How blockchain will impact NZ’s economy

Distributed ledgers and blockchain are anticipated to provide a positive uplift to New Zealand's economy, according to a new report.

The report, Distributed Ledgers and Blockchains – Opportunities for New Zealand, found that these emerging technologies would likely have a positive impact on high-tech jobs and digital exports for New Zealand.

The report defines a distributed ledger as a set of data replicated across many networked computers.

Ideally, computers in the network are in different locations and spread across many countries. A distributed ledger uses protocols so changes are consistently replicated to each computer and the data converges to an agreed known state.

Blockchain technology is one type of distributed ledger. A blockchain ledger is immutable, which means data cannot be removed or changed once it is published. The ledger uses economic incentives to coordinate and drive the adoption of the ledger.

Recognising the interest and investment in blockchain internationally, Callaghan Innovation and blockchain venture studio Centrality commissioned the report to provide Kiwi businesses and innovators useful insights into this emerging technology.

The Ministry of Business, Innovation and Employment (MBIE) contributed an equal proportion of funding to the research. The report does not represent policy advice.

Callaghan Innovation GM Erica Lloyd says, "Technology is now New Zealand's third-biggest export sector, bringing in more than $16 billion a year in overall revenue, with plenty more headroom for further growth. Technological innovation is the path to lifting our earnings and productivity.

"We expect this report will ignite further discussion on the potential of emerging technologies like blockchain and distributed ledgers. Although we are still in the early stages, there are substantial opportunities for us to both understand and apply blockchain towards sustainable and ground-breaking innovation that can support our economy.

Centrality GM of strategic partnerships Andy Higgs said the report provided a useful analysis of the significant opportunities that exist for distributed ledger and blockchain technologies.

He states, "Blockchain presents a huge opportunity, with over $11 billion USD raised through initial coin offerings (ICOs) in the first half of 2018.

"New Zealand has a chance to lead the way, thanks to our sense of fairness and social inclusiveness, to ensure all New Zealanders benefit from the full potential of blockchain and decentralisation.

Distributed ledgers and blockchains are emerging general purpose technologies that are likely to have a significant impact across all aspects of the economy.

The report states that New Zealand has an opportunity to join world leaders in this space, which would likely have a significantly positive impact on high-tech jobs and digital exports.

The technologies could provide opportunities for a positive impact on many sectors, including primary industries, financial services, public services, arts and culture, science and research, and foreign aid. They also have the potential to contribute to regional economic development.

Over 20 billion USD have been allocated to blockchain startups from January 2017 to November 2018 through initial coin offerings.

These technologies are fundamentally changing how startup capital is raised and could prove a meaningful opportunity for New Zealand companies to access much-needed risk capital.