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'… taking up technologies, such as blockchain, can give Australia an edge on the international stage. It’s a competitive industry. So, it’s important we keep pace with the rest of the world when it comes to new technologies — if we’re not constantly pressing ahead, then we risk going backwards. In other words, we want to help position Australia as a global leader in blockchain technology.’

(Senator the Hon Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology) [49]

Australia is not alone in recognising the potential of blockchain. Several nations have made considerable inroads with regard to not only the technology itself, but in developing an environment that can support and promote it. For example, Estonia has used the Keyless Signature Infrastructure (KSI) blockchain to back its business, healthcare, property and succession registries, as well as its digital court system and state gazette. [50]

In October 2019, Xi Jinping, President of the People’s Republic of China, said that China needs to ‘seize the opportunity’ afforded by blockchain technology. President Xi noted that blockchain technology already has a wide array of applications within China, from financing businesses to mass transit and poverty alleviation. [51]

Likewise, in October 2019, the European Commission released its report, Blockchain now and tomorrow: Assessing the impact of distributed ledger technologies, which provides an in-depth exploration of blockchain and its potential, while also avoiding the hype associated with the technology. [52]

Investment

A 2018 Price Waterhouse Coopers (PWC) survey of global executives concluded that 7% currently consider Australia to be a blockchain leader, ahead of Japan (6%), the United Kingdom (UK), Denmark, India and Hong Kong (each at 5%). While still significantly behind the Unites States (29%) and China (18%), respondents predicted that only Australia, China and India were on target to expand their share through to 2023. [53]

IBM has been investing in blockchain in Australia, stating that:

IBM has invested in local provisioning of blockchain network as a service out of its local IBM Cloud data centres in Australia.

With IBM operating the infrastructure locally in Australia, organisations are able to run blockchain solutions sovereign to the Australian market. IBM is pleased that Australia is becoming a leader in the implementation of blockchain for industry and that IBM Australia is playing a key role to drive this success. [54]

Financial services are seen as the most advanced industry in developing blockchain (46%) compared with industrial products and manufacturing (12%), energy and utilities (12%), healthcare (11%) and government (8%). [55] However, these figures represent a shift away from the financial services sector as the near-exclusive user of blockchain technology in 2017 (82%) and a growing engagement with blockchain’s potential across a broader range of industries. [56]

Australia has demonstrated innovation and leadership in blockchain in areas such as international standards, bond operations and smart programmable money, while also conducting trials in the energy, agricultural and public sectors. [57] For example, in a world-first trial, the Commonwealth Bank of Australia and CSIRO’s Data61 conducted a trial for smart money (also known as programmable money), motivated by the context of Australia’s National Disability Insurance Scheme (NDIS). [58] The proof-of-concept trial demonstrated that smart money would, if scaled and applied across the NDIS ecosystem, result in annual economic benefits equating to hundreds of millions of dollars. [59]

The World Trade Organization has highlighted the potential for blockchain to increase the participation levels of micro, small and medium enterprises (MSMEs) in international trade by lowering barriers to entry, providing access to trade finance and facilitating trade procedures. [60] Small-to-medium enterprises or organisations account for roughly 93% of Australian blockchain activity. [61]

IBM have noted that blockchain could significantly transform international trade, in part by helping reduce the physical paperwork associated with customs clearance, transportation and logistics, and thus become the future of trade infrastructure—provided the challenges faced by the technology are addressed and projects demonstrate success. [62]

Singapore has announced plans to develop blockchain-based digital trade infrastructure in the form of ‘TradeTrust’, a set of standards, digital infrastructure and governance and legal frameworks which will facilitate the exchange of digital trade documentation. TradeTrust is anticipated to achieve efficiencies in cross-border trade and logistics documentation processes and to reduce costs associated with paper-based processes. [63]

Case Study: Pellar Technology

Established in 2017, Pellar Technology has been providing enterprise blockchain solutions to clients in Korea, Singapore, Malaysia and Thailand.

Pellar built their own blockchain, capable of transacting at 20,000 transactions per second, which is dramatically faster than many of the existing solutions in the market. Pellar offers end-to-end blockchain solutions using their platform, the demand has been predominantly in the finance and supply chain sector. Their solutions have been used to build digital banks, asset trading, and manufacturing systems. Their system processes over 10 million transactions daily.

A client in Malaysia is using their platform to disrupt digital payments, using Pellar’s blockchain to bypass the existing banking and payment infrastructure in order to reduce transaction fees and latency. Pellar have also assisted a large automotive manufacturer in Thailand to record car ownership, manufacturing and servicing information on blockchain, to help provide transparency and trust.

