Perth business is coming around to see the advantages of blockchain, although challenges remain.
Blockchain technology has not gone unnoticed among Perth entrepreneurs and national companies.
Some experts are heralding blockchain as the next big leap forward for the internet, with the potential to disrupt industries in much the same way websites, apps or social media have done.
However, few of the researchers from global social media groups, who featured at a Business News breakfast last month, saw it as a priority.
A whole world of mystery surrounds blockchain, and it definitely requires some explanation.
Its creator goes by the name Satoshi Nakamato, although whether this is a single person or a group is unknown. What we do know is Nakamato published a paper outlining the bitcoin protocol in 2008, and today owns bitcoins to the value of more than $US1 billion.
A year ago, one bitcoin would have set you back less than $US500. Today, its value is more than three times that. However, blockchain has far more applications than the bitcoin market.
A blockchain is a secure online ledger, providing permanent asset transaction summaries. Each asset, and each transaction (buying or selling), has its own block linked together in chains, hence the term blockchain.
The key point to remember is that each unique block, a time-stamped online transaction record, cannot be altered. This is because this record is sent to all the millions of computers around the world (called ‘miners’) that are linked to the blockchain.
The theoretical implications of this are that any asset transaction can be performed quicker, cheaper and safer than using a traditional intermediary.
The Economist recently referred to blockchain as the ‘trust machine’. Once people start to trust their transactions to a blockchain, entire industries could be changed forever.
Financial institutions were the first to look into blockchains. The ASX has spent many millions developing a blockchain replacement for its CHESS equities settlement and clearing system.
Meanwhile, the Commonwealth Bank of Australia has been experimenting with blockchain solutions for a couple of years.
While it is still early days, executive general manager of cash flow and transaction services, Michael Eidel, believes the technology has some potential.
“I believe the blockchain could reduce some pain points for small to large organisations and government,” Mr Eidel told Business News.
“Its core benefit is that it enables and simplifies transfer of value.
“Cash has become less useful for this, and banks, while trusted, can be slow and costly, especially in international transactions. So maybe the blockchain can help.”
Among many other experimental activities, Mr Eidel and his team have been running a blockchain payments solution around the purchase of coffee in the Sydney office. Apparently it is working well, and provides useful merchant and customer insights.
In Perth, there are various entrepreneurs looking at, or actively developing, blockchain solutions.
John Bulich and his team from Ledger Assets have already developed a world-first blockchain app for photos called Uproov, as well as a low energy power blockchain by the name of Ecochain.
Mr Bulich is a also co-founder of Power Ledger, a peer-to-peer renewable energy trading system, and Enome, a blockchain of medical records.
Having recently signed an MOU with the Garvan Institute on the application of the system for clinical trial enhancement, Enome will soon be trialled to enhance data collection and demonstrate privacy.
The trial will be the first of its kind in the world to use patients’ mobile phones and blockchain technology for the secure storage and sharing of medical records.
“After introducing the blockchain technology to industry experts, it didn’t take them long to understand the huge implications blockchain could have in their sector,” Mr Bulich told Business News.
Lateral CEO Tommy Shin, a 2016 40under40 winner, has partnered his Subiaco-based business with ASX-listed DigitalX to develop blockchain technology for clients to assist with security, transparency and payments.
“Blockchain technology changes everything,” Mr Shin told Business News.
“For the first time, an internet user can transfer a unique piece of digital property to another internet user that is safe, secure and widely viewable to the public.”
Blockchain is not without its challenges, however. For one thing, a blockchain can become bloated. Bitcoin itself is has grown to 43GB in size, and as every computer with access to a blockchain needs the whole chain network, size is becoming a problem.
As often with new technology, incumbents can feel threatened and regulators can be left behind.
“Blockchain tech can reduce many unnecessary processes and cut the cost of doing business dramatically,” Mr Bulich said.
“This can often displace industry incumbents and create resistance to the technology.
“Some countries have embraced blockchain (and are) moving fast and are starting to take a leading role in its application and development.”
Mr Eidel agrees there are issues that need resolving.
“The privacy challenge is not solved,” Mr Eidel said.
“There could be too much transparency in certain cases; plus who sets up the rules and controls those rules?
“Perhaps one way to view the potential of the blockchain is to compare it to artificial intelligence, robotics and quantum computing. These are all emerging technologies, promising, but not yet proven.”
