Blockchain in government: the possibilities after the hype

By David Donaldson

Friday April 12, 2019

Different agencies have been exploring the potential for blockchain in government. There’s potential, as long as you’re sensible about it.

Blockchain does not enjoy the hype it once did.

After the inflated expectations of a couple of years ago, blockchain is now in what’s often called the “trough of disillusionment” point of the hype cycle, which may eventually lead to a more realistic and sustainable approach to its use, argues a recent report on blockchain’s potential in the wider Australian economy.

While it may not be living up to the impossible promises of some tech visionaries, the industry is growing and skills are in high demand, according to the report, published by the CSIRO’s Data61 and tech peak body the Australian Computer Society.

And there is still “lots of opportunity with blockchain” to be used in government, Digital Transformation Agency Acting CEO Peter Alexander told Senate estimates earlier this week.

But in work completed on blockchain last year, the DTA also concluded it was important not to get carried away.

“Agencies should focus on the problem they’re solving before they decide a technology to solve it. They should think about the users and the user journey that they need to assist rather than choosing a technology and trying to find a solution for it,” Alexander told the Finance and Public Administration Committee.

“It’s an age-old problem. For most business requirements there exist more mature technologies that are ready for use immediately that we would recommend people choosing over blockchain today.”

Blockchain has “some limitations but has some great advantages”, and he encouraged agencies to continue exploring possible uses, as the DTA is.

And a lot of government organisations have been looking at it.

“There has been a lot of work across agencies looking at blockchain and considering opportunities and problems in our business, or things we’re trying to achieve where blockchain might help,” Alexander explained.

“We worked with the Department of Human Services and the Commonwealth Bank on the potential for smart contracts and payments in the national disability insurance arrangements. There was some testing of freight movement in Home Affairs. ASIC looked at payment settlements. There has been an amount of cross-government work.

“In each case where government have been doing that work, they’ve been partnering with industry, academia and science and technology organisations — like Data61, who have been doing a lot of work in this space.”

Blockchain could prove useful where government needs unchanging records.

“It is an emerging, exciting technology with opportunities across a number of areas — for example,, our national data resource. Blockchain is a really interesting technology in terms of allowing users to be assured that the dataset they’re downloading is non-repudiable. It is the dataset that comes from the original source. It is correct. It hasn’t been modified or changed,” Alexander says.

“In other areas of government delivery it doesn’t make sense to have immutable records, noting that we need to change things.”

The “overwhelming and major concern” with blockchain today is its lack of standardisation. Embracing blockchain would mean having to “pick a winner” among the group of blockchain technologies available.

“Maybe the best an analogy is we might choose the Betamax version of blockchain and have a number of implementations of that when others agencies and other organisations are using VHS and then someone else will come along and use DVDs or blue ray,” he said.

“In the end, all we want to do is watch a movie, but we’ve chosen an implementation which isn’t going to interoperate particularly well with others.”

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