DTA hanging back from blockchain hype to avoid picking betamax-chain

Biggest issue surrounding blockchain is the lack of standardisation, Australia's Digital Transformation Agency has said.

Digital chain. Blockchain technology concept.

(Image: Getty Images/iStockphoto)

The Australian Digital Transformation Agency (DTA) will not be pushed into using blockchain, with the agency choosing to hang back and let the hype result in standardisation so it does not end up backing the wrong implementation.

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Speaking to Senate Estimates on Monday evening, acting DTA CEO Peter Alexander compared the use of blockchain with deciding what format of movie media to use.

"For government to use a technology, pick a winner, maybe the best analogy is we might choose the Betamax version of blockchain and have a number of implementations of that, when other agencies and organisations are using VHS, and then someone else will come along and use DVDs or Bluray, and in the end all we want to do is watch a movie, and we've chosen an implementation which isn't going to interoperate particularly well with others," he said.

"Standardisation is the biggest challenge in blockchain, for governments then the second consideration is really about that immutability of record, and who holds the authority over that record, so a distributed ledger model where a people would validate a transaction has some advantage, a closed ledger where an individual validates a transaction has some advantage, but each of them have pros and cons at the moment in terms of operations on public records."

Facing questioning on whether the DTA had developed a road map to use blockchain, Alexander pointed out it was the wrong way to approach a technology.

"I think in terms of technology implementation, it's always the wrong way to go to have a road map for technology, what we need is a road map for solving the problems of Australians and Australian businesses," Alexander said.

The DTA reiterated its previous comments on the hyped technology, that for every use of blockchain, there is a better alternative.

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

On Monday evening, the DTA revealed that it had spent only AU$200,000 of the AU$700,000 it was allocated in the 2018 federal budget to investigate blockchain.

"What we fundamentally found is blockchain is a really interesting technology, there's lots of opportunity with blockchain, but fundamentally agencies should focus on the problem they are solving before they decide on a technology to solve it," Alexander told Senate Estimates on Monday.

"They should think about the users and the user journey that they need to assist rather than choosing a technology and trying to find a solution for it.

"For most business requirements there exists a more mature technologies that are ready for use immediately that we would recommend people choosing over blockchain today."

Alexander added his view was "completely aligned" with the US Institute for Standards and Technology and the OECD.

The DTA has been working with a number of agencies to examine blockchain's use: The Department of Home Affairs has looked into applications in freight monitoring and using smart contracts for duties and tariffs; parts of Treasury including the ATO and ASIC have examined its use in settlements and payments; and IP Australia has run a trial into using blockchain to handle food providence.

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