Blockchain’s new coming of age
Niki Ariyasinghe: Sees a huge range of potential use cases for blockchain in the public sector alone
In a week when Bitcoin broke through the $US2,000 barrier, news emerged that a pallet of Coonawarra wine had completed its 8,100 kilometer journey to China's Qingdao with its provenance proved by blockchain every step of the way.
A blockchain based platform designed by Sydney start up TBSx3 managed the handoffs of the pallet at eight separate stages in the supply chain, each of which ensured the authenticity of the goods being shipped.
The trial was overseen and validated by KPMG and involved supply chain giants including DP World Australia, DB Schenker, Hamburg Sud and local wine producer IUS which exports to China.
Blockchain is already making significant inroads in the banking and fintech sector where it is being explored as a payments platform, but also has the capacity to significantly impact other areas of the economy.
Next week Data61 will release the results of a nine-month investigation into how blockchain could be deployed in Australia, and detail four potential applications.
Already blockchain is the subject of significant research by the major banks which see it as a potential alternative payments platform.
The Australian Stock Exchange meanwhile has invested $22 million in New York-based start up Digital Asset Holdings,which is testing whether a blockchain-based system could replace CHESS, the clearinghouse system currently used to manage exchange of company shares.
According to the latest Startup Muster, only 3.4 per cent of the nation’s fledgling businesses are focused on blockchain. Even so, federal and state governments are already exploring the technology both for their own application and from a regulatory standpoint.
NSW for example is considering how blockchain could be used to manage land title transfers, or to boost consumer protection.
Speaking on a blockchain panel at CeBIT's eGovernment conference, Rhys Bollen, executive director of regulatory policy for the NSW Department of Finance, Services and Innovation noted that although the "jury was still out" on blockchain it was a technology of interest to the public sector.
He acknowledged that blockchain was a challenging technology to understand, but added; "I'm not sure my mother knows how her Visa card works. I think blockchain will be invisible to most consumers – if it's better than the status quo a commercial enterprise will make a success of it. And my mother won't know how it works."
Victor Jiang, founding partner of Sapien Ventures and chairman of Civic Ledger, which develops blockchain based solutions for public sector applications, said that the company had been working on a pilot with the City of Melbourne that would use blockchain to allow people to trade parking entitlements.
"The CIO had a great idea to work with partners to develop an exchange for people with parking permits to trade them.
"It is really that Airbnb concept applied to government-controlled entitlements," he said. The technical challenge however of ensure secure transfer and ensuring that vehicle number plates associated with that entitlement at a specific time of day were up to date required a sophisticated solution.
Mr Jiang said that a blockchain-based register was currently in pilot. "It's using a distributed ledger to report who has what entitlements, for what geographies.
“It can be geo-fenced and people can trade hourly or weekly so that the parking inspector goes around with mobile app to scan the licence plate to see if it has validity.
"Apply that to other Government controlled entitlements and the use cases are almost limitless," said Mr Jiang.
Civic Ledger has developed a blockchain platform exchange for government services that allows government issued certificates to be issued and tracked through a single consensus database.
Niki Ariyasinghe is director of partnerships for blockchain consortium R3 CEV which last week announced it had received $US107 million of additional funding. The Commonwealth Bank and Westpac were among the investors in this round.
R3 has developed the Corda distributed ledger platform, but Mr Ariyasinghe told delegates at CeBIT that although there were a huge range of use cases for blockchain; "The key challenge I see is that it is an experimental tech - given government institutions are relatively risk averse, is it mature enough for institutions?"
It's getting there according to Bradley Brown, national manager for strategic intelligence and policy at Austrac.
He said that given the organisation's remit as the national regulator with oversight of anti-money laundering and counter terrorism finance rules, blockchain technologies held great potential.
He said that government had historically balanced risks and opportunities associated with any innovation, and that government and agencies were now “far more forward leaning on products that are immature,” in order to unlock their potential and be more efficient and effective.
He said however that a future “utopia” where blockchain was able to disintermediate the financial sector, having significant regulatory and cost benefits, was not something to anticipate in the near future.