Distributed ledgers and blockchain are anticipated to provide a significant positive uplift to New Zealand’s economy, according to a new report.
In the report, Distributed Ledgers and Blockchains – Opportunities for New Zealand, author Joshua Vial from Enspiral, found that these emerging technologies would likely have a positive impact on high-tech jobs and digital exports for New Zealand.
“There is much unclaimed terrain in the blockchain space: widespread use of security tokens, social bonds on the blockchain, mass digital identity adoption, and centrally banked digital currencies,” he writes.
He concludes that New Zealand could be a world leader in this space.
Vial interviewed more than 50 blockchain entrepreneurs and investors, government officials, academics and international experts, for the report, which was commissioned by Callaghan Innovation and blockchain venture studio Centrality. The Ministry of Business, Innovation and Employment also provided funding for the research.
“We expect this report will ignite further discussion on the potential of emerging technologies like blockchain and distributed ledgers,” says Erica Lloyd, general manager, market engagement and experience at Callaghan Innovation, in a statement. “Technological innovation is the path to lifting our earnings and productivity.”
“Although we are still at the early stages, there are substantial opportunities for us to both understand and apply blockchain towards sustainable and ground-breaking innovation that can support our economy.”
Andy Higgs, general manager of strategic partnerships at Centrality, says the report provided useful analysis of the significant opportunities that exist for distributed ledger and blockchain technologies.
“Blockchain presents a huge opportunity, with over US$11 billion raised through initial coin offerings (ICOs) in the first half of 2018. New Zealand has a chance to lead the way, thanks to our sense of fairness and social inclusiveness, to ensure all New Zealanders benefit from the full potential of blockchain and decentralisation.”
Spotlight on public sector and primary industries
The report says blockchains can provide governments new opportunities to improve transparency, prevent fraud and establish trust in the public sector.
Mitigating the potential harm caused by financial crime using this technology is a valuable niche to pursue in its own rightJoshua Vial, Enspiral
Short-term applications for better public services include audits, attestations such as licensing, accreditation and secure document management. Longer-term possible applications include tax collection, rebates and subsidy distribution, fitness warranties, elections, procurement and social welfare payments. These applications, however, would need substantial progress to be made on digital identity, digital inclusion and, possibly, central bank digital currencies.
Many projects are focused on solving supply chain problems with distributed ledgers, which could have a significant impact on New Zealand’s primary industries, the report states.
The report cites how NZ Post and Fonterra have partnered with Alibaba to use blockchain technology to track consumers’ orders in an effort to increase food safety. Centrality is trialling a supply chain traceability solution to showcase Kiwi products in international markets.
The report cites some considerations for government and the private sector in making the most of the opportunity presented by blockchain technologies.
One of these is the establishment of a multidisciplinary research centre for decentralised computing, with a focus on distributed ledger and blockchain technologies.
The centre might, for example, have research chairs focused on technology, entrepreneurship and public policy with the flexibility to add chairs in other disciplines as opportunities arise.
Initial funding could come from both the public and private sectors, but the goal is to become self-sustaining through private funding from top tier blockchain foundations. The centre could be hosted by a single university or a consortium, and it should aim to attract world-leading academic talent to our country.
The report says another consideration is the setting up of a blockchain financial crime prevention forum
As the report points out, blockchains and crypto-assets have been widely criticised for enabling financial crime, but the technology also offers significant potential to provide solutions.
Mitigating the potential harm caused by financial crime using this technology (as well as using distributed ledgers to reduce existing financial crime such as fraud and identity theft) is a valuable niche to pursue in its own right, it states.
This will further enhance New Zealand’s reputation as a trusted jurisdiction, attracting quality companies to the country.
The blockchain industry likewise needs to acknowledge the high-risk nature of the technology and actively resource solution development to help keep people safe online. Crypto-assets and public ledgers provide an opportunity for sophisticated tools and techniques that keep people safe, deterring financial crime.
Another consideration in the use of the technology is to help prioritise digital identity adoption and digital inclusion.
While digital identity is not intrinsically a blockchain technology, there is an important relation that can dramatically increase the value of blockchains and distributed ledgers, the report explains.
Consideration could be given to how best to support the creation of vendor-neutral standards and implementing blockchain-friendly government system interfaces of digital identity to complement RealMe.
Many potential applications of distributed ledgers and blockchains are interesting only when a significant portion of the population is using them.
Those who have access to these emerging technologies will have a significant advantage over people who do not, which will reinforce social inequality.
“Widespread digital identity adoption and digital service access for all New Zealanders would help to unlock the full potential of blockchain and distributed ledgers,” the report concludes