The Digital Transformation Agency (DTA) has flagged “gaps” in blockchain technology, advising government agencies to weigh any investment in the technology against its ability to meet users’ needs.

The two case studies of blockchain use in government services published so far show only limited benefits and several challenges in development.

The DTA, responsible for supporting government agencies’ digital transformation and digital initiatives, is exploring the viability of blockchain technology for government services. It received $700,000 in last year’s budget to do so.

Currently at the “discovery” stage, a cross-agency team is researching how blockchain is being used around the world as well as the early trials within Australian government.

The findings so far are consistent with the recommendations of other jurisdictions, international organisations and analysts: blockchain holds potential but has several problems.

“Our team found that blockchain is still an emerging technology and, when applied to various pilots or considered against alternative technologies, gaps become evident across both the technical and business facets of its implementation,” the blog post said.

“We recommend agencies considering technical solutions focus on addressing the needs of users and explore solutions to meet that need.”

The DTA still encourages government agencies to explore blockchain solutions with the stipulation that any investments made will address user problems — the agency’s guiding principle for all digital investments.

Blockchain in action

Two local case studies on blockchain solutions have been published by the DTA. 

In the first instance, the Australian Taxation Office’s tax compliance solution uses blockchain technology to increase transparency around tax on luxury cars. The solution, developed during a hackathon, uses blockchain to ensure data entered by car dealers is not tampered with and can be shared with road and customs authorities.

The solution was developed in just one week and helped to raise awareness of the emerging technology — but ultimately the development team concluded it was a likely a centralised database in conjunction with hash trees would have achieved the same outcomes.

The second case study came from a partnership between Data61, the CSIRO’s data innovation group, and the Commonwealth Bank to develop “smart money” for the NDIS.

Smart Money, a blockchain-enabled programable currency used via a mobile app, allows funds to have certain conditions attached to their use. The initial trial involved NDIS users, whose funding may have certain conditions or limitations placed on its use.

Programming the conditions into a digital currency could lessen the red tape and manual calculations of the traditional system, empowering users to take more control of their finances, according to advocates.

Again a centralised platform would achieve similar outcomes for users — although several new benefits on the back end were realised, which would likely increase as other payment environments were added, according to the case study.

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