The blockchain has the potential to deliver “profound” benefits to Australian innovation and disrupt entire industries, but isn’t a “silver bullet”, according to Data61.
The CSIRO’s data agency this week released two reports on blockchain technology, investigating the opportunities and risks associated with it and potential scenarios going into the future.
The reports found the technology has huge potential to reduce costs and improve innovation in several sectors and in government, but also has a number of risks and constraints that may slow or prevent its widespread adoption.
The reports are the result of nearly a year of research, and were funded by the Federal Government as part of the National Innovation and Science Agenda.
It’s crucial to be studying the benefits and risks that blockchain technology brings with it, Data61 CEO Adrian Turner says.
“The pace of change we are experiencing as a nation is exponential and we can’t afford to be followers in the adoption of emerging technology like blockchain,” Turner says.
The blockchain is a distributed ledger that records transactions but isn’t owned or controlled by any one central party. It was originally developed to handle digital currencies like bitcoin, but its potential has now grown far beyond this, the reports found.
Blockchain can prove where information has come from and where it has gone, giving the potential for it to be used in financial services, regtech, and government registries.
In the developed world, blockchain can enable quicker business innovation, reduce the costs of establishing business relationships and risks of transaction, Data61 says.
Treasurer Scott Morrison says they should be used by government and businesses to help pave the way forward.
“It will give decision-makers in business and government guidance on matters they need to consider in developing a system that uses blockchain technology,” Morrison says.
“We should all be interested in blockchain developments and its potential application, right across our economy.”
The first report identifies the vast opportunities and risks that come with the adoption of blockchain technology. It found that it has the most potential to enhance productivity in banking, agriculture, logistics and health because it removes the need for a third party to be involved in these transactions reducing costs and saving time.
But the report also found a number of barriers to the widespread adoption of blockchain, and a series of privacy concerns and risks associated with it.
“The blockchain is not a silver bullet, and has certain limitations that should be considered before and during the design and development of new systems,” the report states.
Data61’s other report lays three possible scenarios for the adoption of blockchain in Australia.
“Scenarios allow decision-makers to consider if similar possibilities were to occur, what should they do to prepare for the future ahead of time,” said Data61’s Rob Hanson.
Data61 found that blockchain is still in its “infancy” in Australia, and much more research and funding is needed before it achieves widespread adoption.
“There is still much that is unknown about the development of trustworthy blockchain-based systems. Further research is required to improve our knowledge about how to create blockchain-based systems that work, and how to create evidence that blockchain-based systems will work as required,” Data61 says.
Its recommendations included more funding for research, investigations into worst-case scenarios, technologically-neutral policy and for regulators to take the lead and get on the front foot.