Blockchain-based privacy technology is the next big thing and New Zealand is well positioned to be a world leader, industry leader Aaron McDonald says.
McDonald is the chief executive of New Zealand-based company Centrality, the largest blockchain project in Australasia, and one of the largest in the world.
He's speaking at the "Blockworks" conference in Auckland this week which has attracted representatives of government, higher education and some of the country's largest companies - and says New Zealand can be a world leader in developing and exporting the technology.
He tells Saturday Morning's Kim Hill that while blockchain got started with Bitcoin, privacy is likely where it will come into its own.
"I think cryptocurrency's an interesting early-use case of the technology," he says.
"Bitcoin has, if nothing else, proven that a network can run very reliably, very robustly - that a protocol is able to manage this currency in a way that means there isn't double spending and those kinds of things.
"I think the next wave of technology is going to be a privacy-oriented economy," McDonald says.
"I think that in the near [future] - like, five year horizon - it will become a very mainstream thing.
"Big companies - Microsoft, IBM, Google and the likes of those - and New Zealand equivalent - are all putting resources into this space."
Blockchain is a technology where data is stored in a 'block' which can be added to, but by design is stored across many computers, so that additions or changes must be by consensus.
"It's kind of like a modern day cooperative," McDonald says.
"It allows a community of people to add their own computing power to a network and create a community-driven resource that we can run applications on top of, instead of a company.
"Instead of a company constitution, you have software - code that can't be changed without the community's consent - that runs the processes."
"We can do more than just 'run a database' … we can do these things called 'smart contracts' which allow us to build applications with some of those same properties of immutability and trust and reducing the need for counterparties.
That means there is the potential for the technology to "cut out the middleman" in industries where there's a third party relied on to create trust, like banks, conveyancing and so on.
"One of the great opportunities here is to create more economic equality," McDonald says.
"I think there's still a place for brands and banks in the future but they're going to be very different to how they operate now.
"As a human I'm not an expert in all the things relating to banking and finance, I'm still going to want to trust someone's advice in that environment … but all of the overheads and the greed and all of those things that kind of sit behind the scenes has suddenly surfaced and becomes transparent, and so you get a more efficient and fair system."
It also can be applied to things like personal data security, which is where the privacy aspect comes in.
"So instead of being controlled by a company like Facebook - and they get to do whatever they like with it - it's generally controlled by you because the infrastructure isn't owned by one single entity, it's owned by the community.
"We've gone through this economic stage where data has been ripped out of our souls, and our digital self is for sale on the web everywhere.
"That's not a good place to be in - especially as AI starts to take that data and do things with it that we're not even aware of."
"Those applications - big companies like Facebook that get a disproportionate share of the value that we create as a community in those networks - that [value] can now be shared with the community itself.
"They [the community] can be the owners of the next Facebook or the next Uber or the next Google."
Ways of using blockchain like that are already taking shape, he says.
"We're working with a company now which is able to take your information - say, medical information - store it in a way that researchers can research that information without ever seeing the information itself or having access to who you are."
"It's still not the perfect technology for every use case - you still have to be careful about how you use it - but there are certainly lots of places where it can add value."
"The technology is getting faster and faster - and, solving some of the problems around speed we've got great researchers in our business here in New Zealand that are coming up with some really cool innovative math around this kind of thing."
He says New Zealand is well positioned to be a world leader in blockchain technology, he says.
"I think that could be one of the things that a CTO of New Zealand should look at seriously, I think we've got a tremendous opportunity here to be a world leader.
"We've got the opportunity to create these protocols here in New Zealand around things like our identity, health records, even currencies, and then export that to the world instantly.
"New Zealand could be an awesome place for it, we've got a great regulator here who's very friendly to deal with, we've got a great government who should be caring about economic equality and greater participation in the digital economy and all of those things bode well for a technology like blockchain."