Japan’s Ministry of Economy, Trade and Industry (METI) has released the results of a new survey on blockchain technology, recommending that government groups play a leading role in “verifying the validity” of its use cases.
Prepared in conjunction with Nomura Research Institute (NRI), the 75-page report provides an overview of the technology, from detailing the step-by-step workings of a bitcoin transaction to outlining how the mechanics of the protocol could create stresses if applied to existing business practices.
Most notably, the report outlines the specific use cases it sees as being valuable for the government to explore, as well as why the government should have an incentive to play an active role in this experimentation process.
The report states:
“The government can promote hypothesis verification concerning blockchains and accumulate and broadly publicize outcomes and challenges in Japan, thereby efficiently facilitating the development of the relevant market.”
Use cases cited in the report include asset management; authentication; commercial distribution management; communication; content; crowdfunding; finance (a definition that captures remittance, settlement, etc); Internet of Things (IoT); loyalty points and rewards; medical services; prediction markets; public elections; sharing and storage.
But the report goes on to suggest that not all these use cases maximize the effectiveness of the technology. In some instances, it argues, the cost of replacing existing systems would be prohibitively large.
Further, the METI report goes to note challenges to both the architecture of blockchain-based systems, as well as their integration by existing businesses, that could hinder development going forward.
In terms of technology, researchers noted that “synchronization” between the blockchain and the real world may prove challenging, and suggested it believes that the immutability of the system could be a problematic feature.
For business applications, the report theorized that service-level agreements would need to be developed by those who manage private blockchains, and that efforts would need to be made to ensure the volatility of token-based assets are not subject to price fluctuations.