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Blockchain gains foothold in Australia
A number of blockchain projects are under way in Australia, but questions remain about whether the technology is wanted
Australia’s Data61, IBM and a leading law firm have shrugged off enterprise ambivalence about blockchain technology and are working together to develop a cloud-based platform for smart contracts.
Working with Herbert Smith Freehills, Data61 – the Commonwealth Scientific and Industrial Research Organisation’s digital research network – and IBM are building the Australian national blockchain, intended to manage smart contracts from negotiation, through signing and across the contract’s lifecycle. They describe the initiative as “a new digital backbone for business”.
Data61 described smart contracts as computer protocols that facilitate the transfer of digital assets between parties based on agreed stipulations or terms with transparency and auditability built in.
“It is similar to a traditional contract in most ways, including definition of rules and penalties around the agreement, except for the fact that it can also enforce the agreed-upon obligations automatically,” it said.
“Smart contracts help you exchange money, property, shares or anything of value in a transparent, conflict-free way while avoiding the services of a middleman.”
A pilot scheme is under way, using IBM blockchain and cloud as its technical foundation, and if the system works as expected, it will be offered first to Australian enterprises and then internationally.
But although the blockchain scheme may be technically feasible, there are questions about whether it is wanted. Gartner’s 2018 CIO survey revealed that only 1% of CIOs are using blockchain in any form today, 8% have current plans, but 77% say their organisation has no interest in blockchain, leading analysts to describe the technology as “massively hyped”.
Whether Australia’s CIOs will change their minds when smart contracts are available as a service remains to be seen.
Despite Gartner’s concerns, there is some local appetite for blockchain and the eyes of the world are on the Australian Stock Exchange, which is working with New York-based Digital Asset Holdings on a blockchain-based platform to replace the current Chess clearing system.
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- Companies need to ensure that rushed blockchain and other new technology projects are not introducing security vulnerabilities by gaining granular visibility of network activity, according to RSA Security.
- The adoption of blockchain technology is likely to increase in the consumer goods industry as more businesses use the technology to address fraud and improve supply chain management.
- HSBC and ING used blockchain to successfully complete a real-world trade financing transaction as part of a pilot.
- By doing away with a central authority in IoT networks, blockchain technology can reduce the risk of IoT devices being compromised by a single point of security failure.
Australia’s annual lawtech conference in September is also making blockchain a highlight, and has invited US-based Dan Katz as the keynote speaker, who will explain why lawyers and law firms need to embrace innovations such as blockchain – not least as a survival mechanism in a digitally disrupted era.
Natasha Blycha, blockchain and smart contract legal contract lead at Herbert Smith Freehills, said the technology could transform the legal and wider business landscape.
She said businesss are “enthusiastic about process automation, and how it can support a move away from paper-based systems, simplify supply chains and quickly and securely share information with customers and regulators”.
The Australian national blockchain now under development by the trio will support the development of smart contracts, featuring smart clauses that can take in data feeds from external sources, such as sensors and devices connected to the internet of things, to allow clauses to self-execute once specified threshold are met. That could, for example, see a payment automatically made once a delivery is received.
Add in the real-time payments promise of Australia’s New Payments Platform and the opportunity for truly real time and automated business begins to crystallise.