Blockchain could have an impact on the economy — is Russia leading the way with its current investments?
With eCommerce transactions moving at the speed of light, the ability to have transparency between parties is likely crucial to preventing security breaches.
When executives in the finance industry think of blockchain technology, its perception has shifted in the past few years in terms of how it could shape financial services — and therefore the economy — as a residual impact.
As we reported recently, MIT researchers believe today’s complex financial system could move to a decentralized financial system that could help streamline operations by removing barriers to entry and reducing risks.
Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO) Data 61 unit conducted a study, Risks and Opportunities for Systems Using Blockchain and Smart Contracts, that shows a direct correlation between the use of blockchain technology to help boost productivity levels across agriculture, banking, healthcare, logistics and public sectors. The study, one of many on the blockchain topic, also showed that the technology could potentially assist businesses and governments manage the incoming influx of IoT data.
Specific to the Australian economy, the country’s treasurer Scott Morrison said that its report would have a profound impact on delivering significant productivity, security and efficiency gains. Through these reports, King & Wood Mallesons partner Scott Farrell, who worked with CSIRO’s Data 61 unit, commented on how companies in Australia should proceed with caution on blockchain implementation.
“Critically, for those considering the technology from either a tactical or strategic perspective, the reports provide a scientific foundation for making decisions, not only on what the technology is and what it can do, but where it might lead us and how we might get there,” said Farrell.
The use case for payments in the study is for regularly occurring remittance payments that Australian workers send to friends and family overseas. Because of the amount of parties involved in money transfers, there are various fees tacked onto these payments in order to process them. It’s argued that these remittance payments, which can account for up to 10 percent of a developing country’s GDP, have significant socio-economic impacts to a country’s ability to grow and prosper.
Additionally, Australia’s Digital Currency and Commerce Association’s Chief Executive, Nicholas Giurietto, commented on what’s next for the country in terms of forward movement with blockchain technology. He said, “Australia now has a clear picture of how blockchain technology could transform our economy in the coming decades. We now need to make a choice to accelerate our efforts, or see other countries overtake us while we pay the price of moving too slowly.”
Several other countries have been making the news rounds this week in terms of their work with blockchain technology.
Four Japanese financial institutions participated in trying out a blockchain prototype developed by New York-based software platform Corda. These institutions include: Nomura Holdings, Daiwa Securities, the Mizuho Financial Group and the Sumitomo Mitsui Banking Corporation. In this test phase, the goal was to simplify email exchanges done during over-the-counter derivative transaction negotiations. The hope is that blockchain technology will enable data storage and management to be streamlined and boost transparency.
Spain’s very first banking blockchain consortium is now comprised of 33 percent of the country’s banks. While the consortium has its sights set on utilizing technologies like Ethereum and the open-source Linux Foundation-led Hyperledger Project, there have also been hints about using decentralized ledgers for everyday banking uses.
Grant Thornton partner Luis Pastor commented on this topic. He said, “We are going to work to ensure that this consortium ‘manufactures’ the first usable blockchain banking applications.”
Through India’s BankChain consortium, its first blockchain solution has been developed and completed its first project dubbed Clear-Chain. Through this platform, customer data can be shared to help detect suspicious transaction reports, investigation reports, KYC data and cross-border wire transfers.
While Australia, Japan, Spain and India are moving the ball for blockchain technology to go somewhat mainstream through the use of banks and consortiums, it appears most advancements are occurring overseas. As we reported earlier this year, the U.S. has been hesitant to move forward with putting regulations in place on blockchain technology. As such, it’s unlikely that the U.S. will see the same level and rate of blockchain technology advancements.