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Australian government warns of blockchain gaps

Digital Transformation Agency dispels some myths around blockchain, calling for government agencies to be cautious about using the technology

Australia’s Digital Transformation Agency (DTA) has warned fellow government agencies of the limitations of using blockchain to share and exchange information across government.

In an advisory, the DTA, which roped in a cross-agency team to ascertain whether blockchain is suitable for government services, found gaps in the technical and business facets of the technology when applied to pilot projects or compared with alternative technologies.

These include additional risks when using permissioned consortium blockchains, in which leading users often control the blockchain, effectively eliminating the perceived benefits of decentralisation.

Also, the DTA noted that blockchains are not encrypted by default, and data is available to all users in private and public blockchains. Although there are permissioned blockchains that limit some access, that data is not encrypted by convention, it said.

With blockchain being one of a number of data storage and exchange solutions, the DTA called for agencies to go beyond experimentation and prototyping, to real-world applications using proven alternatives already available for immediate use.

It said: “Blockchain technology is still new and should be investigated with the mindset of ‘how could blockchain technology potentially benefit us?’ rather than ‘how can we make our problem fit into the blockchain technology paradigm?’.

“Organisations should treat blockchain technology like they would any other technological solution at their disposal and use it in appropriate situations.”

In considering technical solutions, the DTA said agencies should focus on addressing the needs of users and explore those that will meet that need.

“Understanding user needs and understanding the tools, skills and systems required to build, host, operate and measure the solution are both criteria under the Digital Service Standard,” it said, referring to current government guidelines for designing and delivering e-services.

Read more about blockchain in Australia

  • Australia’s blockchain scene is buzzing, as organisations ranging from startups to the country’s largest banks and government agencies look to harness the technology.
  • A number of blockchain projects are under way in Australia, but questions remain about whether the technology is wanted.
  • Although blockchain is no silver bullet, experts say Australian organisations should embrace and invest in the technology.
  • By doing away with a central authority IoT networks, blockchain technology can reduce the risk of IoT devices being compromised by a single point of security failure.

The government’s latest advice on blockchain, which is consistent with the recommendations of the US National Institute for Standards and Technology and the Organisation for Economic Cooperation and Development, come at a time when interest in blockchain is growing in Australia.

Data61, IBM and law firm Herbert Smith Freehills, for example, are working together to develop the Australian National Blockchain, a cloud-based platform for smart contracts.

A blockchain-powered global trade experiment to track almonds that were shipped from a grower in Sunraysia, Victoria, to Hamburg, Germany, was also completed in July 2018.

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