The CSIRO’s Data61 and the Commonwealth Bank of Australia are crowing over a new “smart money” trial that will help manage payments within Australia’s National Disability Insurance Scheme (NDIS).
By using a permissioned Ethereum network with smart contracts that control when and where money from the government can be spent, the pair is touting a potential future where governments, businesses, and welfare recipients do not need to search for receipts and can instantly know balances and activity.
“We’re excited by the potential to enable NDIS participants to exercise greater choice and control over their disability support services, while streamlining budget management and removing the need for paperwork,” Commonwealth Bank’s head of Government and ADIs Julie Hunter said. “The results also show potential to reduce administration costs for disability service providers and the risk of fraud and accidental misspending.
“The trial has also highlighted that the technology could have wide application across the government, business, and not-for-profit sectors.”
The proof of concept took individualised NDIS plans, which allocate spending into categories, converted line items into tokens, and allowed users to book and purchase services through a mobile app.
“Participants never see the tokens — only their budget balances — as the tokens operate in the background,” the Making Money Smart report by the pair said.
The report also compared the proof of concept with a centralised database that replaced smart contracts with a rules engine, and found no real benefit to the blockchain model when it came to choice for users, control of money, accessibility, simplicity, or efficiency.
Since the blockchain solution also needed participant data stored in an off-chain database, the report claimed it had higher confidentiality, but noted that the extra nodes needed would increase the surface area for attacks.
For integrity, the report said the blockchain’s immutable data model was an improvement, but followed it up with the main drawback of immutability.
“Any erroneous or fraudulent payments that were made would be easier to reverse with a centralised database,” the report said.
The report also admitted that a centralised database would likely be faster than the proof of concept, and while it touted the “modifiable nature of the blockchain” as a way to achieve wider rollout and cost reduction, the report conceded that blockchain would involve larger upfront costs.
Addressing modifiability directly, the report said policy contracts would “likely” be easier to modify than a database, and users would be able to create new policies as needed.
“An immutable ledger and multiple nodes can make it more difficult to update the system if changes to the underlying architecture are required,” the report added.
Speaking to Senate Estimates last month, Digital Transformation Agency (DTA) chief digital officer Peter Alexander said that for every use of blockchain, there is a better alternative.
“Blockchain is an interesting technology that would well worth being observed, but without standardisation and a lot of work to come — for every use of blockchain you would consider today, there is a better technology — alternate databases, secure connections, standardised API engagement,” Alexander said at the time.
“Blockchain: Interesting technology but early on in its development, it’s kind of at the top of a hype cycle.”
Alexander pointed out that although blockchain can be used in low trust environments, the government wants to have trusted relationships and know who it is interacting with, and noted where the hype surrounding the technology is coming from.
“I think it would be fair to say a lot of big vendors and technology vendors are pushing blockchain very hard; they see sales opportunity in it,” Alexander said.
“So internationally, most of the hype around it is from vendors and companies, not from governments, or users and deliverers of services who are saying ‘blockchain is the solution to our problem’.
“It’s not that we don’t trust any of the vendors — that would be an unfair characterisation — we trust the vendors, but note that the motivation is generally sales and making revenue.”
DTA CEO Randall Brugeaud said in May that the agency is looking into the use of blockchain for Centrelink welfare payment delivery.
“Our plan is to look for use cases across the Commonwealth with an initial focus on the welfare payment delivery system, then working with our digital service standard, we’ll conduct user research with a view to having a prototype by the end of next financial year,” Brugeaud said at the time.
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