The Commonwealth Bank of Australia (CBA) is continuing its focus on blockchain technology, this time announcing a prototype it believes has the potential to boost sustainable development while enabling investment opportunities for landowners, environmental groups, developers, and government. Developed by CBA, alongside BioDiversity Solutions Australia (BDS), the prototype enables the creation of tradeable digital tokens — BioTokens — within an “efficient and transparent digital marketplace powered by blockchain”.
The BioTokens, CBA said, represent biodiversity credits for the New South Wales government’s Biodiversity Offsets Scheme. “This innovative prototype creates an accessible, transparent online marketplace where valuable biodiversity credits can be securely managed and traded using ‘BioTokens’ on blockchain — transferrable digital tokens which represent unique biodiversity assets.” CBA head of experimentation and commercialisation for blockchain, artificial intelligence, and emerging technology Sophie Gilder said.
“Our vision is that by digitising biodiversity credits and building a marketplace where they can be bought and sold, we can invest in and protect our natural environments.”
According to BDS managing director Rod Barnaby, the organisation came up with the concept of a biodiversity credit marketplace through a desire to better understand the challenges and potential benefits of the Biodiversity Offset Scheme, which was in 2017 expanded by the Australian government. The framework requires developers to find and purchase biodiversity credits to offset development impacts. The credits can be generated by landholders establishing stewardship sites to protect biodiversity on their land in perpetuity.
Currently, there is no transparent marketplace for developers and landholders to trade biodiversity credits, but the prototype digital marketplace for trading BioTokens, CBA said, provides a platform. The bank also said an accessible marketplace to trade these biodiversity credits also opens up the possibility for others to purchase biodiversity credits as an investment. “Our vision is that by digitising biodiversity credits and building a marketplace where they can be bought and sold, we can invest in and protect our natural environments,” Gilder added.
“Creating a transparent, accessible, secure, and liquid market place for the creation and trading of biocredits, aligns with our strategic focus on sustainability, support for regional economies and exploration of emerging technologies to deliver tangible benefits to our customers.”
Gilder said CBA sees future possibilities to extend the BioTokens concept to the management and allocation of other scarce resources, such as intellectual property or water rights. The BioTokens play follows the bank in August announcing the completion of the world’s first bond delivered via blockchain, on behalf of its client, the World Bank. The “$AUD Kangaroo bond” Blockchain Offered New Debt Instrument (bond-i), which used a private Ethereum blockchain, was created, allocated, transferred, and managed through its life cycle solely using distributed ledger technology. The two-year bond raised AU$110 million.
It also previously tracked the shipment of almonds from Australia to Germany on a blockchain. The blockchain platform, underpinned by distributed ledger technology, smart contracts, and the Internet of Things, was used to facilitate the trade experiment that saw 17 tonnes of almonds sent from Sunraysia in Victoria, Australia, to Hamburg in Germany. CBA also recently announced a partnership with CSIRO’s Data61 that sees the pair help manage payments within Australia’s National Disability Insurance Scheme (NDIS) by using a permissioned Ethereum network with smart contracts that control when and where money from the government can be spent.
This followed Data61 partnering with law firm Herbert Smith Freehills and IBM to build a blockchain-based smart legal contracts network, the Australian National Blockchain (ANB), touted as enabling organisations to digitally manage the lifecycle of a contract, from negotiation through to signing, and continuing over the term of the agreement. CBA also joined forces with ANZ bank and Westpac, as well as Westfield shopping centres operator Scentre Group, to trial a new bank guarantee platform that uses blockchain.
The three banks have partnered with IBM for Lygon, which is touted as having the potential to reduce the time it takes to issue a bank guarantee from up to a month to on or around the same day. Lygon leverages the IBM Blockchain Platform, which is built on top of Hyperledger Fabric, an open source blockchain project from the Linux Foundation. The Australian government’s Digital Transformation Agency (DTA) recently gave advice to those getting lost in the buzz of blockchain. “It is the DTA’s current position that blockchain is an emerging technology worthy of ongoing observation. However, without standardisation and additional work, for many uses of blockchain, there are currently other mature technologies that may be more suitable for immediate use,” is the agency’s official position. Addressing Senate Estimates in October, DTA chief digital officer Peter Alexander dunked on its use, adding to the above that “for every use of blockchain you would consider today, there is a better technology — alternate databases, secure connections, standardised API engagement”.
“Blockchain: Interesting technology but early on in its development, it’s kind of at the top of a hype cycle,” he said.
The government entity has even published a questionnaire for organisations to self-evaluate before bothering with something that can just be stored in a secure database.