Published on the 20/12/2018 | Written by Jonathan Cotton
It may be hyped to the hilt, but a new report says the blockchain promise is real and set to disrupt NZ industry...
A new report from the Callaghan Innovation, entitled Distributed Ledgers and Blockchains – Opportunities for New Zealand, says blockchain technology is likely to have a profound and positive impact on high-tech jobs and digital exports in New Zealand – haters be damned.
“Distributed ledgers and blockchains are emerging general purpose technologies that are likely to have a significant impact across all aspects of the economy,” writes the report’s author, Joshua Vial of entrepreneur network Enspiral.
“Participants estimated that the proof of concept could save them between one and 15 hours per week.”
“New Zealand has an opportunity to join the world leaders in this space, which would likely have a significantly positive impact on high-tech jobs and digital exports.”
“[Blockchain technologies] have the potential to contribute to regional economic development. Over US$20 billion have been allocated to blockchain startups from January 2017 to November 2018 through initial coin offerings.”
The mention of initial coin offerings, however, might have the blockchain cynics quivering somewhat after a year in which cryptocurrency suffered a serious spike to its credibility. The report’s author has approached the discussion very much from the perspective of blockchain’s role in creating and maintaining cryptocurrencies. Others seem to be looking at the debate more from the perspective of the robust transactional security that a blockchain can provide in any value chain, rather than for cryptocurrencies per se.
Regardless, Vial boldly predicts blockchain could well be the key to bringing new life to many New Zealand sectors, including primary industries, financial services, public services, arts and culture, science and research, and foreign aid – but it requires a new approach from the government to fully realise the benefits.
“The industry does not need financial incentives or deregulation, it needs a government willing to engage with it and to clarify how existing rules apply to the emerging industry.”
The report cites Australia’s recent forays into ‘smart money’ – money that ‘knows’ what it can be spent on, who it can be spent by and when it can be spent – as an example of early blockchain applications showing promise. (The trial focused on enhancing the experience of participants and service providers for the National Disability Insurance Scheme).
“Participants and carers estimated that the proof of concept could save them between one hour and 15 hours per week, with an average result of three hours,” says the report.
“Service providers estimated that the proof of concept could save them approximately 0.3 percent to 0.8 percent of costs as a percentage of revenue… We conclude that the economic benefits would be the order of hundreds of millions of dollars annually, if the proof of concept was leveraged to develop and implement a full-scale solution across Australia.”
But New Zealand industry is lagging behind the rest of the world, says Vial: “Action is required to unblock access to basic financial services and to provide a reasonable approach to goods and services tax on crypto-assets. Significant opportunities exist to attract talent and high-growth companies to New Zealand.”
Crypo-assets? Readers will need to decipher that one, but it seems the authors may need to add some delineation between the transactional technology and its use in handling cryptocurrency transactions.
The report was sponsored by Centrality. A peruse of the various ventures promoted on its website might offer some clues as to how it sees New Zealand’s blockchain economy unfolding. But you’ll need to exchange some of your hard-earned coin for Centrality’s in order to participate.
The report proposes eight key areas that need to be addressed before New Zealand can fully exploit its blockchain potential:
- Convening a cross-agency blockchain working group
- Unblocking access to banking services for blockchain companies
- Promoting New Zealand as blockchain friendly
- Growing technology industries in regional Aotearoa New Zealand
- Focusing on security tokens
- Establishing a multidisciplinary research centre for decentralised computing
- Establishing a blockchain financial crime prevention forum
- Prioritising digital identity adoption and digital inclusion
“Although we are still at the early stages, there are substantial opportunities for us to both understand and apply blockchain towards sustainable and ground-breaking innovation that can support our economy,” asserts Erica Lloyd, GM of market engagement at Callaghan Innovation.
Lloyd says technology is now New Zealand’s third-biggest export sector, bringing in more than $16 billion a year in overall revenue, with plenty more headroom for further growth.
“We expect this report will ignite further discussion on the potential of emerging technologies like blockchain and distributed ledgers.”
“Technological innovation is the path to lifting our earnings and productivity.”
On that I think we can all agree. The rest? We’ll see.