For better or worse, blockchain is the new internet

Current debate over tech giants shows we’ll need to be prepared for blockchain’s downsides as we tap its vast potential.

Local start-up Trust Provenance is currently piloting its blockchain technology on the mango supply chain. Pictured is co-founder Andrew Grant. Picture: Heidi Lewis

Let me take you on a journey into a future and show you something that is going affect all Australians. Blockchain is the new internet and the long term changes it will bring to the way we live and run businesses will be as profound and as fundamental as those delivered by internet.

I must confess that I knew very little about blockchain technology, apart from its use in cryptocurrencies. But I became aware that this week blockchain experts from around the world were descending on Adelaide to attend the ADC global blockchain summit. I decided to drop in.

And what a privilege it was.

Back in the mid-1990s MIT’s Nicholas Negroponte briefed me on the revolution the internet would bring to the world. All of Negroponte’s predictions (and more) came true, but it took much longer than he predicted.

Blockchain will be similar and indeed currently the blockchain phenomena is being downgraded because of the collapse in the value of many cryptocurrencies that were based on the technology.

But cryptocurrencies are only a fraction of the changes blockchain will bring.

In the case of the internet, it started as a way of duplicating the activities that we were already doing. But over time a whole new set of activities emerged and they are still emerging.

So, at the summit I moved around looking for some of the immediate applications of blockchain technology. I then looking at how they might develop into new wealth creating industries. People at the summit also raised the longer-term regulatory challenges that the technology will create. As with the internet, I will leave the explanations of how blockchain works to others.

But already, Starbucks in the US is using blockchain to monitor its coffee supply chain so it can see exactly where its beans are coming from. Essentially the task of following a supply chain can be undertaken via the internet, albeit blockchain does it better. At the summit, Americans explained how they use blockchain to check that organic food meets required standards while Australians are using it in almonds and experimenting with exporting lobsters, via a proposed new start up.

That’s the present. But that supply chain process opens up whole new industries. For example, it connects the grower with the customer and will result in new farming methods, almost certainly incorporating carbon storage in the ground. And those supply chains are in fact cash flow streams which can be monitored accurately.

Each of the segments of the supply chain will have the reliability created by blockchain to fund their business. Opportunity for new lending paradigms for banks? Maybe. But in Australia the industry superannuation funds may look to bypass banks and fund the supply chain businesses directly. And blockchain will enable much more reliable cash flow monitoring, so making low interest rate loans to a far wider array of small business possible. Accordingly, farming, transport and banking are transformed.

Look at health, where community expenditure is exploding at an unsustainable rate. There are obvious things that blockchain can do by correlating prescriptions and referrals and hospitalisation administration. But that’s simply a better way of doing what we could now do via the internet if we were interested in making the system more efficient and stopping the money bleeding.

Go forward a decade and blockchain turns medicine on its head.

Australia has invested about $2 billion in the MyHealth website which uses old technology and is next to useless. The future blockchain medical databases will be entirely different. Blockchain is a technology that stores data and provides security for that data. In these databases, customers (you and me) will own our database material and decide who should see it. It will be linked to our gene profiles and a whole new area of medicine will develop.

Sometimes a person’s cancers or diseases have research value. Where material is valuable customers will have the option of sharing in the spoils. And out of that comes a whole new medical system.

Also get set for a new tax system. We currently spend millions of hours on an inefficient GST collection system. Blockchain will allow GST to be more easily deducted at the transaction level, thanks to the fact that we are dealing with documented supply chains.

Big changes will take place in real estate data. Currently the data on who owns real estate is complex and inefficient. Registers of other assets (including art) have similar problems. Blockchain systems will transform these asset registers, slashing the costs and delays in real estate and other asset transactions. The ASX will go onto blockchain technology around 2021.

The examples keep flowing but you can see the endless array of potential new applications. Blockchain development businesses will be an important part of a developed country’s GDP. But they will require greater computing power and more electricity - problems that may delay mass introduction. But at the moment, Australia is behind the rest of the world. However, the CSIRO’s Data61 operation is regarded as one of the world’s leaders in the area, so we can catch up.

We are now discovering how the internet can be used for bad things as well as good. The same will apply to blockchain. When the internet was introduced great community areas like sport, religion and business had a much higher level of trust and community standing than they do today. That means blockchain is going to be treated by the community with greater apprehension. A great deal of time at the summit was spent looking at how blockchain rules might be set along with issues of trust and ethical standards. Meanwhile business may embrace the new technologies and step by step and tackle such issues when they arise. That’s what happened with the internet. But these issues represent a minefield as do the employment implications of blockchain.