Blockchain Not Superior To Existing Technologies, Says Australian Govt Agency

Blockchain, News | October 24, 2018 By:

Peter Alexander, chief digital officer of Australia’s Digital Transformation Agency (DTA), said that blockchain is at the “top of a hype cycle” and is less effective than other existing technologies.

The DTA received AU$700,000 (about US$500,000) from the government in May and was directed by former Prime Minister Malcolm Turnbull to investigate potential applications of blockchain across the government. Since then, the agency has been working with a number of government agencies to develop prototypes for the use of blockchain to deliver services, including with the Department of Human Services for welfare payments and the Department of Home Affairs for cargo settlement.

Speaking at a parliamentary committee meeting on Tuesday, Alexander said that after the DTA’s initial research, they found that blockchain needs time to develop into a standardized technology.

“Blockchain is an interesting technology that would well worth being observed but without standardization and a lot of work to come — for every use of blockchain you would consider today, there is a better technology — alternate databases, secure connections, standardized API engagement,” Alexander said. “I want to say to be clear we’re not saying blockchain doesn’t have potential. It’s just today without standardization there is a challenge of blockchain becoming a little fragmented and when we get into a standardized world, the opportunities for blockchain will grow.”

Alexander said that while blockchain has shown potential for “low-trust engagement,” the technology might not be suited to many government applications.

“Generally speaking when government is engaging with someone, we want to have a trusted relationship with them,” Alexander said. “We want to know who they are, what they’re entitled to and we want to give them a service that’s personalized and meets their needs. Blockchain is good for low trust engagement where you don’t know who you’re dealing with, you have low trust in that person or business, but you have a series of ledgers that can give you some validation. It’s transactional in that interaction. It doesn’t build a maintenance of trust ongoing – it just does that transaction.”

Alexander also said that most of the blockchain hype comes from firms seeking to make profits in the space.

“I think it would be fair to say a lot of big vendors, and technology vendors, are pushing blockchain very hard, they see sales opportunity in it,” Alexander said. “So internationally, most of the hype around it is from vendors and companies, not from governments, or users and deliverers of services who are saying ‘blockchain is the solution to our problem’. It’s not that we don’t trust any of the vendors — that would be an unfair characterization — we trust the vendors, but note that the motivation is generally sales and making revenue.”

The DTA is not the only government agency in Australia that is studying blockchain use cases. Earlier this month, CSIRO’s Data61, Australia’s digital innovation network, teamed with the Commonwealth Bank of Australia (CBA) to explore the potential for blockchain to create “smart money.”