The story behind the development of Bitcoin, and the first blockchain database, could just as well be plucked from a classic cyberpunk novel (see breakout box). Inventor and self-proclaimed Japanese national, Satoshi Nakamoto, claims to be a pioneer in solving a double-spending problem – a potential flaw where the same token can be spent more than once – for digital currency using a peer-to-peer network. The work started in 2007 and was deployed in 2008.
The blockchain technology we know today is a digital ledger that tracks a single version of transactions and other records rather than relying on two or more databases. Author, William Mougayar, uses a great analogy to explain blockchain, with reference to Google Docs.
“The traditional way of sharing documents with collaboration is to send a Microsoft Word document to another recipient, and ask them to make revisions to it,” said Mougayar.
“The problem with that scenario is that you need to wait until receiving a return copy before you can see or make other changes, because you are locked out of editing it until the other person is done with it.
“That’s how databases work today. Two owners can’t update the same record at once. That’s how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again).
“With Google Docs (or Google Sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people,” he said – adding that business documents become can be shared rather than being transferred back and forth, which would be ideal for legal contract workflow.
On-trend with using blockchain for smart legal contracts, Australia’s data innovation group, the Commonwealth Scientific and Industrial Research Organisation’s Data61, formed a consortium with law firm, Herbert Smith Freehills and computer manufacturing company, IBM.
Known as the Australian National Blockchain (ANB), the new platform has the potential to represent a significant new piece of infrastructure in Australia’s digital economy, enabling companies nationwide to join the network to use digitised contracts, exchange data and confirm the authenticity and status of legal contracts.
Once completed, the ANB will reportedly enable organisations to digitally manage the lifecycle of a contract, not just from negotiation to signing, but also continuing over the term of the agreement, with transparency and permissioned-based access among parties in the network. The service will provide organisations the ability to use blockchain-based smart contracts to trigger business processes and events.
According to Data61, ANB will provide smart legal contracts (SLC) that contain smart clauses with the ability to record external data sources such as Internet of Things (IoT) device data, enabling these clauses to self-execute if specified contract conditions are met. “For example, construction site sensors could record the time and date of a delivery of a load on the blockchain and trigger a smart contract between the construction company and the bank that would automatically notify the bank that terms have been met to provide payment on that load delivery.”
ANB will be the first large-scale, publicly available blockchain solution available to businesses of all kinds across Australia – designed for Australian legal compliance.
“Technologies like blockchain are set to transform the legal industry and the wider business landscape as we know it,” said Herbert Smith Freehills Blockchain and Smart Legal Contract Lead, Natasha Blycha. “This presents a huge opportunity for agile and forward-thinking firms and has potential to deliver significant benefits to our clients and the business community as a whole. Our clients are enthusiastic about process automation, and how it can support a move away from paper-based systems, simplify supply chains and quickly and securely share information with customers and regulators.”
Consortium partners Herbert Smith Freehills, Data61, and IBM will first test the concept as a pilot project, using IBM Blockchain. The consortium is already working with another Australian law firm to bring the ANB to market. Going forward, regulators, banks, law firms and other Australian businesses will be invited to participate in the pilot which is expected to start before the end of the year.
“IBM Blockchain and the IBM Cloud provide the highest level of security to support even highly regulated industries such as healthcare and government, and IBM has extensive experience building blockchain networks and convening large consortia focused around solving important business problems,” said IBM Global Business Services Vice President and Partner – Cognitive Process Transformation, Paul Hutchison.
“Blockchain will be to transactions what the internet was to communication – what starts as a tool for sharing information becomes transformational once adoption is widespread. The ANB could be that inflection point for commercial blockchain, spurring innovation and economic development throughout Australia.”
In 2017, Data61 delivered two comprehensive reports for Treasury on how blockchain technology could be adopted across government and industry in Australia.
“Our reports identified distributed ledger technology as a significant opportunity for Australia to create productivity benefits and drive local innovation,” said Data61 Senior Research Scientist, Dr Mark Staples.
“Data61’s independence and world-leading expertise will help to catalyse the creation of digital infrastructure for Australian businesses to transition to a digitally-enabled future. For complex enterprise contracts, there are huge opportunities to benefit from our research into blockchain architecture and into computational law. Smart contracts have many applications, and as the ANB progresses we look forward to exploring other business use cases to roll out.”
Meanwhile, Stephen Brett, CEO of US-based consultancy, iFranchise Group, sees blockchain as the highway to ethical profit coupled with efficiency. He told business magazine, Forbes, that blockchain technology in mainstream industries allows all participants to perform cost-effective verification, which not only lowers the cost of auditing transaction information but may also allow new marketplaces to emerge. All blockchain projects, according to Brett, boil down to trust and transparency. “If you plan to work on a blockchain project, expect that your future users will be onboard from the moment the website goes live. They will be watching and commenting on your every move online, and they will be asking questions.”
This notion of transparency was one of the reasons why a band of like-minded individuals in the US formed the Blockchain in Transport Alliance (BiTA) in 2017 – a forum dedicated to the development of blockchain standards and education for the freight industry. Mitch Hixon, Vice President – Member Engagement, said in a statement in May that BiTA’s think tanks aim to identify pain points in risk management, finance/business administration, asset utilisation, driver and supply chain marketplaces.
BiTA’s membership comprises logistics firms and OEMs from across the globe, including China’s e-commerce company, Jingdong Logistics, which is using blockchain technology to optimise its supply-chain flow while enhancing cross-border logistics and communications. Jingdong Logistics is the first Chinese domestic logistics enterprise to join the Alliance, connecting to other global freight partners, which will help accelerate its growth.
BiTA President, Chris Burruss, believes that standards are important because if industry does not set the stage for success, the government will get involved, which is something he does not want to see happen. “One thing that is clear to me [from my career experience] is that standards get lost in the larger organisation,” he said – adding that BiTA’s Standards Council will work to improve trust and enable transparency in the field of transportation logistics and drive technological efficiency, ideally resulting in cost savings for those who adopt the approaches defined by BiTA.
There is a tonne of work that needs to be done as we strive to make blockchain an accessible concept, according to Brett. “Is blockchain a bubble? That’s what they all said about the internet in 1995.”
Blockchain is a distributed ledger technology that enables permissioned sharing of an immutable record among parties to create consensus and trust, according to Australian data innovation group, CSIRO’s Data61. It empowers multiple trading partners to collaborate and establish a single shared view of a contract without compromising details, privacy or confidentiality.
The pseudonymous developer of cryptocurrency, Bitcoin, and blockchain inventor, Satoshi Nakamoto, owns around 1.1 million Bitcoin (€6.3 billion), which is about five per cent of the total digital currency in circulation. His identity has been the subject of speculation since he shared his works with the world due to his use of perfect English and his Bitcoin software not being documented or labelled in Japanese. To date, investigative journalists, bloggers and other curious individuals have attempted to expose the brilliant coder. Theories range from a physicist-trained, Japanese-American man living in California or a Finnish economic sociologist to Tesla’s Elon Musk.
US-based Blockchain in Transport Alliance (BiTA) Board Member and TransRisk CEO, Craig Fuller, launched BiTA to advocate the implementation of blockchain applications in the commercial transport industry. Through engagement with individuals from leaders in transportation, finance and technology, BiTA aims to build the first set of transportation industry-specific blockchain standards. “We formed BiTA to develop common standards around blockchain applications in the trucking industry,” he said. “The technology holds great promise, but to encourage its proliferation, we felt that developing industry standards were paramount.”