Data61 joins IBM and Herbert Smith Freehills to build the ‘Australian National Blockchain’

By Stephen Easton

Friday August 31, 2018

Following its recent research on the pros and cons of blockchains, CSIRO’s Data61 unit has formed a consortium with IBM and law firm Herbert Smith Freehills to commercialise smart contracts based on the concept.

Getting in early to seize the name Australian National Blockchain, the consortium plans to build a digital platform for Australian organisations to form and manage trustworthy legal contracts through a consensual process that can increase efficiency in supply chains and encourage the greater uptake of automated processes.

The consortium launched at a conference in Melbourne yesterday, and hopes to build “a significant new piece of infrastructure in Australia’s digital economy, enabling companies nationwide to join the network to use digitised contracts, exchange data and confirm the authenticity and status of legal contracts”, according to its press release.

“Once completed, the ANB will enable organisations to digitally manage the lifecycle of a contract, not just from negotiation to signing, but also continuing over the term of the agreement, with transparency and permissioned-based access among parties in the network.

“The service will provide organisations the ability to use blockchain-based smart contracts to trigger business processes and events.”

If the Australian pilot is successful, the consortium intends to expand internationally.

There’s still a lot of hype around the potential for the underlying technology, which is also known as a distributed ledger and was first created as a nifty way for people to use a digital currency without having to trust each other or any intermediary institution. There’s also considerable scepticism, given a lot of blockchain evangelists rely heavily on faith that distributed ledgers are revolutionary and simply assume any shortcomings will be overcome in future.

At this stage, proposed applications of the next generation of distributed ledgers are legion and proven working prototypes are few, but the boffins at Data61 are a credible source of expertise on the subject and IBM has also invested considerable resources in developing blockchain-based enterprise solutions over recent years.

Last year, Data61 published two reports, one which described four “plausible adoption scenarios” for Australia, and the other looking specifically at how blockchain-based smart contracts could be used in agricultural supply chains, government registries and remittance payment systems.

Dr Mark Staples, a senior researcher in Data61’s software systems group, said the reports backed up the idea that distributed ledger technology would increase economic productivity and spur on local innovation.

“Data61’s independence and world-leading expertise will help to catalyse the creation of digital infrastructure for Australian businesses to transition to a digitally-enabled future,” said Staples, in his contribution to the launch.

“For complex enterprise contracts, there are huge opportunities to benefit from our research into blockchain architecture and into computational law. Smart contracts have many applications, and as the ANB progresses we look forward to exploring other business use cases to roll out.”

IBM, meanwhile, claims the mantle of “the leader in open-source blockchain solutions built for the enterprise” and was an early member of the Hyperledger project, a collaborative effort to develop the technology. The company has produced a considerable amount of open source code, and worked away on problems like transaction speeds for several years.

Most of these tangible applications it spruiks to companies are around trust and transactions, and the prospect of more efficiency by automating processes that are otherwise subject to possible human error or skulduggery.

“Since 2016, IBM has worked with hundreds of clients across financial services, supply chain, government, retail, digital rights management and healthcare to implement blockchain applications, and operates a number of networks running live and in production,” the company said in a statement.

The ANB project will start off as a pilot using the existing IBM blockchain platform and is still months away from going to market. The consortium said it would invite “regulators, banks, law firms and other Australian businesses” to join the pilot, which is expected to begin later in 2018.

What are smart legal contracts and what’s so good about them?

According to the new ANB statement, “smart legal contracts contain smart clauses with the ability to record external data sources such as Internet of Things (IoT) device data, enabling these clauses to self-execute if specified contract conditions are met” so there is the potential for less paperwork and more automation in supply chains.

“For example, construction site sensors could record the time and date of a delivery of a load on the blockchain and trigger a smart contract between the construction company and the bank that would automatically notify the bank that terms have been met to provide payment on that load delivery,” the consortium suggests.

The ANB smart contracting system will be designed to be legally compliant in Australia and open to any business. It will allow “multiple trading partners to collaborate and establish a single shared view of a contract without compromising details, privacy or confidentiality” and the consortium suggests advanced data analytics could be applied to the information stored on its blockchain in future, either to check on regulatory compliance or for business intelligence.

Natasha Blycha, who leads Herbert Smith Freehills’ part in the project, expressed the law firm’s confidence that blockchain will “transform the legal industry” and other sectors.

“Our clients are enthusiastic about process automation, and how it can support a move away from paper-based systems, simplify supply chains and quickly and securely share information with customers and regulators,” Blycha said.

Paul Hutchison, IBM’s blockchain lead for the Asia-Pacific region, said the company’s platforms provided a sufficient level of security for data from industries such as healthcare and government and that it had “extensive experience building blockchain networks and convening large consortia focused around solving important business problems”.

“Blockchain will be to transactions what the internet was to communication – what starts as a tool for sharing information becomes transformational once adoption is widespread,” Hutchison enthused. “The ANB could be that inflection point for commercial blockchain, spurring innovation and economic development throughout Australia.”

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