A detailed, 52-page white paper titled Blockchain Challenges for Australia, written by the ACS Blockchain Advisory Committee headed by Vincent Gramoli of the University of Sydney and CSIRO's Data61, expanded on some of the issues that blockchain faced in its bid to become a more accepted technology.

The report said that bitcoin had given birth to blockchain technology a decade ago and Australia was now at the forefront in terms of regulation, research and industry applications.

Australia's standards organisation had been picked to lead the secretariat of blockchain standards for the ISO, Australian Research Council-funded research had produced a scalable blockchain system and the World Bank had chosen an Australian Bank to implement the first blockchain-based bond.

Despite this, there were significant challenges that prevented the exploitation of blockchain for benefitting the economy and society: scalability, security, regulation, education and employment.

"The use of blockchain and the benefits of a decentralised system are currently limited by the challenge of scalability; the predominant blockchain systems are confined by the costs of energy as well as by the trade-off between performance, security and trust," the paper said.

While blockchain promised potentially critical, scalable services that were globally accessible across the internet, Australia's geographical isolation contrasted with this inherent openness, and could affect the quality of its Internet communications with major hubs.

When it came to security, the paper said, most existing blockchains did not offer accountability, as they did not allow users to identify responsible actors and initiate recovery processes in case of losses. Accountability was required to provide blockchain users with some guarantee as to the security of their transactions.

Regulation needed to keep pace with the progress of technology, the paper said, pointing out that there was a limited regulatory landscape around blockchains.

"The challenge is to develop a clear statement of the legal, policy and ethical framework that enables the use of blockchain technology, especially cryptocurrency. Some related issues include a lack of clarity on the terminology, and perceived immaturity of the technology.

"Additionally, a lack of clear governance rules for compliance with legislation and regulation for know-your-customer (KYC), anti-money-laundering (AML) and counter-terrorism-financing (CTF) processes for pseudonymous users is a challenge; and measuring the extent to which ‘code’ can be considered a legal agreement between parties remains unclear and untested in court."

Education and employment were both linked as challenges to the spread of blockchain, the paper said, and they posed a challenge of supply and demand, where education was the supply, and employment the demand.

"Currently, the industry (recruitment) is experiencing a shortage of supply, and is resorting to non-accredited individuals to fulfil skill-specific jobs. 34 Some recruitment agencies specialised in IT are specialising in blockchain as well. Incubators are also specialising in the fintech economy, including more particularly in the blockchain economy. The employment challenge requires putting VET and tertiary education organisations in contact with recruiters or SMEs.

"A key challenge is to fund research in blockchain for academics in order to educate others. Breaking it down further, education challenges in particular can be thought of as a concentric circle; the research, academia and the technical profession must be the first to be educated on blockchain, and only then can that knowledge be dispersed to related professionals and government, followed by professional users and decision makers and then public end users."

Dr Gramoli said blockchain has some way to go before it became a mainstream technology. “The good news is that there are solutions for these problems, and in this paper, we wanted to explore how we get to those solutions," he added

ACS president Yohan Ramasundara said, however, blockchain remained a technology with tremendous potential for Australia.

“In Australia, we’re already a world leader in blockchain technology. We punch well above our weight in research and deployment,” he said. “But to take that next step there are issues that need to be addressed.

"We need to figure out how we can integrate the technology into our legal, technical and educational systems – which is why we’ve put out this paper now. We also need to address the skills shortage. If we can do that, then blockchain remains a potentially revolutionary technology in which Australia can lead the world.”