A report by international law firm Allens investigates the use cases for blockchain and where the technology is now
International law firm Allens, which has offices in Australia and Asia, has released a detailed report investigating the attributes, problems and possible use cases for blockchain. The report’s lead authors say blockchain first got on Allens’ radar in 2012 due to a junior lawyer’s penchant for blockchain, and the fascination stemmed from there.
“We’ve seen distributed ledger technology move out of the lab and onto the C-suite agenda of our clients, from startups to multinational giants with centuries of transactions behind them,” they said. While perspectives are many and varied, the overwhelming view is that distributed ledger technology has the power to shift economies, “While perspectives are many and varied, the overwhelming view is that distributed ledger technology has the power to shift economies, businesses and behaviours.”
Blockchain is a type of distributed ledger technology that records, encrypts and transfers data “blocks” along a secure chain. While originally used for bitcoin transfers, the use cases for the technology are numerous.
Key report stats
- USD$11-12 billion. The projected global annual savings from cash securities by cutting settlement times and reconciliation costs.
- The number of banks and financial institutions currently testing, analysing or investing in blockchain.
- $4-5 billion. The savings estimate of ASX advisors for using blockchain in equities post trade.
- $160 million. The amount invested in blockchain by VC firms in Q1 2016.
Blockchain use cases
- Banking: The report outlined the “strong potential” to improve the efficiency and accuracy of payment services and cross-border banking. Commonwealth Bank, NAB and Westpac have all already started to invest in distributed ledger solutions for payments, with them all being part of consortium of global banks testing blockchain. Some Australian banks are also trialling Ripple technology. However, as outlined by Allens, the technology can also be detrimental for banks as it could threaten the viability institutions that are transactional intermediaries.
- Securities transactions: The clearing and settlement process currently relied on by the securities industry could be improved by allowing for “quicker settlement, improved integration with registry and back-end systems, and reduced capital requirements.” In Australia, the ASX is currently investigating whether the technology could replace its current system CHESS:
- Digital currencies: Central banks, including the Royal Bank of Australia (RBA) and The Bank of England, have been exploring the possibility of developing their own cryptocurrenciesby leveraging distributed ledger technology.
- Government records: Record-keeping in governments could be improved through distributed ledger technology. Some examples outlined in the report include collecting taxes, delivering social security benefits, issuing passports and maintaining the integrity of public records and services.
- Intellectual property: Verifying electronic documents or digital intellectual property is a clear use case for this technology, with “obvious” examples including verifying ownership and the creating date of copyrighted works. Companies such as Ascribe, PeerTracks and Ujo are already leveraging this technology for copyright and royalties.