The SA Museum, in partnership with Civic Ledger, has been named as a finalist in the State Government’s Blockchain Innovation Challenge. To figure out how the technology works, we’ve revisited a conversation with Civic Ledger co-founder Katrina Donaghy from last year.

Blockchain, like every new revelation in tech, has evangelists, deniers, and a lot of people in the middle with no idea what the fuss is about.

Easily dismissed as the tech that underlies the cryptocurrency Bitcoin, there is fuss to be made about the technology, with the State Government this week announcing the finalists in the running for its $100,000 Blockchain Innovation Challenge.

“The possibilities blockchain presents could prove key to the future growth of our state’s economy, so it’s fantastic to see so many of our local entrepreneurs test the boundaries of what it has to offer,” Premier Steven Marshall says.

One such entrepreneurial entity in the list of finalists is the South Australian Museum, who, “like most Museum’s, has been faced with the challenge of digitising its world-renowned collection,” a Museum media release says.

“Under the guidance of Museum Director Brian Oldman, the Museum [has] started to look for innovative solutions to address digitisation.”

The solution, according to the SA Museum, is blockchain, and, if awarded the $100,000 prize, the institution will work with Queensland company Civic Ledger to digitise its collection.

Civic Ledger works with governmental organisations to help implement smart contracts and blockchain technology, allowing the public sector to become “more accessible, efficient and effective.”

CityMag spoke with co-founder of Civic Ledger, Katrina Donaghy, in July last year, in the lead up to her appearance at the Adelaide Festival of Ideas.

In a transcript of that discussion below, Katrina explains to us what blockchain is, and how it can make the public sector work better for the public.

---

 

CityMag: What is your history in blockchain and how did Civic Ledger come about?
Katrina Donaghy: Civic Ledger was founded in late September 2016… We basically were created because we delivered a product, or a small little MVP – which is a minimum viable product – for the Queensland Government.

So way back then, we saw an application of blockchain technology that could have some benefits for government, and when we had that validated we decided that forming a company would be a good idea.

We’ve [since] secured some very interesting contracts with governments solving some very interesting problems, and… we were announced as Australia’s Emerging FinTech Organisation for 2018, which is pretty good for a blockchain company that works with government (laughs), when people are still trying work out ‘What is this technology called blockchain?’

 

Where did your initial interest in blockchain come from?
People who know me know I say this all the time, because I interview people as well about technology, and I always ask the question: When did blockchain find you? Because it does. You have this moment in time where all of a sudden you notice it and it’s trying to catch your attention.

But I would say in around October 2015, I was in another startup and we were trying to solve problems around identity, and I realised that traditional technology systems just weren’t ready to look at identity in a different way.

At that stage too, around that time, Shane Warne had some opaque things in his charity, and I came from a not-for-profit background, and I was wondering how we could actually make these things transparent – how can we provide a record of a transaction that couldn’t be changed or covered up.

I found a book in my children’s library and it was about Bitcoin and I read it, and I had a profound change of thinking. And then one thing led to another, finding the right people, the right ecosystem, the right problem, the right opportunity, and saying yes.

 

What’s the easiest way for people to understand what Blockchain is?
Well basically, blockchain technology is something that evolved out of Satoshi Nakamoto’s white paper, which came out in 2008, around the GFC.

There’s three elements to the blockchain technology: there’s cryptography, which has been around for some time; peer-to-peer protocols, which, again, have been around for some time; and the idea of data storage, which we’re all quite familiar with – the cloud, centralised servers.

So those three things have existed separately for a long time. You can go back thousands of years to see ledgers and things like that, it’s just that with the Satoshi Nakamoto paper of 2008, that entity pulled together those three elements and wrapped it up with some very interesting, smart thinking, and rules, and protocols that actually allow those elements to be decentralised.

So the blockchain facilitates an initial place for a transaction to occur between people [where] it will have commonality in data [even though] they exist in separate entities, and there needs to trust that data in some way.

So that’s where blockchain is able to help. And because of those elements – that protocol that sits underneath it – it starts to give us a whole way of thinking about transparency and trust in the data that’s involved in those transactions.

 

What has the association between blockchain and cryptocurrencies done for the perception of blockchain?
Obviously we all have our personal opinions about [cryptocurrencies], but putting that aside, I think it’s important for the readers to understand that the very first blockchain application is Bitcoin. So it’s the most successful application of blockchain that we have, and the Bitcoin blockchain solves the problem of the double spend of a digital asset – the Bitcoin, the cryptocurrency.

Cryptocurrency is an important element of the conversation, it’s just people started perceiving it as to hold, to invest in, to leverage their homes against, to earn money fast.

We work very hard to unpack them both from the conversation, but also give merit to the role of cryptocurrency, as well as the blockchain.

 

How wide-ranging are the potential applications of blockchain?
Oh, it’s huge. There’s basically four very good use cases for blockchain:

The first is peer-to-peer value transfer. So when we think about many of our emerging trade routes many hundreds of years ago, when we had early local production, the community trusted each other, so they were able to barter, but since we’ve started to open up our trade areas, we had to bring intermediaries into those transactions such as banks, wholesalers, governments and things like that.

So what we’ve seen with blockchain, it starts to move intermediaries out of the transaction to allow people or organisations to trade with each other, which reduces cost, creates efficiency, and then allows innovation to occur.

The second use is shared ledgers – that’s what I mentioned before around having a mutual place for a transaction to occur – so that people who have a common interest in that data can share one version of the truth, one version of that data.

