Dr Mark Staples (left) interviews Lucas Cullen, Natasha Blycha and Katrina Donaghy at D61 + LIVE

This week at the D61+LIVE conference, a panel of experts spoke about the future of blockchain and distributed ledger technology in Australia. The conversation centred around blockchain adoption — the pace, the barriers, the buy-in and what’s happening at a national level to help enterprise embrace the new tech.

A bit of background

Data61 is the data arm of Australia’s national science organisation, CSIRO. Every year they get together to showcase their R&D and discuss the way forward for data challenges in Australia.

Across their many research groups, Data61 are working on several projects that incorporate blockchain technology. So on day two of the conference, principal research scientist Dr Mark Staples interviewed three experts in the field to shed light on the latest challenges and developments in the space.

On the panel were:

Here’s what they said about blockchain adoption in Australia.

1. Adoption is not as slow as people think

To kickstart the conversation, Staples raised the point that many people are frustrated with the fact that blockchain technology has not yet been adopted into real, large-scale production.

“Have we been slow to adopt?,” he asked.

“Not at all,” said Civic Ledger’s Katrina Donaghy, pointing out that it is only three years since the Ethereum blockchain went live.

“Maybe there’s a high expectation that needs to be managed a bit better,” she said.

Donaghy argued that in a relatively short timeframe, the blockchain conversation had already moved from development to regulation.

“That’s exciting because we can agree on standards for the adoption of blockchain technology.”

2. Technology isn’t the problem

Two years ago the Queensland government recruited Donaghy to undertake their first blockchain proof of concept, after which she worked for the Federal Government’s Department of Industry on a Water Ledger project for the Murray Darling Basin. Donaghy said working with government has taught her a lot about the adoption process.

“We find technology isn’t the problem. It’s the acceptance of the tech into the culture of organisations.”

Donaghy believes a key issue is interoperability— integrating new blockchain-based applications into existing systems. Other challenges include regulation across different jurisdictions and concerns around the future of work.

“Thirty percent of employment is there to do the trust mechanism that blockchain is there to replace,” said Donaghy. “So you need to think about the future of work.

“There’s a whole raft of conversations that are happening now, that aren’t involved with the technology itself.”

3. Business leaders struggle with open source

On the business front, the panel identified some challenges that are blockchain-specific, and others that are common to innovation in general.

When it comes to the nature of blockchain itself, the concept of ‘open source’ is unpalatable to the business mindset, said blockchain developer Lucas Cullen. “If it’s open source then there’s an apathy to take it on.”

“When you go and pitch it, you say it’s open source and anyone can write to it — that’s going to freak people out.”

Cullen had also seen business groups struggle with the concept of a decentralised workforce, where there’s no dedicated IT team that you can call if something goes wrong.

“There’s a risk versus reward scenario. Businesses are probably not comfortable running their entire system on a distributed network that’s run by no-one in particular.”

4. C-suite fatigue and legal uncertainty are common innovation challenges

The panel identified executive fatigue as another difficult hurdle, but something that every new technology faces.

Natasha Blycha explained that when you have people on the ground pouring their heart and soul into a proof of concept, but a hierarchy who don’t fully understand it, and are looking for a return on investment, you can hit a wall.

“You get C-suite fatigue on your proof of concept,” she said.

“It’s not malicious, it’s just a natural human element of adoption. So how do we make it easier for humans to adopt and legal for enterprise to adopt?”

That’s the question at the heart of Blycha’s work. As a technology lawyer at Herbert Smith Freehills, Blycha is working to develop legal frameworks for blockchain adoption. Her team is also working with Data61 and IBM to create the Australian National Blockchain (ANB).

5. There are still question marks around human data rights

Blycha explained that distributed ledger technology (DLT) poses many practical problems. One of these is how the public, permissionless nature of DLT interacts with data rights.

Human rights to control and erase their data are currently under debate around the world, with General Data Protection Regulation (GDPR) laws recently enacted in Europe, and different forms of consumer data legislation currently under consideration in Australia.

“Some people would say blockchain is incompatible with those rights so there are legal questions that need to be answered on a global scale,” said Blycha. “That’s what we’re trying to do with the ANB.”

6. Private key management is another major hurdle

When Staples asked what other advances needed to be made to pave the way for better blockchain adoption, the conversation turned to the difficulties that people have in managing their own private keys.

“The challenge is how to educate the community,” said Donaghy.

“Everyone owning their own wallets and keys is a massive challenge. You get announcements on it being solved, but we’ve got a long way to go.”

Staples pointed out that it’s a trade-off between trustlessness and personal responsibility.

“If you don’t need to rely on a third party then responsibility is pushed back on you.”

One of the audience members suggested that a prime-time television campaign similar to SunSmart’s Slip! Slop! Slap! ad might be needed to help Australians manage their cryptocurrency safely.

For Blycha, there is a long way to go before consumers will be comfortable with trustlessness.

“We all want to make money on crypto — until you’ve lost your wallet, then you want to go back to the bank,” she said.

“We’re not prepared to give away our central trusted authorities yet. That’s a long journey.”

7. Nevertheless, Australia is a frontrunner

Towards the end of the interview, questions from the audience revolved around Australia’s place in the blockchain movement. The panel was unanimously positive.

“Australia is definitely a leader,” said Cullen.

“We’ve got awesome talent here…I think the world looks towards Australia on implementation.”

Blycha was quick to agree.

‘For me the exciting part is that the community is really talking and there are standards and Australia is leading in those standards for the world.”

“As a country we are one of the leading blockchain uptake jurisdictions. We’re also the first country to build a national spine. That’s world leading.”

The ‘national spine’ Blycha was referring to is the Australian National Blockchain, which is designed to enhance the connectivity of blockchain systems across the country.

“If you have a specific blockchain, you can plug it into the ANB and pick up network effects of what is already out there.”

The ANB is set up so that everyone on the blockchain is moderated by a traditional legal contract, which Blycha describes as “marrying the best of tradition with the best of technology.”

It’s also token-free.

“We’ve resisted the urge to tokenise the model,” said Blycha. “We’re trying to bring the country together.”

Cullen believes the next step for Australia is to get its own digital currency up and running.

“If we can have a digital currency then we can have explosion in this technology.”