Resellers, get yourself a Bitcoin account and get to know blockchains
Don’t know what the hell I’m talking about? Bitcoin should need no introduction. If you haven’t heard of the world’s best-known cryptocurrency then spend some time with our old friend Mr Google and get up to speed. The news here isn’t Bitcoin itself. It’s the backend technology that makes Bitcoin work which has found itself on the PM’s National Innovation and Science Agenda.
The blockchain is a new kind of database. Although it was first invented to store financial transactions with Bitcoin, in principle it can store any kind of data. The magic about blockchains is that they are distributed ledgers, just like the internet is a distributed network. Every asset is recorded semi-publicly so that anyone with access to the ledger knows who has what (not the asset itself, but a numerical representation).
When a transaction takes place it is recorded through all copies of the distributed ledger. This can only occur when the asset holder uses their private key to decrypt the asset. The consequence is that there is no need for a clearing house or third party. In Bitcoin’s example, it removes the need for a central bank to issue currency and control its movement.
Last month Turnbull commissioned the Federal Treasury to work with CSIRO research outfit Data61 to look at ways to use blockchains in government and industry. This is very exciting stuff. Blockchains promise to create more efficient services because they eliminate the need for oversight. There’s no need to send an invoice for a transaction that has occurred on a blockchain. When a transaction occurs it happens immediately, is irreversible, and everyone can confirm it. No need for audits.
Financial transactions are only the beginning. You can add any kind of asset, in fact. People have proposed adding property contracts to blockchains for selling houses. Unfortunately that won’t get rid of real estate agents but it should mean a lot less gazumping!
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