“We believe that the blockchain has huge potential,” Commonwealth Bank CIO David Whiteing today told the annual conference of the Stockbrokers Association of Australia.
The Commonwealth Bank is a member of the R3 consortium, which is researching how blockchain technology can be used by the banking sector. The blockchain is the protocol that underpins bitcoin, acting as a distributed ledger for the cryptocurrency.
Whiteing drew an analogy between blockchain and TCP/IP.
“In 1983 we didn’t rush around talking about this great thing called TCP/IP,” the CIO told the conference. “But we today talk about an awesome thing called the Internet — and the Internet is enabled by the protocol TCP/IP.
“I would use the same analogy: We are getting super-excited about thing called blockchain, which is in effect no different to TCP/IP. We shouldn’t be excited about the blockchain as a construct – what we should be excited about is the possibility of things that we can do on top of the blockchain. And that’s what interests us as business.”
Whiteing said that he had sought to create an environment where his team could experiment with blockchain technology — “to try a few things, to make a few mistakes, to explore the art of the possible.”
Although Whiteing sees a lot of potential for the technology, he said the bank is also acutely aware of a number of limitations that will need to be overcome.
“My view is these problems will be solved,” he told the conference. “The scalability of the blockchain remains a challenge but there are smart people working on that today,” he said. The purely distributed nature of the blockchain could also be a problem because of the potential compute cost of replicating it.
Ensuring it is a secure platform will also require more testing. “Our hypothesis is that it’s substantially more secure than some of the technologies we’ve been using today, which are over 30 years’ old, but it hasn’t been tested,” the CIO said.
Whiteing said that he believes the blockchain will drive productivity and a large number of use cases involving the technology will emerge. Trade finance is one area where it could make it significantly quicker to process contracts; others include applications in the procurement and share trading and settlement spaces.
Greg Medcraft, the chairperson of Australia's corporate regulator, the
Australian Securities and Investments Commission, last year said that the blockchain could have a dramatic impact on the global financial system.