Blockchain technology, the underlying system that facilitates bitcoin trading, is a shared, distributed ledger that can store the complete transaction history of not just cryptocurrency but other kinds of records as well. This, according to Australian Securities Exchange (ASX) group executive for operations Tim Hogben, means it is ideally suited for securely recording medical health information.
Speaking at the GovInnovate summit in Canberra, Hogben suggested that with many entities within the health industry contributing data to records that are saved and stored erratically, an immutable record would be a more viable option, given that blockchain only allows the information to be available to those authorised to see it.
"For things as simple as a device, a hip replacement, a cochlear implant -- if you're doing a product recall on that stuff, how do you know where and who is using those devices in that point in time," he explained.
"All this information is stored over various databases and they're not all secure and the blockchain or a ledger such as this is one way of capturing that and providing instant identification of those users."
Hogben believes there is a multiplicity of other applications for the blockchain, especially within government, that he sees as ideal use cases.
"If you want to use it purely for searching, or requesting, or verifying data, it's almost an ideal candidate for that," he said.
Suggesting record-keeping was a burden for organisations and a poor use of resources, Hogben pointed to a recent report by consultancy firm McKinsey & Company and said that 15 to 20 percent of a financial firm's head count is dedicated to governance, risk management, and compliance.
"It is all because data management is just woefully inconsistent in different formats, in different sources; here is an opportunity to get everything onto a single source of truth that is accurate because it's immutable and can just be made available to people who need to see it and who are authorised to see it," he said.
"Hence the exchange is moving at quite a breathtaking pace at the moment and the outcomes that the use cases [are] doing is providing very favourable outcomes for the use and protection of data in very sensitive fields."
The ASX has been working on its own blockchain initiative, announcing in September that it has a complete prototype and was now moving to building an "industrial-strength solution" to use as its equity settlement and clearing platform.
The blockchain solution will replace the legacy Clearing House Electronic Subregister System (CHESS) platform as a more efficient mechanism at the exchange, which the ASX recently touted as having the ability to significantly improve the efficiency of clearing and settlement -- not only for the organisation, but for its customers as well.
Hogben said the ASX took a different approach to the more common bitcoin application of blockchain, as bitcoin builds trust through transparency.
"For the exchange in dealing with securities and sensitive client information, having such an open, transparent way of creating trust wouldn't make our regulators and our participants and clients really comfortable," he said.
"If you took a participant like Goldman Sachs, Merrill Lynch, or Bank of America, being able to see their trading behaviour and activity on a real-time basis -- that type of information is very sensitive and those parties certainly wouldn't want that to be transparent to others in that network or environment."
Instead, the ASX took the concept of the distributed ledger, as Hogben said the organisation felt it provided a lot of real-time opportunity, real-time cost reduction, real-time risk enhancement, and ways of monetising data that have not been previously monetised.
"We took components of the ledger, and we effectively created an architecture in which the private data -- which is the sensitive piece -- isn't actually stored on the ledger itself, so the private data is held in a different data store which is only available to the participant or the owner of that data. What the ledger does is it provides a form of verification to that data or a synchronisation of that data on a real-time basis to those who are authorised to receive those verifications," Hogben explained.
"This has enabled us to relieve some of the risks of what we see with the current open public applications. The blockchain in which protection mechanisms like encryption are probably not guaranteed long-term to remain and provide the confidentiality as they do today, so we needed to find a way around that, so we created another way of registering assets and doing a verification on the ledger."
The ASX had announced in June that it was building a new post-trade solution using blockchain technology, asking for market feedback. This followed the ASX enlisting US-based firm Digital Asset at the start of the year to help it develop blockchain solutions for the equity market.
The organisation has been planning to replace or upgrade its trading and post-trade platforms for over a year.
According to Peter Hiom, deputy CEO of the ASX, implementing blockchain within Australia's financial markets will strengthen their global competitiveness.
"We believe the potential of the technology to improve post-trade efficiency and reduce costs is genuine. Our market is a complex organism, and there is a terrific opportunity for us to simplify how it works," Hiom said in June.
"In doing so, we can unlock a new era of collaboration and innovation."
The Sydney Stock Exchange (SSX) similarly announced a project recently that would see it instantly settle trades using blockchain technology with the help of Sydney-based Bit Trade Labs.
"I've always been amazed that I can trade in the blink of an eye, in a millisecond on some exchanges. However, the clearing and settlement process can take between two and 30 days depending on what asset class you're trading," SSX director of market development Loretta Joseph said previously.
"It is our hope that we can lead to set policy recommendations that the government can adopt in order to facilitate blockchain-based innovations."