The other particular use is very important, is it’s an immutable source of truth. So when we think about transactions that can happen in one organisation, and if another organisation wants that data, it has to be re-presented or re-entered into their system, and often that can result in error or removal or change.

So what is very important about blockchain is that it actually gives you a timestamp of when something happens, so you can always verify the date or the time that something had happened, and it cannot be changed. It authenticates the data; it creates an immutable storage of that data, so the record cannot be changed; and it’s notarised without the need of a centralised third party.

And the last thing, which is why Ethereum blockchain is very big, is because it has these enforceable agreements called smart contracts. So once you can program money, you can start to program the way that transactions occur through automation, and that’s really interesting for escrow payments – so when you need to hold money in initial place when the transaction occurs – or things like Internet of Things. Internet of Things is going to be creating a significant amount of data, so we need to structure that data and mesh it in a way that becomes transparent and automated, so machine-to-machine contracts can start to emerge, particularly when we think about autonomous driving cars, sensors, drones – all those sort of things will be able to be programmable through blockchain technology.

 

Internet of Things technologies already exist to some degree. Are they currently using blockchain technology? Or will blockchain be an advancement of what is currently the norm?
It’ll be the advancement. We see around the world, we hear of proof of concepts, minimal viable products, pilots – we’re yet to see the effects of Bitcoin blockchain, and we’re yet to see really fully developed blockchain applications. We’re still going through that process. But it’ll be interesting to see.

 

In regards to Internet of Things, what’s the current system being used that blockchain will replace?
If you think about our centralised servers, so if you think about Facebook and Amazon, they are what we call ‘centralised data storage systems,’ where when we, as a consumer, produce a piece of data, that data is owned by Facebook and Amazon, or different centralised authorities, for them to monetise.

You can imagine seeing significant harm done to the public because of hacking, stealing of identities, fake news, stuff that gets put through our feeds which is not correct, so blockchain technology will be a different way of having a relationship with data where we will actually own our own data and choose to share our data through trusted mechanisms, through keys and things like that.

It’s going to take a significant shift in understanding the value of data, especially for humans because we’re so bad at passwords (laughs). And that’s one of the things about blockchain technology, is it’s going to require us to be responsible for the security of our information, which is going to be an interesting cultural shift, because we’re so used to having somebody else reset our passwords when we forget them.

In the future, if you lose your keys, you’ve lost your assets. So there’ll be a lot of incentive for us to be far more careful, because the reason why we get hacked, the reason why our data is insecure is not because necessarily the technology, it’s because humans are really bad at it.

 

Civic Ledger looks at the ways that cities and governments can use this technology. What are the practical applications that are available to cities and governments to improve the way they operate?
We always look at the transaction between governments and citizens and organisations and industry. So if you think about your life journey, life cycle as a human, as a citizen, the moment you’re born to the moment you die, your life is embedded with paper.

So as soon as you’re born, you’re issued with a birth certificate. As soon as you get your driver’s licence, you’re issued with a licence. When you finish school, you get issued with a certificate. When you want to go camping, you need to get a permit. When you want to go build something onto your house, you have to get a building approval. That all requires regulatory paperwork, process, authentication, verification, and all of that adds up to what we call intermediaries in the transactions that create friction and cost.

So we’re very interested in how government can rethink the way they can transact with citizens and organisations by building it from the citizen or the organisation outward, and using digital to deliver services.

We look at very interesting basic things, like car parking. For a lot of people, for a lot of councils, particularly local government, parking of cars is a very emotional thing. If neighbours get into lots of fights with each other because of the precious real estate that sits outside their door, local government has to regulate that very heavily, which costs a lot of money.

But imagine if council could create a peer-to-peer marketplace for verified or authenticated customers to access those services and then negotiate in a marketplace access, or trading of that value, should they no longer require it.

Think about Melbourne, AFL time, inner city, there’s parking available but somebody in the street holds all the vouchers, and they give it to their friends – that’s not a very good marketplace. But imagine if you have those tickets and you don’t want to use them, you can put them into a marketplace for them to be resold or bought, and council gets transparency on that. They’re able to see the transactions, and when there’s a trade, they get a financial click, and they’re able to monitor and moderate, should there be any uncompetitive behaviour emerging out of the market.

We see a future where government will become a facilitator of emerging markets, rather than a regulator.

 

How is blockchain going to save journalism? (I’ve just started listening to the podcast Zig Zag.)
Yes, yes, it’s about giving what we call provenance and authorization. You get a lot of people asking these questions about ‘Is blockchain going to create truth?’ and the answer is, well, no. It doesn’t create truth, because at the end of the day, you can put bad data into the blockchain [and] the blockchain’s not going to determine what is truth and what is not.

That’s where our processes that occur… are quite critical, because it comes down to the design of the solution, and how the data is what we call ‘federated.’ Who has the authority to verify that data before it’s put into an immutable state, and those are the things that get missed a lot.

There’s a general perception that you can just put anything in – well, the answer’s no, you don’t. You’ve got to be very, very clear about what goes into the blockchain, and it’s what we call metadata.

For journalism, anything that has a source of information, you create a level of provenance and authenticity, which gives the reader confidence that what they’re reading has been verified. That is a very powerful proposition for the future. And what is also more powerful is that information becomes extremely valuable, so you start to monetise that information from a journalist’s perspective, which is really important, given how the current centralised media treats journalism, journalistic integrity.

It will just be expected that this technology is the layer that holds this all together. If we don’t see blockchain in there, we’ll actually say ‘I don’t trust that information.’