Better blockchain on the horizon

Tuesday, 04 July, 2017

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Australian researchers are working on a new super-fast, safe blockchain technology which they say has the potential to revolutionise the global economy.

Named ‘Red Belly Blockchain’, the new system being developed by the University of Sydney’s School of Information Technologies will allow secure and almost instantaneous digital transfer of virtual currencies across the world.

“In recent testing, our blockchain achieved the best performance we have seen so far — with more than 440,000 transactions per second on 100 machines,” said Dr Vincent Gramoli, who heads up the Concurrent Systems Research Group developing the blockchain.

“In comparison, VISA’s network has a peak capacity of around 56,000 transactions per second and the Bitcoin network is limited to around 7 transactions per second.”

According to the researchers, Red Belly Blockchain is the first being built to work both in public and private contexts, meaning that it could be used by internet users in a peer-to-peer fashion, as well as in an industrial environment restricted to certain users.

It also aims to avoid common problems currently plaguing digital transactions.

“As opposed to mainstream public blockchains, ours is not subject to double spending — when an individual successfully spends their money more than once — because its chain of blocks never forks,” said Dr Gramoli.

A fork occurs when a bug in the system causes the blockchain to diverge into two or more potential paths forward.

“As opposed to consortium blockchains, it can treat hundreds of thousands of transactions per second coming from a potentially unbounded number of clients. It offers a performance that scales horizontally, which ensures the security of transactions.”

Dr Gramoli said the next step is to develop a recommendation system to automate the selection of the participants of a consensus instance. This consensus will ensure the security of the blockchain.

“We will soon release wallets to help the end users issue transactions and read the balance of their account from anywhere,” he said.

Ignoring Asia

Meanwhile, local FinTech company MoneyMe Financial Group has warned that Australian FinTech firms that ignore the potential of Asian markets do so at their peril.

According to Clayton Howes, CEO of MoneyMe, Australian FinTechs that don’t include Asia in their growth strategies, both in terms of target markets and location of operations, risk falling behind and missing the next wave of FinTech as a result of Australia’s higher corporate tax rates, and the comparatively higher quality of our financial services which drive down the urgency for local innovation.

Howes says this is particularly important given the recent Census results, which showed that Asians, not Europeans, now make up the largest proportion of the overseas-born Australia population for the first time since European colonisation.

“With limited potential for scale in Australia, we believe this will drive Asia’s strong track record of growth even higher, putting Australian FinTechs at risk of competition from markets where the cost of innovating is far lower and the need for innovation far higher,” said Howes.

“In Australia, our corporate tax rates are inhibitive to the point that it can be far more advantageous for start-ups to locate operations and development outside of Australia.”

Tax rates in Singapore and Hong Kong are 17% and 16.5% respectively, compared to Australia’s 30% (which is set to reduce to 25% over a 10-year period).

“While this is unfortunate for Australian start-ups who locate operations domestically, the positive side effect may be that it provides a great incentive for these companies to ‘dip their toes’ into Asian markets and trial working at their more favourable tax rates,” said Howes.

“With Asia looking set to lead the next global surge of FinTech growth, Australian FinTechs that don’t take a pre-emptive step towards preparing for this inevitability risk being taken over by our nearby overseas rivals.”

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