Last week, Block8 held a webinar panel to talk about blockchain use cases with two of our partners - BDO Australia and R3. Our CTO Samuel Brooks joined the discussion and provided his perspective on the four questions, moderated by our very own Tim Bass and Leighlah Ashmore:
We’ve transcribed Sam’s answers below if you’d like to check them out, or alternatively, you can check out the full recording here.
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“Sam, what do you look for in identifying a good use case for blockchain technology?”
“A good use case will be characterised by a high cost of trust - i.e. a high cost of managing some critical business information. It’s often from an analysis of your critical information that you can identify a good use case, hence I tend to classify use cases into three rough categories: asset management, data management, and process management.
“In terms of asset management, this often manifests as a liquidity or an exchange use case. As for liquidity, this is about freeing up access to invest and trade in a low liquidity asset, such as a house, or invest in a neo-asset like a you-tuber, while exchange is more to do with replacing an intermediary with a cheaper p2p platform. And you can imagine there are plenty of projects that combine both.
“Data management relates to things like maintaining public registers and corporate record keeping for auditability, and the management of consumer data.
“Probably the biggest opportunity though is in Business Process Management. Here you have a few flavours:
“So generally a use case will fit into managing one of either assets, data, or processes.
“And then the solution will be to either replace an existing intermediary, or to replace the current process that exists to deal with data fragmentation between database siloes (e.g. asset reconciliation). This applies equally whether it’s a cost-out initiative or a new product.
“Ultimately, a good blockchain use case will save some combination of time, cost or risk by allowing separate entities or systems - that don’t fully trust each other - to plug into shared sources of truth - and reduce their cost of trust.”
“What are the potential challenges for a blockchain or DLT project?”
“Agree with Ryan that there’s a general lack of awareness within enterprise of the value that DLT can bring. Beyond that though, another big challenge is a number of misconceptions about the technology. Many associate blockchain with Bitcoin, cryptocurrencies, financial products on the fringe of legality; inability to scale; lack of privacy. It’s key for us to tackle these and provide the truth about the technology.
“One of the biggest challenges we encounter though is that some solutions require business collaboration with their competitors and/ or their counterparties: i.e. suppliers and customers. And as we know, getting just one business to innovate can be hard enough. And this is entirely natural if you think about it: suppliers and customers of a business are in a natural state of financial contention; even though this is where there is fertile ground for a blockchain app, collaborating with your competitors isn’t something a business naturally contemplates. But the whole point of these kinds of applications is that if you and some of your competitors cooperate, together you can disrupt all of your other competitors.
“Also, a lack of treatment of all non-functional requirements is definitely a common gotchya. There are plenty of poorly designed projects that haven’t fully appreciated all of the requirements, or because they’ve used tech that’s fashionable. The problem manifests when the product starts to gain traction; you risk losing your newly won customers or partners because the underlying ledger simply can’t support their requirements at scale beyond PoC stage.
“A couple of other things that are worth mentioning that sometimes prevent an initiative from even being considered - one is how to commercialise, and another is how to deal with privacy.
“With the majority of use cases, you can commercially segment them into two categories: if it’s a cost-out exercise, consider how much manual processing will be saved versus the cost of replacing those IT systems over time benefits realisation horizon. If it’s a new product - or a new feature of an existing product - consider the addressable market, and whether the proposed ledger architecture scale to meet that need.
“And then of course privacy is a big one: with any DLT use case you must fully consider how sensitive the data is that you’re proposing to share. Once you have the requirements, then you can work out a solution, e.g. can the use case benefit from leveraging zero-knowledge proofs? Does the design team understand how zero-knowledge proofs work? In general, working with public or non-sensitive information makes the implementation a lot simpler and the reasons for using blockchain more attractive.”
“What are some differences between domestic and international use-cases?”
“There are some huge differences in regulatory environments and government fiscal policy between Australia and other nations. Some countries are looking to blockchain in an attempt to skip a generation in terms of regtech and govtech, or indeed their citizens are looking to blockchain to access financial or other services that are simply not available to them domestically.
“In Australia we have a relatively effective government environment and blockchain is about continuing to enhance the efficiency of the digital economy.”
“What's your favourite use case for blockchain globally today, and what’s coming over the horizon in the next 3-5 years?”
“I have to go with a home favourite here with one of Block8’s previous initiatives for proposed industry consortium put before the South Australian Government. Late last year, Block8 responded to an RFI into use of Distributed Ledger Technology for Electronic Lodgement Network Operator Interoperability. This is just the electronic lodgement part of a property transaction and is managed by companies such as PEXA.
“In our response we supplied a high level design for how to leverage a shared industry application to achieve fair interoperability between participating lodgement companies.
“The use of DLT seemed to be a clear winner over a messaged-based solution for a few key reasons. With a set of smart contracts, instead of the implementation of an API or data standard, a shared blockchain solution only has a single code base, meaning that:
“In terms of what’s emerging over the next three to five years… I think we will see DLT networks that exist between businesses start to extend through to the consumer. I anticipate that in Australia, we will have access to digital wallets that will connect directly into their digital rights and obligations, things like property, mortgages and rent, super, and unlisted shares.
“I also think an emergent property of this will be the ability to gain a single-pane-view into many of the financial relationships that make up a consumer’s individual economic profile. Regulation such as the CDR has already started to pave the way.”
“Thank you everyone! I have to agree with all of your comments and I do believe this is certainly a very exciting space to be involved in. Although it’s not bleeding edge technology any more, it is proving to still be leading edge.
Ok, I trust we have provided you all with some food for thought on blockchain use cases, challenges for adoption and what we believe is coming in the future!”
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A big thanks to BDO and R3 who joined the conversation!
Kel Campbell is the country lead for R3 in Australia and New Zealand. Kel has worked in Enterprise software vendors for over 20 years in business development and leadership roles. Most recently he has led teams and businesses at Oracle, Salesforce, and Antworks, who is an automation company specialising in digital transformation.
R3 is the leading Enterprise Blockchain and DLT platform, which is widely used by many of the largest enterprise companies globally.
Ryan Kris is an Associate Director for Technology and Blockchain at BDO Australia.
Ryan and his team provide management and technology consulting to the business community, helping his clients become ready for the disruption that cryptoassets and blockchain are bringing. He sees a connected future where blockchain is solving everyday problems while adding value to both society and business.
BDO is one of the world’s leading audit, accounting and advisory organisations. They provide technology consulting services for clients from a variety of industries and public sector organisations.