"It is important for Australia to have a platform that provides a reputable network for smart contracts so users don't have to go to Corda or Ethereum," said Philippa Ryan, a senior lecturer in the UTS law school and co-author of a new book, Blockchain: Transforming your business and our world.

"We don't know how many people will want to use it or how many contracts will run over it, but it is important to put the infrastructure there."

Currently, many contracts are drafted, signed, and put in a draw and are only retrieved in the case of a dispute. By coding the clauses and running them on a blockchain, agreements can be turned into something that can keep track of obligations in real time, and feed information back to lawyers and clients during the life of the contract.

"We can create a contract on steroids to give clients new commercial opportunities," Ms Blycha said.

Scott Farrell, partner at King Wood & Mallesons: "The platform should take care of the worries about whether it works legally so more can use it." Peter Braig

King & Wood Mallesons partner Scott Farrell, whose has been working on smart contracts for several years, said contracts were essentially a relationship between two people but became documents and calcified into formal instruments.

"Now, we are looking to use technology safely so that the contract can become a living thing, like the parties to it," he said.

"We have already been on a long journey in developing really smart contracts but now we have learned where a contract can, with technology, look after itself and tell us what it is doing, allowing humans to intervene when they want and need to."


An example of a contract that could operate on the Australian National Blockchain would be a logistics agreement governing a supply chain; sensors attached to the internet of things could provide data on location or the condition of goods, and the contract could be programmed to self-execute when specified contract conditions are met. For example, when a load of materials is delivered a bank could automatically trigger the payment.

Lawyers will also use it to create notification algorithms, to inform them and their clients when changes are made to legislation or regulation underpinning contractual terms.

'Legal engineers'

By overhauling the contract administration function, the technology raises the prospect of fewer lawyers being required to monitor compliance and redundancies across the profession.

Ms Blycha said lawyers would still be needed but the emergence of 'legaltech' meant legal skills were changing and lawyers with science backgrounds would be in greater demand.

"We are working more with 'legal engineers' and paying greater attention to the fact some of our lawyers are also physicists and chemists, mathematicians or computer programmers and leveraging off those skills to provide better future legal tech services."

Ms Blycha said the law was slow and moved in a way that minimised risk, but technology had to be delivered quickly, which pointed to the need for law firms to accelerate their pace of change.

"Law firms will be digitally disrupted," she said. "We realise we need to move at a different pace and make sure we are delivering products that the clients want."


"The contracts we work on are complex. That complexity can't be fully captured by smart contracts. What we are working on is a hybrid contract, where we embed smart contracting technology into the traditional framework."

Mr Farrell said the Australian National Blockchain will be used by a combination of lawyers, technologists and commercial experts who know the transactions being worked on.

"Together, it is possible to build smart contract architecture in a safe way, and maintaining the availability of human control," he said. "It should take care of the worries about whether it works legally, so more can use it."

The project partners declined to disclose how the Australian National Blockchain has been funded, ongoing investment requirements, or whether fees for using the infrastructure will be levied. These issues are currently being discussed with potential partners.

The consortium is also seeking to engage with regulators and understand that ultimately the infrastructure will need to be governed by a committee.

If the Australian National Blockchain system takes off, it could be exported for use in other jurisdictions.

The creation of the Australian National Blockchain comes after Mr Farrell and King & Wood Mallesons senior associate Claire Warren published a landmark analysis on the firm's website in July 2016, titled How to use humans to make smart contracts truly smart.

"Any lawyer in the world who understands how smart contracts interacts with the law will have had the benefit of that work down by Scott and Clare," said Dr Ryan.


Australia is leading the world in several aspects of blockchain. The ASX said this week it would turn on a blockchain to settle and clear the Australian equities market in March or April 2021.

Commonwealth Bank last month issued the world's first bond on a blockchain, which it built in a deal for the World Bank.

Australia is also chairing the global body determining standards for blockchain, known as ISO/TC307, which will define how different blockchains across borders can talk to each other.

Data61 wrote two landmark reports on the technology last year declaring it would enhance productivity across the economy.

"Australia should be able to punch above its weight in blockchain," Mr Farrell said.

"Australia has a sophisticated and internationally respected legal and regulatory system, in a small enough nation to allow us to communicate readily, explore new methods and get things done together."