Startup News & Analysis

A strong start or money down the dunny? Startups react to the budget’s $700,000 blockchain allowance

Stephanie Palmer-Derrien /

Liven

William Wong (left), one of the co-founders of Liven, weighed in on the debate. Source: Supplied

The federal government has given a nod, albeit a small one, to the existence of blockchain in this year’s budget, allocating $700,000 (and a mere 45 words) to investigating “areas where blockchain technology could offer the most value for government services”.

A handful of blockchain experts spoke to StartupSmart about the vague pledge, raising questions around where the funds should be directed, Australia’s leadership status in the innovation space, and whether this is all just a waste of time and money.

Nick Byrne, co-founder and chief executive, Typehuman

“The figure is a good start. There are still questions for the government around how it could be used, and the $700,000 would be best allocated towards really understanding the use cases.

“Tokenising the central bank and work around the crypto Aussie dollar could put Australia as a leader, globally. They could also look at tokenisation of other markets such as energy and water.

“Then there is the opportunity to use blockchain as part of the evolution on open data movement and new infrastructure innovation, or for managing data correctly.

“The budget also saw $90 million reserved for the identity project GovPass, and that would be an amazing opportunity for blockchain. Similarly, South Australia and New South Wales have already digitised their driving licenses, and blockchain technology has a very elegant use case here to help create digital interoperability standards across states.”

Daniel Alexiuc, chief executive, Living Room of Satoshi

“It’s encouraging that they’re looking at blockchain, but honestly I think they’re flushing that money down the toilet.

“The government doesn’t really have any practical use case for blockchain at all. It would be better off simply using a central database. Databases are pretty good these days — we have a lot of experience in using them and they work.

“Blockchain has had a lot of publicity recently, perhaps unfairly. It’s been promised to do a lot of things that it’s not suitable for. It doesn’t solve all the problems we think it’s going to solve.

“The only reason blockchain is immutable is the incentive mechanism and, for government purposes, its still not a trustless system. Any time you have something on a blockchain that represents something in real life, there has to be an authority involved who puts it there. You still have to trust those people or systems.”

William Wong, co-founder, Liven

“It’s the right direction. It’s quite heartwarming to see the Australian government putting aside some money for this purpose, but its not good enough. The allocation of $700,000 is frankly a joke — $5 million would have been a good start. I’m not sure what they want to achieve, but it’s not going to be much.

“Internationally, the Australian government is perceived as being supportive of blockchain innovation and ICOs, and it has always been one of the top four countries for foreign investment into blockchain projects. The $700,000 just doesn’t add it. It’s quite disheartening that people are going to see that disparity. We should be the ones leading the charge.

“The Australian government should invest more in education, and in incubation and acceleration of blockchain-specific products, whether that’s through directly injecting money or indirectly, using the R&D tax incentives for blockchain projects. They should open up a new R&D grant specific to blockchain. That will encourage both startups and existing companies to have a crack at developing use cases.”

James Lynch, chief executive, CastleCoin

“The $700,000 is a start, and although it doesn’t look like a lot, there have been a number of positive actions with regards to cryptocurrency and blockchain leading up to this point, putting a framework in place with regards to regulation, blockchain in business, and guidance with respect to the taxation of cryptocurrency transactions.

“The use cases they find in the short term will be mostly process and system-driven benefits, but in the long term we could see applications around voting, public-private partnerships, and unification and fluidity of information between different levels in the government.

“Blockchain improves transparency of information, and auditability, which could lead to more confidence among the populous with respect to where their money is going.

“Australia is on the forefront here, and to see any budget allocation is fantastic. It does seem like a meagre number, but its dedicated to blockchain and it’s just the beginning.”

Nicolas Steiger, chief enabling officer, FlashFX

“In the grand scheme of things it’s not a lot of money, but still quite positive to see. It’s a stepping stone — as soon as the government has a better understanding of how it can improve infrastructure, services and payments through blockchain, they will become more open to product policies and new opportunities.

“For something bigger to come of it, they have to have a better understanding of how blockchain can help the whole economy. There are a lot of inefficiencies, not only in government, but in the whole economy, that could be reduced through easier sharing of data.

“It doesn’t have to be through a blockchain, but we need to increase communication and reduce friction. Increasing operational standards in running the government and economy could yield cost savings, and we would see benefits that are great for everyone.

“If they spend $700,000, and save more in cross-savings and efficiencies, then it’s worth it.”

NOW READ: Why blockchain is the future of democracy

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Stephanie Palmer-Derrien

Stephanie Palmer-Derrien is a reporter at StartupSmart.

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