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Senate Select Committee on Australia as a Technology and Financial Centre – Questions on Notice

Published 26 Aug 2021

Holon Global Investments Limited provided a submission to the Senate Select Committee on Australia as a Technology and Financial Centre’s Third Issues Paper. As a result, we were invited to participate in the Committee’s public hearing on 6 August 2021. During the public hearing we were asked to respond to “Questions on Notice”. We subsequently provided that response to the Senate Committee that can be viewed here.

Questions on Notice

The Chair of the Committee provided “Questions on Notice” as follows [via transcript provided by the Committee Secretary]:

Can you take one thing on notice, please: given the [inaudible] being made about the benefit that would accrue to Australia if we had more digital asset activity in Australia, what would that benefit, in terms of jobs and investment, be to Australia? You have asserted, I’m sure rightly, that we are losing opportunities. Could you please do some work on that and come back to the committee, so that we have some harder numbers and evidence around that?

Key Highlights

Economic benefits to Australia

  • The new internet era of Web 3.0 (that includes digital assets and distributed data cloud storage) is being built. The data innovation capacity of the incumbents (AWS, Microsoft, Google) is limited to the size of their internal proprietary development teams.
  • Compared with the Web 3.0 ‘Filecoin Network’ (digital asset and data storage) ‘open-source’ community at 7,000 and growing, legacy models will simply not be able to innovate at the same pace.
  • For digital assets such as Bitcoin, there is an estimated 100 million users (including leading payment companies and global corporates) with a market value of USD$740 Billion and growing. The strength of another digital asset, Ethereum, has grown a global community building more than 3,000 apps standing at a market cap of $USD 383 billion.
  • The ‘Filecoin Network’ is on a similar trajectory to Bitcoin and Ethereum. It is possible that Australia could capture 5% of rewards in the growing Filecoin Network that would equate to ~$20 Billion dollars of foreign investment over the next 20 years.
  • Doubling Australia’s data cloud storage market position from 4% to 8% of the global market would represent around $US 100 billion (or ten times what it is worth today) and is achievable with supporting legislation and investment.
  • Not participating in Web 3.0 design and development will result in these solutions coming into Australia as ‘import services’ only. The opportunity cost in the next 5-10 years will stand somewhere between 100 billion and 1 trillion dollars.

Creation of Australian Jobs

  • The technology sector has increased 79% since 2016 and has outpaced average growth in the economy by more than four times. It now contributes $167 billion to the Australian economy or 8.5% of GDP. The sector would be equivalent to the seventh largest employer in Australia, providing jobs to 6.6% of the workforce.
  • Cloud engineering, security consulting and full stack development (essential in the digital asset ecosystem) are among the most in-demand skills in the jobs market in 2021. These jobs will expand proportionately because data growth is expected to increase significantly as it is central to business and life.
  • What is certain is data creation is growing exponentially, being led by the technology sector and, in particular, the digital asset ecosystem. Providing the legislative certainty for Australian businesses and investors to engage in Web 3.0 can position our country as a significant participant, if not leader, in the digital future.

Rather than circumventing the rules, many of these technologies (and the responsible technologists and companies that are harnessing them) are enshrining law and responsible market conduct into code. This allows business models to scale to henceforth unreachable applications, use cases, markets, and people, billions of whom are hopelessly out of reach of the formal economy but for digital transformation, of which blockchain and crypto are essential parts.

(Fortune: The infrastructure bill is a coming-of-age moment for crypto)

 

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