[This is the Hansard of the opening statement delivered on behalf of Dr Chris Berg, Dr Aaron Lane and myself to the Senate Select Committee into Fintech and Regtech]
Good morning. We welcome the opportunity to appear before this important committee today. I’m delivering this opening statement on behalf of my associates Dr Chris Berg, Dr Aaron Lane and myself. We appear here today in our personal capacity. We are a team of academic economists and lawyers affiliated with the RMIT Blockchain Innovation Hub in Melbourne. Chris is also a member of the steering committee of the Australian government National Blockchain Roadmap. Our research explores complex economic and public policy implications of frontier digital technology, including blockchain.
We have provided a written submission to the committee that outlines our research in this field. Our submission has two themes. The first theme is the potential of blockchain as new digital infrastructure. Applications of this technology represent a fundamental shift in the governance structure of the economy, with applications ranging from supply chains to decentralised finance, or DeFi. For Australia, blockchain represents a unique opportunity to transition our major sectors, such as trade and education, towards the digital economy.
The second theme of our research turns to the challenges that blockchain presents for regulation, or, more broadly, what governments do to foster blockchain innovation. Understanding the regulatory challenges of blockchains must recognise that blockchains are unique technologies of governance. They enable us to organise and to coordinate in new ways by facilitating trusted information and trade.
Ongoing regulatory possibilities of blockchain innovations are critical. While we do not cover specific regulatory issues in our submission, our interactions with industry partners suggest some current challenges, including [inaudible] taxation system, the potential treatment of blockchain and decentralised finance, products as managed investment schemes—some of these issues relating to ICOs [inaudible] issue. And finally whether blockchain base records will be accessible by Australian regulators—any specific regulation must be housed within a broader regulatory approach. Our standards should demonstrate to entrepreneurs that governments are adaptable and open to innovation and willing to reduce regulatory concerns. Our recommendation is that governments aid the transition to a digital economy by using and improving regulatory reform tools, such as sandboxes, to facilitate the process of regulatory evolution.
We thank you for the opportunity to appear before this committee and we welcome any questions that you have regarding our submission.
Book published with the American Institute for Economic Research (with Chris Berg and Sinclair Davidson).
We are on the cusp of a dramatic wave of technological change – from blockchain to automated smart contracts, artificial intelligence and machine learning to advances in cryptography and digitisation, from Internet of Things to advanced communications technologies.
These are the new technologies of freedom. These tools present a historical unprecedented Continue reading “The New Technologies of Freedom”
Book published with the American Institute for Economic Research (with Chris Berg, Sinclair Davidson, Aaron M Lane and Jason Potts)
We spell out the policy settings necessary for the rapid adaptation and market re-coordination that is required to resuscitate the economy. We explain why a return to business as usual is simply not enough to get everyone working again. A period of high growth prosperity will be imperative to deal with the costs of the freeze. This book tackles the tough questionsContinue reading “Unfreeze: How to Create a High Growth Economy After the Pandemic”
Published in Research Policy (with Chris Berg, Brendan Markey-Towler, Mikayla Novak and Jason Potts)
Abstract: For the past century economists have proposed a suite of theories relating to industrial dynamics, technological change and innovation. There has been an implication in these models that the institutional environment is stable. However, a new class of institutional technologies — most notably blockchain technology — lower the cost of institutional entrepreneurship along these margins, propelling a process of institutional evolution. This presents a new type of innovation process, applicable to the formation and development of institutions for economic governance and coordination. This paper develops a replicator dynamic model of institutional innovation and proposes some implications of this innovation for innovation policy. Given the influence of public policies on transaction costs and associated institutional choices, it is indicated that policy settings conductive to the adoption and use of blockchain technology would elicit entrepreneurial experiments in institutional forms harnessing new coordinative possibilities in economic exchange. Conceptualisation of blockchain-related public policy an innovation policy in its own right has significant implications for the operation and understanding of open innovation systems in a globalised context.
[Together with Chris Berg and Jason Potts this article was published in the Australian Technology Manufacturing Magazine]
Bitcoin was invented in 2008 by Satoshi Nakamoto as a censorship-resistant cryptocurrency built for the internet. With regular fiat money centralised bodies such as banks and governments control the records of who owns what. For bitcoin those records are held in a decentralised blockchain. Blockchains are updated and maintained by a decentralised network. To ensure the transactions and records are correct, economic incentives to continually drive the blockchain network towards consensus.Continue reading “Blockchain and the manufacturing industry”
[Together with Chris Berg this article was published at FEE.org]
The core of the free market explanation for global poverty is simple and compelling: much of the world’s poor are poor because of institutional failure.Continue reading “Why blockchain technology could be the key to solving the developing world’s biggest problems”
Published in The Journal of the British Blockchain Association (with Alastair Berg and Brendan Markey-Towler)
Abstract: We apply institutional cryptoeconomics to the information problems in global trade, model the incentives under which blockchain-based supply chain infrastructure will be built, and make predictions about the future of supply chains. We argue blockchain will change the patterns and dynamics of how, where and what we trade by: (1) facilitating new forms of economic organisation governing supply chain coordination (such as the V-form organisation); (2) decreasing information asymmetries and shifting economic power towards the ends of supply chains (e.g. primary producers); (3) changing the dimensions along which we can reliably differentiate goods and therefore de-commoditising goods and disaggregating price signals; and (4) decreasing consumer reliance on quality proxies (e.g. production within national borders).
[Together with Alastair Berg and Brendan Markey-Towler this article was published at Machine Lawyering]
As goods move from producers to consumers, information about those goods must travel with them. Where did a product come from? Is this wine fake? How fresh is this lobster? Modern supply chains, however, are remarkably long and complex. This complexity makes it costly to produce trusted information about goods. Blockchain and other distributed ledger technologies are poised to help lower information costs, potentially expanding and reshaping global trade.Continue reading “Predictions for trade in a blockchain world”
[Together with Chris Berg, Sinclair Davidson, Mikayla Novak and Jason Potts this article was published at Cryptoeconomics Australia]
International trade is an information problem.Continue reading “TradeTech and the problem of international policy coordination”