DTA dunks on blockchain hype saying for every use there is a better alternative

Hype driven by technology vendors looking to boost revenue, and not service providers that have found it useful, DTA says.

Australia's Digital Transformation Agency (DTA) has formed a view on blockchain following the agency receiving AU$700,000 in May to take a look into it.

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"Blockchain is an interesting technology that would well worth being observed but without standardisation and a lot of work to come -- for every use of blockchain you would consider today, there is a better technology -- alternate databases, secure connections, standardised API engagement," Digital Transformation Agency chief digital officer Peter Alexander told Senate Estimates on Tuesday.

"Blockchain: Interesting technology but early on in its development, it's kind of at the top of a hype cycle."

Alexander pointed out that although blockchain can be used in low trust environments, the government wants to have trusted relationships and know who it is interacting with.

In Tuesdays' hearing, the DTA said it is working with a number of agencies that are examining blockchain's use: The Department of Home Affairs is looking into applications in freight monitoring and using smart contracts for duties and tariffs; parts of Treasury including the ATO and ASIC are looking at its use in settlements and payments; and IP Australia is conducting a trial into using blockchain to handle food providence.

DTA CEO Randall Brugeaud said in May that it is looking into the use of blockchain for Centrelink welfare payment delivery.

"Our plan is to look for use cases across the Commonwealth with an initial focus on the welfare payment delivery system, then working with our digital service standard, we'll conduct user research with a view to having a prototype by the end of next financial year," Brugeaud said at the time.

See also: The Australian government and the loose definition of IT projects 'working well'

Speaking on Tuesday, Alexander detailed how the system would work.

"When someone might receive a welfare payment or a balance ... where someone would be allocated a certain amount of money, and be able to access that for various purposes -- used for some purposes, not used for others -- the smart contract, the programmable currency, can release that fund for a particular purchase, and say no for another without having an intervention," he said.

In its examination of blockchain, Alexander said the Australian government was at a similar level of blockchain maturity as other progressive governments, and noted where the hype surrounding the technology was coming from.

"I think it would be fair to say a lot of big vendors, and technology vendors, are pushing blockchain very hard, they see sales opportunity in it," Alexander said. "So internationally, most of the hype around it is from vendors and companies, not from governments, or users and deliverers of services who are saying 'blockchain is the solution to our problem'.

"It's not that we don't trust any of the vendors -- that would be an unfair characterisation -- we trust the vendors, but note that the motivation is generally sales and making revenue."

Earlier in the hearing, Brugeaud said the DTA would begin rolling out digital identity pilots in the coming weeks.

"The first pilot will allow to acquire a government-issued digital identity, and a Tax File Number entirely online," Brugeaud said.

"This will reduce a month-long, partly analogue process, to a less than 30 minute fully digital process."

In August, the DTA decided to take the hosting element of its digital identification play, Govpass, in-house and ended the contract with cloud services provider Vault Systems.

Last week in its annual report, DTA revealed non-corporate Commonwealth entities spent a total of AU$1.2 billion on IT and digital initiatives in 2017-18.

ZDNet reported in May that 14 of the then 80 IT projects it was overseeing were being "closely" monitored, labelling the projects from the Bureau of Meteorology, Department of Human Services, Department of Education, Department of Finance, Department of Defence, Department of Prime Minister and Cabinet, Bureau of Statistics, Department of Veterans Affairs, Federal Court Australia, and the DTA itself as requiring "engagement".

Getting on the agency's "engage" list means the project, already exceeding AU$10 million in government expenditure, is either highly complex, has a wide community reach, or the DTA has highlighted a declining confidence in delivery.

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