New Zealand tapping into blockchain's potential beyond crypto
We tend to think of cryptocurrency and blockchain as being inseparable. They are from the standpoint of cryptocurrency. Without blockchain technology, cryptocurrency simply doesn't exist. Yet it is not true in the other direction.
Blockchain now exists as a platform for things that have nothing to do with cryptocurrency. Blockchain will continue on irrespective of whether crypto survives or not.
As a case in point, New Zealand's IT sector is tapping blockchain technology as the next driver of business heading into the next decade. Both the public and private sector are relying on blockchain to fuel the IT growth they hope will make New Zealand a world leader in new IT technologies.
How important is blockchain to IT in New Zealand? If money is any indication, consider this: New Zealand's third biggest export is IT. It generates upwards of NZ $16 billion annually thanks to the hard work of nearly 100,000 employees. Blockchain technologies are gradually making up a larger share of IT exports coming out of New Zealand.
A recent report from Callaghan Innovation suggests that opportunities involving blockchain and distributed ledgers could significantly boost the tech sector in New Zealand with a combination of more international investment and an increased labor force. That is just what the country's leaders are hoping for.
Creating the right kind of environment
If New Zealand is to take maximum advantage of the emerging blockchain IT sector, they need to work a bit harder at creating the right kind of environment. They could learn a few examples already provided by the gambling industry. For example, let us take a look at Sweden.
The Scandinavian country recently overhauled its gambling regulations in order to relax things a bit and invite investment from foreign operators. Their decision to do so has already resulted in more than two-dozen international operators seeking licenses. Just by relaxing regulations and opening up the competitive market, Sweden already has an influx of new players willing to invest in their gambling industry.
Blockchain technology is in the same boat. It is great technology that holds a lot of promise for the future. And yet there are plenty of hurdles getting in the way of the kind of progress innovators are truly capable of. A good example in New Zealand are the archaic banking regulations that prevent some blockchain sector businesses from accessing traditional banking services.
At the heart of the issue are fears of money-laundering. As you may know, regulators the world over are fearful of both blockchain and online gambling because they believe the two entities invite money-laundering. As a result, it is difficult for companies involved in either sector to access banking services.
Restricting banking is no way to attract investment, is it? So New Zealand has to figure out a way to balance its money-laundering concerns with the needs of blockchain sector businesses. If they want to encourage more blockchain development within New Zealand's IT infrastructure, they have to remove those barriers to banking.
A favorable tax regime
Another concern New Zealand has to address is how it intends to approach future tax policies. As things stand, government leaders recognize that the vast majority of IT startups operating in New Zealand employ workers from all over the world. Those not physically living in New Zealand do not contribute to the country's tax base because their income is not taxable there.
Government leaders obviously want to change that. Ideally, the goal would be to find ways to incentivize startups to employ mostly New Zealand workers. If they cannot do that, the next best option is to find ways to encourage international employees to move to New Zealand. The one thing they cannot do is start taxing the income of workers who do not live there.
Taxing workers based on where their employers are located would be a huge mistake - even if such taxation is levied directly against employers rather than employees. Any income-related tax takes money out of workers' pockets regardless of how it is assessed, and you can bet foreign workers would not take too kindly to New Zealand taxing their pay.
Lessons from the UK
Once again, the New Zealand government can look to online gambling for some guidance on tax policy. They can specifically look at the UK. Last year the UK took in some £3.5 billion in tax revenues from gambling despite the fact that gambling winnings are tax-free there. How did they manage it? By assessing a reasonable tax on gambling operators.
An online casino offering table games and slots like MegaMoolah.com pay a tax equal to 15% of their profits. That is not bad when you compare it to the rates other European countries assess. When having to choose between the UK's 15% and France's 50%, it is obvious that a gambling operator will choose the UK.
All of this is to say that reasonable tax policies that are not seen as punitive by either operators or gamblers contribute to the growth of the gambling industry. As you might already know, the UK is arguably the largest single market for online gambling in the world. That's partly due to its tax policies.
If New Zealand wants to lead the world in blockchain technology, they have to figure out a way to maintain reasonable tax policies that encourage growth. Right now the tax environment there is pretty good compared to some other places. Yet government leaders must find a way to keep it that way moving forward. If there is any indication that tax policies will hinder growth, you can bet the IT sector will look elsewhere.
Blockchain technology and game development
In light of New Zealand's push to become a leader in IT and blockchain technology, it is worth considering what the emergence of blockchain means to casino game development. Remember that there are dozens of game developers contributing to the thousands of titles now available in the online arena.
Companies like Evolution Gaming, NetEnt, and Microgaming have been at it for years. They have shepherded game development through a number of different innovations that have only served to improve slots, table games, and even live gaming. Blockchain could be the next innovation to transform what they do.
Ethereum paved the way
If you are curious as to how blockchain could influence game development, look no further than Ethereum. The Ethereum platform is not actually a cryptocurrency platform in its purest form. It is a software development platform with characteristics of an operating system. It just so happens that the platform is ideal for operating a cryptocurrency.
Ethereum was originally developed separate from the whole idea of cryptocurrency. It came to be as a result of some brilliant minds understanding that a distributed ledger, like the one originally created for bitcoin, could be used for purposes other than financial transactions. So they set about creating a platform that would accommodate everything from finances to developing software as a service (SaaS).
Their success proved that the potential of blockchain is far greater than its originators ever imagined. Any sort of technology in need of a means of tracking and storing the exchange of data can utilize blockchain for that purpose.
Chain-enabled casino games
In light of our discussion, this immediately brings to mind the possibility of developing casino games that actually run on blockchain. RNG games seem to be the perfect candidate. An RNG game relies exclusively on the exchange of digital data to function. Taking current titles and converting them to blockchain would increase game integrity, security, and fairness.
Any games linked to progressive jackpots could make use of the distributed ledger for tracking jackpot data as well. Blockchain is the perfect technology for doing so because it can account for an unlimited number of players contributing to a single jackpot simultaneously. A distributed ledger would be far more reliable from a technology standpoint.
Blockchain accounting for casino operators
Blockchain technology appears pretty inviting to operators as well. Right now, the computerized systems they use for accounting are based on legacy technologies that we have been using for generations. All those technologies rely on traditional banking systems and interactions between them. What if an operator could convert all its accounting to a blockchain system?
Just as blockchain makes financial transactions more secure, it would do the same thing for accounting. A blockchain ledger for accounting purposes would utilize the same proof-of-work principle to guarantee that all entries are verifiable and accurate. It would utilize the same sort of encryption to maintain security and privacy. It would offer built-in scalability that would allow companies to seamlessly grow their accounting along with their revenues.
Tying it all together
We have clearly thrown a lot of information at you in this post. However, we believe the discussion was worthwhile. It is clear from New Zealand's enthusiasm over blockchain technology that the distributed ledger originally developed for bitcoin offers a lot of potential that transcends mere cryptocurrency transactions. If the world's decision-makers are willing to embrace policies that actually encourage blockchain development, the technology could very well power national economies for decades to come.