Blockchain projects have so far been heavily customised and narrow in scope, but that could change quickly if a pilot of the Australian National Blockchain (ANB) proves successful later this year.
The ANB project, built by IBM and CSIRO’s Data61 arm with the support of legal firm Herbert Smith Freehills (HSF), is a contract-management platform designed for businesses in every industry to use as a single, indisputable source of the truth.
Such contracts can not only be used as a reference point for contract conditions throughout the life of the partnership, but can be automated using checkpoints that trigger specific actions if certain criteria – which may be established by temperature, location or other Internet of Things (IoT) sensors – are met.
For example, a shipment of frozen goods might be flagged for inspection and potential penalties if equipment failure allows the temperature inside a transport truck to pass a contractually-agreed level.
The ANB’s flexible architecture will allow it to be adapted to a broad range of applications, providing a digital version of contracts that Paul Hutchison, IBM Global Business Services vice president and partner for cognitive process transformation, calls “the guardrails of trust between businesses.”
“Other blockchain solutions have taken a very narrow or focused use case,” Hutchison told Information Age.
“By taking the ecosystem of a contract, and modelling it on the blockchain, we can digitise that guardrail.”
Solving the trust problem
Blockchain may be conceptually clear, but its implementation has proven challenging.
A recent Gartner survey of CIOs, for example, found that just 1 percent had any kind of blockchain running in their organisations and just 8 percent were in short-term planning or actively experimenting with the technology.
Most of those blockchains are still at early stages, with recent supply-chain, asset management, and e-voting applications showing promise in creating indelible, verifiable records of a process’s functioning.
Applying the technology to the verification of credentials has been a win for the University of Melbourne, which recently ran an internal pilot using blockchain to track completion of the Melbourne Teaching Certificate using Learning Machine’s Blockcerts-based issuing system.
Blockchain’s open verifiability and non-repudiability show promise for addressing what university executive David Israel called “absolutely blatant and brazen credential fraud” that has seen people misrepresenting academic qualifications that have been hard to confirm.
Speaking to the recent FST Media Future of Financial Services conference, Israel – director of educational innovation and commercial development within the university’s Office of the Provost – said cracking down on credential fraud was “like whack-a-mole.”
The situation had become even harder with a broader range of institutions offering incremental credentials that delivered valuable skills that might not normally be recognised by a full university degree.
“When we combine the state of higher education, the technological disruptors and the risk of credential fraud, we are facing a very interesting time,” he said, noting that Blockcerts could track both university degrees and industry ‘micro-credentials’ within a standard framework.
“What we really have is a problem of trust, but with blockchain once a credential is issued it can’t be hacked. We see this forming the backbone of a lifelong record of achievement that’s within the sovereignty of the student.”
Helping enterprises stop dragging the blockchain
Herbert Smith Freehills blockchain and smart legal contract lead Natasha Blycha said the ANB project was intended to “put together a digital spine for Australia” that would, similarly, support a commercial relationship for as long as that relationship lasts.
“A lot of effort goes into industry-specific pilots, or pilots on a specific use case,” she said. “But there aren’t many contracts that don’t have some automated cues that you could digitise or automate in some way.”
“This is particularly relevant if you have long-term contracts with multiple participants, who have regulatory and contractual obligations to one another over the lifespan of that contract.”
The potential for automating business-contract compliance monitoring was recently demonstrated in a shootout that pitted 20 US lawyers against an artificial intelligence (AI) system built by emerging AI firm LawGeex.
The AI engine proved 94 percent accurate in analysing a series of non-disclosure agreements (NDAs) and summarising the key requirements – on par with the best of the 20 lawyers and well ahead of the average accuracy of 85 percent.
Pairing such AI technology with an indelible, incontrovertible record of a contract’s terms is expected to help change contract management, helping businesses move away from filing reams of paper to enforceable agreements that function alongside operational business processes.
Modelling the contract within a blockchain provides “a third party to the consensus process” that arises when contract terms are disputed, Hutchison said.
“It’s all about removing the quicksand, and creating transparency down the line.”
If you're interested in learning more about Blockchain and the Australian National Blockchain in particular, you can check out an event that the ACS running with Hilary Goodier and Melanie Ryan of global law firm Herbert Smith Freehills. Click here for more information.