Often when people hear of updates in blockchain technology, it’s easy to associate it as only relating to digital currencies. The truth about blockchain however is that it hold promise for all transactions across a society.
In fact there is immense opportunity for blockchain, and although it’s been predicted to peak a few years away, we can look forward a future where transactions between parties become more efficient, secure and permanent.
Just as we’re moving our manual and paper based services online, there will come a day when all ledgers (records of transactions) will be maintained purely online. It’s the word on the street that blockchain technology will provide the most integrity to online distributed ledgers. In this post we look at the application of blockchain technology in government, including the good, the bad, and the implementation.
On first sight, it’s easy to associate technologies that are based in the intangible unknowns of the internet is enough to make us cautious and reluctant to adopt that technology right away. But the fact of the matter is, the underlying technology behind blockchain and other virtual currencies like bitcoin is intrinsically secure and trustworthy because you can see a clear path of where information has come from and gone to.
Data61 released two reports on the potential risks and opportunities of blockchain (you’ll find them hyperlinked at the bottom of this post) , and if you have the time and the interest, they’re a great introduction into what can seem to be a complex idea.
But let’s look at contracts as a specific way blockchain can add value to digital transactions. Contracts, transactions and records are the defining features of modern civilisation. Combined, they set organisational boundaries and govern interactions between nations. But as technology change the way everything else interacts, the very backbone of these transactions has not changed.
The Harvard Business Review recently published an article titled The Truth About Blockchain, where the writers Marco Iansiti and Karim Lakhani compared the development of contracts on par with digital transformation being “like a rush-hour gridlock trapping a Formula 1 race car”.
One of the biggest challenges yet to be overcome in the implementation of blockchain is the confusion and fog currently surrounding the concept. It’s true, if you’re not one to keep up with the latest trends in technology it’s not a straight forward idea to grasp. And not only is there no universally accepted definition of blockchain, confusion is compounded even more by inaccurate associations with bitcoin.
So what’s the difference between bitcoin and blockchain? Bitcoin is a very specific technology platform, but the term blockchain has been more widely adopted to as a way to categorise these types of technologies. Say for example, Facebook as a social media network.
There is also the concern that for blockchain technology to succeed, other social barriers – technological, governance, organisation etc – will have to fall or adjust to the new technology. Though this would be many years in the future and a topic worth it’s own book to discuss.
With all this in mind, it’s important to really weight up the risks and opportunities associated with blockchain technology. And further, because it’s in its very early stages (and a lot of this information is just conjecture), the more blockchain is implemented into practical setting, the more we’ll understand it’s implications.
But for now, we know that it will be important for organisations to hire people with the right skill sets to implement these types of technologies. Because we’re sitting at the cusp of the application of blockchain technology being quite broad (it could potentially be used for controlling fraud, cyber security, legal contracts etc) IT professionals are going to have to prepare themselves for a new set of skills in accounting and auditing.
Another consideration you may need to make if implementing blockchain into your organisation is that you may need to redesign your ledgers format when you move oit online. A variety of factors such as volume of transactions may make the manual format unworkable in digital formats.
If you’re interested in reading more about blockchain, download the two below reports put together by Data61 here. They cover:
- Distributed ledgers
- Risks and opportunities for systems using blockchain and smart contracts
If you’d like to understand more about the applications of technology in the public service, then register your interest to get the GovInnovate 2017 program when it’s released.