Bitcoin & Blockchain – Australia’s new digital currency
Bitcoin and Blockchain now reign as staples in the modern economy we live in, revolutionising the finance sector as an increasing number of businesses tap into the efficiencies of digital currency.
Australia, an aspiring FinTech hub, wants to establish itself as a world leader in Financial Technology, with a vision to spur growth in the market through technology. With Bitcoin users predicted to reach almost 5 million by 2019, the Australian economy will treat Bitcoin “just like money” after revising regulations to ensure Bitcoin is no longer subjected to double taxation as mentioned in the 2017 Federal Budget.
Until now Australia has suffered from a troubled relationship with cryptocurrency regulation and double taxation forced several well-reputable operators out of Australia in 2014 which led to a decline in innovation. By removing double taxation from the supply chain cryptocurrency businesses will be able to increase their profits, and therefore investment, in Australia once again.
Blockchain can potentially also drive operational efficiency and structural change for the country (Source: Financial Review). As a result, Australian banks and government organisations including The Commonwealth Scientific and Industrial Research Organisation (CSIRO), CommBank and Westpac have chosen to lead the way by experimenting with digital currency to make it an effective and safe option to transfer money around the world.
A blockchain is a decentralised database of every Bitcoin transaction. When a Bitcoin transaction is made, the global network of connected computers verifies the transaction without the need to “check” with a bank or clearing house before sending the funds. Bitcoin is a hybrid of a currency, an equity, and a social network. Its decentralised verification allows banks to transfer funds to one another at a faster rate and lower cost. Currently, international money transfers come with relatively high fees and even higher exchange rates, often to cover the cost to the banks involved.
Tighter regulation, rising competition from technology companies and low central bank interest rates, which seem likely to persist, have forced the banking sector to look towards reducing costs. Blockchain may very well be the solution.
Being a shared database technology, Blockchain can help increase the speed whilst reducing the cost of activities such as settlement and clearing by automating back-office functions with systems that would be shared across the banking sector.
“Pre-2008 the industry would not have lifted a finger to do certain shared things, which may save a hundred million dollars, but now a hundred million dollars is a lot of money and people are now prepared to work together to cut costs,” says Richard Lumb, Chief Executive of the Financial Services Group at Accenture.
Bitcoin has previously been criticised for enabling consumers to make illegal purchases anonymously over the internet, so there have been problems around privacy and confidentiality being breached. There have also been security concerns with encryption being broken by faster computing power. Beyond that, Bitcoin previously had a very small market so has been a highly volatile currency, at the time of writing, the Bitcoin exchange rate makes 1 Bitcoin worth $328 AUD but in the past it has been worth as little at $18 AUD. (Source: Canstar).
However, the rest of the world has embraced the work of Blockchain. Cryptocurreny has enhanced productivity across the agriculture, banking, healthcare, logistics and public sectors and has further helped businesses and governments in managing the deluge of data which was about to be unleashed by the internet of things. Expatriates in countries such as Hong Kong, the Philippines and India have also benefitted from cryptocurrency in its ability to allow cheaper money transfers. (Source: Financial Review). Nevertheless, the Australian Government will continue to encourage the exploration of Blockchain technology, accompanied with the help of CSIRO’s data science research team, Data61.
The first report developed by Rob Hanson and Dr Stefan Hajkowicz in Data61’s Strategic Insight Team explores four plausible adoption scenarios of Blockchain technology in Australia by 2030 including: aspirational, transformative, new equilibrium and collapse.
“Scenarios allow decision makers to consider if similar possibilities were to occur, what they should do to prepare for the future ahead of time,” Mr Hanson said.
“Most importantly, each scenario examines the aspects of critical uncertainty for the use of Blockchain technologies; human behaviour, technology and development, regulation and user adoption.”
The second report takes a technical approach by exploring design alternatives for Blockchain systems in three illustrative use cases: remittance payments, open data registries and agricultural supply chains.
“Looking at the range of critical requirements in these specific context helps us understand how Blockchain-based systems can support new markets and business models,” said Dr Mark Staples, Group Leader Data61, CSIRO.
The study highlighted that the path towards widespread adoption of Blockchain based systems is still not clear. Further research is required to create greater evidence that Blockchain systems will work as intended and how they will operate with legacy systems.
In order to tackle the nation’s concerns, more emphasis has been placed on equipping the right talent to become specialists within areas of cybersecurity and Human-Computer Interaction (HCI) technology. If you would like to find out more about the talent pool within the mentioned areas, please connect with me so that I can share them in greater detail with you.
While bitcoin currency may be too abstract to understand, due to its complex mining process and its strong privacy settings, Huxley recruitment consultants are confident in providing our clients with deeper insights to the sector for you to stay up-to-date with the trend of cryptocurrency. You may follow our LinkedIn page for more regular industry updates.