Blockchain has taken centre stage thanks to the rise of cryptocurrencies like bitcoin. But can the technology that allows for secure transactions between parties also change the way infrastructure is managed?
QIC believes it is possible. The Australian investment firm owned by the Queensland government has begun exploring ways blockchain can improve operations across its assets and in August released a paper concluding that it “may even turn out to be as significant as the internet itself”.
“We consider blockchain to be potentially one of the most disruptive technologies in our time,” said Tibor Schwartz, a QIC senior consultant.
Schwartz points to international supply chains in which hundreds of pieces of communication and verification are needed to move goods from origin to destination.
“We consider blockchain to be potentially one of the most disruptive technologies in our time.” Schwartz
“If you were able to substitute that with technology that underpins that process end-to-end, you could literally replace it with a set of smart contracts executed automatically enabled by blockchain technology, and significantly simplify that process,” Schwartz told Infrastructure Investor.
This, however, requires collaboration and co-ordination from a host of stakeholders, including managers of assets such as international shipping ports. How long this will take is up for debate.
“While the technology is there, it hasn’t been embraced by more than a very small piece of the economy,” Gregory Nowak, a partner at Philadelphia-based law firm Pepper Hamilton, told Infrastructure Investor. “But once it starts, it is going to be like the adoption of the internet, I think, and everybody is going to want to move in that direction.”
In its paper, Knocking at Infrastructure’s Door, QIC points to energy grid technology and car parks as two prime areas in which blockchain can be a gamechanger. Regarding the grid, QIC predicts a shift in the coming decades from a centralised to decentralised model relying on real-time pricing signals.
“We believe blockchain has an important role in smoothing this transition,” the paper notes, adding that the technology could help speed renewables adoption. “It has the potential to disrupt existing market players and if embraced by consumer-centric regulators could alter the electricity value chain and its pricing models.”
In parking, QIC believes blockchain can enable more efficient payment methods between drivers and owners of the parking assets. It can have a similar impact on toll roads, building on technologies such as electronic and dynamic tolling.
Adoption of blockchain technology across infrastructure is, at best, in the early innings. That does not mean investors should not be keeping up.
“With any disruptive technology, initially the impact is very small. But when it starts ramping up, it is a non-linear growth that organisations need to accommodate,” Schwartz said. “So if infrastructure operators don’t go through that organisational learning early on, then when this technology gains critical momentum, your organisation may not have done enough learning, piloting and trialling to be equipped for serious adoption and scaling up.”