Chris Pash* says that CSIRO has helped create blockchain-powered ‘smart money’ that can be handed out and spent only under set conditions.
The CSIRO’s Data61 and the Commonwealth Bank of Australia (CBA) have created a new type of smart money powered by blockchain.
This smart money, also known as programmable money, can be used to help manage insurance payouts, budgeting and the management of trusts and charities in Australia.
Once programmed, smart money knows who it can be spent by, what it can be spent on, when it can be spent, how much of it can be spent and any other conditions that may be set by those funding the payment.
Smart money also reduces the need for funders to assess payments after-the-fact when checking for compliance with spending rules.
The technology was trialled with 10 participants and carers in the National Disability Insurance Scheme (NDIS) using a prototype app.
The findings of the smart money proof of concept were released last week in a report, Making Money Smart.
“This has been an important research project for understanding the benefits and limitations of blockchain technology in the context of conditional payment environments, such as the NDIS,” says Dr Mark Staples, Senior Principal Researcher in the Software and Computational Systems program at CSIRO’s Data61.
“Our use of blockchain added new kinds of programmable behaviours to the smart money in the prototype system.”
“This automation and flexibility could reduce friction and enable greater innovation in many payment environments and unlock network-effect benefits.”
“This could include more directly connecting citizens to public policy programs, empowering people to optimise their spending through things like smart savings plans and smart diets, and reducing costs for businesses, including through the potential for self-taxing transactions.”
The prototype app was tested by 10 NDIS participants and carers in the CommBank Innovation Lab as well as a small number of medium-sized disability service providers.
Participants and carers estimated the app could save them one to 15 hours per week, while service providers estimated potential annual cost savings as a percentage of revenue of 0.3 per cent to 0.8 per cent.
CBA modelling indicates the economic benefits would run to hundreds of millions of dollars a year.
Julie Hunter, CBA’s Head of Government, says the trial results also show potential to reduce the administration costs for disability service providers and the risk of fraud and accidental misspending.
* Chris Pash is a Sydney journalist. He tweets at @TheLastWhale.
This article first appeared at www.businessinsider.com.au.