The Australian market has been substantially slower for Pellar, as they have found businesses are hesitant to invest and adopt blockchain technologies. Pellar are still optimistic that the domestic market will eventually trial new ideas and technologies.

Recently, Pellar was named 2019 Emerging Exporter of the Year by the Victorian Government and nominated as 2019 Blockchain Company of the Year by Fintech Australia.

Case Study: Inter-Government Ledger

The Australian Border Force (ABF) has developed the Inter-Government Ledger (IGL)—a capability (proof of technology) to share documents electronically between participating governments. For international trade, there is an issue where an importing regulator has no direct relationship with an exporter and, more importantly, there is no digital mechanism to verify documents they provide. This leads to the importing regulator to rely upon physical documents—supported by signatures and wet stamps—to validate the claim or information on that document, rather than being able to use digitised data. Moving these paper documents adds costs and delays to the international trade process. The IGL aims to assess the viability of replacing paper documents with high-integrity digital processes. IGL involves a blockchain solution that will help streamline the process, reduce costs and reduce compliance issues at the border by creating a ledger of electronically verifiable digital documents, suitable to all trading partners.

Collaboration

A number of annual blockchain-specific conferences and events are held internationally which represent opportunities for increased collaboration between jurisdictions, as well as for Australian businesses to attract investment and promote their services. High-profile events include New York’s Consensus, Shanghai’s Wanxiang Blockchain Summit, Dubai’s Future Blockchain Summit, Singapore’s Blockchain Summit and the OECD Global Blockchain Policy Forum. In addition to business missions to New York, Shanghai, Taipei and Dubai, Austrade has held international virtual events for Australia-based parties to attend.

One barrier to increasing investment and collaboration across borders is a limited understanding of the blockchain-related needs of potential customers or investors, relative to the services which Australian blockchain firms can provide. Improving the ‘pitching’ skills of Australian blockchain businesses—as well as taking a more targeted approach to helping blockchain providers find the right customer or investor—may help maximise the impact of international engagement opportunities.

Case Study: Austrade 2019 Mission to Consensus

Austrade has run a number of overseas missions to create export and partnership opportunities for Australian blockchain businesses, as well as to build Australia’s reputation as a global blockchain leader. In May 2019, Austrade partnered with the (then) Australian Digital Commerce Association (now Blockchain Australia) and the Department of Industry, Science, Energy and Resources to send 43 delegates from 36 Australian organisations to the world’s largest blockchain conference, Consensus, in New York. The mission generated a number of export and investment leads and also raised the public profile of the Australian blockchain industry. The delegation also generated a number of links between participants, which has increased collaboration within the domestic ecosystem.

Case Study: Netherlands

The Netherlands established the Dutch Blockchain Coalition (DBC) in 2017 as a joint partnership between industry, government and the research sector to identify where blockchain’s practical potential lies, as well as identifying related challenges.
In 2017–18, DBC partners invested over €1 million and made 30 FTE available to realise an agenda with three lines of action:

  • Conditions: informing the development of blockchain technologies with standards and norms that are compatible with European views, values, norms and regulations
  • Human Capital agenda: improving domestic capacity in blockchain expertise within organisations, through a range of initiatives
  • Self-Sovereign Identity (SSI): developing a ‘digital passport’ that the citizen installs via a blockchain app and which can only be unlocked and used with a facial scan of the owner.

DBC has also established a number of working groups for 2019, focussing on Cyber Security, Legal, Governance, Cabinet & Board Level Engagement, and Research Agenda respectively.

Footnotes

[49] Speech to APAC Blockchain Conference, Sydney 23 June 2019

[50] e-Governance: The Digital Republic Secured by Blockchain

[51] President Xi Says China Should ‘Seize Opportunity’ to Adopt Blockchain

[52] Blockchain now and tomorrow: assessing the impact of distributed ledger technologies

[53] Blockchain is here. What’s your next move?

[54] IBM Statement supplied to Department of Industry, Innovationa and Science, October 2019.

[55] Blockchain is here. What’s your next move?

[56] Blockchain is here. What’s your next move?

[57] (external download) ACS Data61 Blockchain 2030 (10MB PDF). Website: Australian Computer Society - publication overview

[58] (external download) ACS Data61 Blockchain 2030 (10MB PDF). Website: Australian Computer Society - publication overview p. 63.

[59] Blockchain trial could lead to smarter money

[60] World Trade Organisation Report

[61] (external download) ACS Data61 Blockchain 2030 (10MB PDF). Website: Australian Computer Society - publication overview (stats are 50.7%; 31.2%)

[62] Can Blockchain revolutionize international trade?

[63] TradeTrust