypt the text is called the encryption algorithm. The operation of an algorithm depends on the encryption key, or an input to the algorithm with the message. For a user to obtain a message from the output of an algorithm, there must be a corresponding decryption algorithm which, when used with a decryption key, reproduces the plain text.

Identity

Identity is real world information about a person which describes them. We are given a legal identity at birth, with our birth certificate, which is used to demonstrate our legal rights to participate in society. We also have other contexts, disconnected from our personal being, such as when we act as an agent or delegate for someone else, or for an organisation e.g. as company director or government inspector.

Identity attributes

Our Identity attributes are pieces of information about us and that we build upon and extend over our lifetime. These are sometimes permanent, and sometimes temporary during tenure of position, or receipt of a benefit. Attributes are often sensitive personal data items such as date of birth, social security, medical or social condition. Often, they extend to biometrics or authority to perform or restrict a function. These attributes may only be valid in a given context or with a particular authority.

Many attributes are retained by public authorities and commercial third parties. These copies are used to verify identity through 'proof of knowledge' exchange. Often this leads to data inconsistency and loss. This lets attackers impersonate an individual by having a more complete set of answers to 'proof of knowledge'.

Permissioned Ledger

Private or permissioned ledgers are only open to authorised operators and provide the same core ledger facility as Public Ledgers. They do however have different operational properties such that they can scale and provide throughput not achievable on Public Ledgers. This provides inherent security as access is by invitation, adding layers of lifecycle management and centralised control. Processing is shared by the consortium who can agree data and processing characteristics appropriate to requirements of their application.

Personal data

Personal data includes basic data such as name, address, date of birth, phone number, email address and bank details from which a living person could be identified, as well as additional special category data like health records, ethnicity, sexual orientation, religion, race and political views. Public authorities and commercial companies typically protect personal data with a local digital identity. This lets us interact with local services and functions but rarely allows re-use of that proof in other contexts.

Usually the data is about you but does not belong to you. You may own your house but the record that you own your house belongs to the land register. Medical data is about you but maintained and held in trust by the health service.

Public Ledger

Public Ledger DLTs are fully open to any participant assuming they play within the rules. It is not just the ledger data that is shared but the workload of verifying the transaction is distributed in order to maintain a balanced and trusted ledger. It is the distribution of this verification that ensures no single party can enforce invalid transactions into the permanent records. This verification workload can lead to constraints in scalability and throughputs in public ledger systems.

Smart Contract

Software that allows users to create invoices that pay themselves when a shipment arrives or share certificates which automatically send their owners dividends if profits reach a certain level. Smart Contracts can provide a distributed execution environment to automate transactions according to pre-agreed rules without any human interaction. Smart Contracts can be built on to hold funds, support Initial Coin Offerings, and even Decentralised Autonomous Organisations. Popularised in the Ethereum public blockchain's solidity programming language, they have received popular attention and have been exploited by entrepreneurs—but nevertheless human error has allowed their autonomy to be exploited in real-world scenarios.