“Is blockchain made of gold”? My wife’s rather amusing question during a random research turned out to be more than just comic intervention.
It raised a pertinent point though. Wouldn’t it be good if we dealt with blockchain like gold, which is traditional, time-tested and a commodity with proven value?
Blockchain is nothing of that sort though. It is not a commodity but an online database that anyone anywhere with an internet connection can use. Unlike traditional databases, owned by banks and governments, a blockchain doesn’t belong to anyone.
It creates a system through which two people who don’t know each other can trade, without intermediary. In other words, it’s a network that has the potential to make middlemen redundant, banks and financial institutions irrelevant and can directly connect goods and services to consumers and markets.
In an ideal world, effective implementation of blockchain can make financial ecosystem more inclusive, enhance efficiency of health records storage, take land registration documentation to another level and enhance security in digital transactions. In other words, it is here to stay.
Using such a technology has numerous benefits but for us to move from proof of concept to scale, someone quickly needs to bell the catEhtesham Shahid
A new era?
Yelena Kensborn, an entrepreneur who believes in blockchain, calls it the “start of a new era, where items, thoughts and services can move freely and independently of each other”. Yelena has in her sights a world where everything is connected and one that seeks balance.
“We will have a more transparent society and this transparency will enable us to trust each other and the computers on a completely new level. And when this trust is established, we can do a lot and achieve great things,” she insists.
Peter Johnson, who is developing blockchain to apply to humanitarian crises, also looks at the big picture.
“The money is transferred directly, with no bank or other financial intermediary taking a processing fee, and the information about the transaction is unchangeable. If everyone used such a service, there would be no need for banks or credit card companies anymore,” says Johnson.
Shahin Colombowala, Germany-based Principal Consultant at Digital, Infosys, puts things in perspective.
“Basically it is taking bookkeeping and making it in a global distributed system that is tamper proof,” she says, clarifying that blockchain imitates transactions with physical objects in the real world.
“So, if I gave you my 100 dollar note, I wouldn’t have it anymore and you would have it. I cannot copy the note. I cannot give you the note and say it is still in my wallet,” she makes it simple for me to understand.
Here is what I deduce from all these explanations. Blockchain can address many third world challenges such as poverty, unemployment, healthcare and corruption. I am making a case for its implementation in third world countries simply because that is where it is needed the most.
Imagine the two billion poor people around the world, with no access to banking system, ending up on the highway – via their mobile phones of course – and reaping the benefits of a blockchain set-up, which connects them to their employer or consumer of their goods and services.
The same applies to small businesses that struggle to get finances through banking channels and constantly need new markets to expand and thrive. The biggest hurdle to poor and marginalized around the world is corruption where welfare funds meant for the needy routinely end up in the pockets of a few.
A transparent method that tracks allocation of funds, including foreign aid, throughout the disbursal phase will only make things easier. Already, GPS-added transparency in land registration is doing wonders in some poor countries.
A glimpse of the possibility it offers unfolded in Jordan where 10,000 refugees in a camp housing displaced Syrians were able to pay for their food by way of entitlements recorded on a blockchain-based computing platform.
The World Food Program’s “Building Blocks” route revealed other benefits too. Through blockchain, the UN body aims to cut payment costs, better protect beneficiary data, control financial risks, and respond more rapidly in the wake of emergencies.
All that is easier said than done though. Attempts to make blockchain mainstream has returned a mixed bag in third world countries so far. Responses have ranged from ignorance to disbelief, even utterly dismissive.
The question of what happens to cyber criminals who are attracted to cryptocurrencies also remain unanswered and we are all aware of the controversies surrounding bitcoin.
Using such a technology has numerous benefits but for us to move from proof of concept to scale, someone quickly needs to bell the cat. The response is sure to be different in different parts of the world.
Until that happens, my little surplus cash would occasionally go toward gold chain for my wife.
Ehtesham Shahid is Managing Editor at Al Arabiya English. For close to two decades he has worked as editor, correspondent, and business writer for leading publications, news wires and research organizations in India and the Gulf region. He loves to occasionally dabble with teaching and is collecting material for a book on unique tales of rural conflict and transformation from around the world. His twitter handle is @e2sham and he can be reached at Ehtesham.Shahid@alarabiya.net.