A government cryptocurrency could be built on a blockchain, but there is really little point. Some properties that it would need are:

* It's backed by usual pounds by the treasury, which means only they get to issue new coins (no public mining rewards).

* Court judgements must be able to block, reverse or force transactions. This means either the government gets a copy of all private keys, or simply has master keys for the system.

* UK government would probably want to attach names to all accounts, so new wallets could probably be only generated on some gov.uk site, or participating businesses like existing banks.

In the end, the blockchain is wasteful and inefficient when you could just have a big-ass server somewhere with an API.

> * Court judgements must be able to block, reverse or force transactions. This means either the government gets a copy of all private keys, or simply has master keys for the system.

You can certainly avoid that, just make it part of the protocol. You could create currency with such rules on top of Ethereum today. Court judgments simply become a part of trusted oracle.

Hasn't UK been fighting encryption since at least the 90's ?

To be honest, they have been fighting encryption since the 30's.

Public key encryption was actually first thought of at GCHQ - but was you would expect they kept it secret:

https://en.wikipedia.org/wiki/Public-key_cryptography#Classi...

So has the US:

https://dspace.mit.edu/bitstream/handle/1721.1/97690/MIT-CSA...

Aye. We should just go back to using the Royal Mail.

Wouldn't be surprised if the surveillance infrastructure for physical mail started deteriorating already and a beautiful handcrafted, scented letter with calligraphy could fly under the radar.