We continue to explore the future of the revolutionary technology called blockchain, and its potential practical applications.
In the previous article explaining how blockchain could potentially fuel future development, we unpacked two reports generated based on an investigation conducted by CSIRO’s Data61 research unit. We continue that topic, focusing on impacts blockchain could have on financial services.
Changing face of payments
Until now, blockchain has primarily been used in the financial world for releasing cryptocurrencies. There are currently almost 1000 cryptocurrencies in circulation, but the best known and most trusted are Bitcoin and Ethereum.
The Data 61 reports point out that these cryptocurrencies, while resting on public blockchains, can easily be made private through tools such as virtual private networks, creating greater access controls; however, some industry groups are working on private blockchain solutions, which are typically smaller and “can provide improved security and performance”.
Dr Philippa Ryan, a lecturer at University of Technology Sydney and one of the world’s leading legal experts in blockchain technology, believes blockchain use will soon be more common in financial markets because of its advantages over traditional exchanges. “The slowest transaction right now is about 12 minutes to transfer to the other side of the world, with fees so low no one even notices them,” she explains. “However, regulators don’t see this as a benefit, they see it as a risk, because they can’t trace funds like they can now.”
The financial potential of blockchain has been well documented, but Ryan thinks we’ll begin to see possibilities in other areas, such as digitising identity. “It’s much safer than any system we have right now,” she says, predicting custodianship of identity will eventually be given to the individual, rather than stored on government databases. “I can control to whom I give permission to access my information, and precisely what inspections of my personal information I am giving to them,” she adds.
Ryan predicts that some of the most revolutionary uses of blockchain will be in smart contracts. “They will run on a certain set of intelligent, complex logic and information,” she says. “For example, you could have an agreement with the Tax Office that whenever your income goes over a certain amount, they will take a percentage in tax from your bank account – and for such an arrangement they might offer a 10 per cent discount.”
“They are setting up a world of set-and-forget interactions, like a debit arrangement with your energy bill, but far smarter,” she adds. “In the near future, someone like a university or government is going to design a killer app, and it will see a smart contract operating on a blockchain and it won’t be long before we start to see the concept released into the wider community.”
Ryan is part of the Australian team that won the bid to lead the standardisation of blockchain around the world. “We are collaborating with other countries to create a product that anything on the blockchain with the International Organization for Standardization tick of approval will create market confidence, which then creates further interoperability,” she explains.
No matter what, experts agree the technology is here to stay, and will become part of our daily lives sooner than we may imagine.
This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
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