There are lots of ongoing conversations and debates around cryptocurrency. I hear people obviously new to the concept talk about it in awe. Some make plans to trade and cash out in this current revolution; while those astute enough to jump on the cryptocurrency wagon, when it was fairly new in Africa, pat themselves on the back.
The frenzy over cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and numerous others is reminiscent of what existed during the Gold Rush of California, the United States. About one hundred and seventy-two years ago, precisely in 1848, a huge influx of fortune seekers flocked to Sutter’s Mill at the discovery of gold in that region.
Interestingly, cryptocurrency is a global concept not bound by geography, economy and is open to all. In fact, according to the 2020 Global Crypto Adoption Index compiled by blockchain data analytics firm Chainalysis, China, Nigeria, Russia, South Africa, Ukraine, and the US are among the top-ranking countries that have adopted cryptocurrency.
With this trend, I foresee cryptocurrency displacing paper cash or any other conventional currencies in the future. In this piece, I’ll discuss the power behind cryptocurrency and that is blockchain. In addition, we’ll see how harnessing it can revamp different sectors of the African economy.
Although blockchain technology is quite complex to grasp, originally created as the ultra-transparent ledger system for Bitcoin to operate on, many equate it with cryptocurrency. So, what is this transformative technology?
A blockchain is a database that stores data in blocks that are then chained together. As new data is introduced, it is entered into a fresh block. Once the block is filled with data it is chained onto the previous block, which makes the data chained together in chronological order.
In other words, we can sum up blockchain as data you can only add to, not take away from or alter, ergo the term “chain” because you’re making a chain of data.
Also known as innovative Distributed Ledger Technology (DLT), blockchain technology makes it possible for users to monitor a transaction and do business with unverified partners barring the assistance of financial institutions.
Its most unique features are decentralisation and transparency. This means that blockchains are consensus-driven, as such no single entity can seize control of the data. With it, you don’t need a trusted third-party to validate or approve transactions.
In addition, owing to its decentralised nature, particularly Bitcoin’s blockchain, all transactions can be transparently viewed by users who have a personal node such that all participants can see transactions as they play out.
Blockchain technology has evolved into one of today’s groundbreaking emerging technologies. Having started out as a system used for financial transactions, it is now extensively used in other sectors and industries. Consider how the technology can boost the different sectors/industries in Africa.
How it impacts various sectors
Cyberattacks are inimical to the growth of our digital world as the perpetrators themselves are becoming increasingly sophisticated. There’s a saying that desperate times call for desperate measures; for ransomware and cyber attacks, blockchain technology can be leveraged to end hackers’ reign of terror. It offers data security against unauthorised access and tampering.
Since blockchain is a decentralized system, it can enhance cybersecurity. It provides a secure and transparent way of recording transactions without disclosing private information to anyone. It is especially ideal for different companies that collaborate in their cloud environments without compromising sensitive information due to security, privacy, and other concerns.
Also, it is easy to spot malicious data attacks with blockchain due to peer-to-peer connections, where data cannot be changed or tampered with.
The outbreak of the COVID-19 pandemic has inadvertently promoted the growth of edtech in Africa. As online and distance learning grows, there’s a need to confirm students’ transcripts and school records. A blockchain-enabled system could be designed, enabling employers and other educational institutions to track student’s academic progress, access their data and transcripts.
This simplifies the process students and graduates have to go through to ‘prove’ they actually attended a particular institution.
Even as the pandemic rages on, the healthcare sector, in addition to its many other challenges, continues to grapple with how to store and keep individual health data secure.
In Africa, one of the problems hospitals face is the lack of a secure platform to store and share data. Due to antiquated infrastructure, healthcare centres are vulnerable to hacking.
Adopting Blockchain technology will enable hospitals to safely store data like medical records and share it with personnel or patients. The records could be encoded and stored on the blockchain with a private key such that only authorized individuals can access them, thereby guaranteeing privacy.
In democratic African countries, the concept of a free and fair election is a myth as a certain group of greedy elites would always attempt to manipulate the voting process. As such, many Africans, particularly Nigerians, have lost faith in the system. After all, why bother if the results of an election have been predetermined before the actual event?
With its key element of transparency, it is possible to use blockchain to build a working modern voting system, reducing the personnel needed to conduct an election and providing officials with nearly instant results. Through it, the threat of election fraud will be eliminated, thereby boosting voter turnout.
Consider this scenario: a voting system could be operated in a way that every eligible citizen of a country would be issued a single cryptocurrency or token. Then, each political aspirant would be given a specific wallet address where the voters would send their token to the address of their preferred candidate. I wonder if this level of sophistication can be mimicked in Nigeria.
In Supply Chain Management
Looking at the supply chain in many African countries, one might describe it as highly fragmented. For instance, before a product can be delivered from manufacturer to consumer, it might have to travel between 2 or more intermediaries so much that when it gets to the end-user, the cost may likely increase.
Since this cycle does not favour the consumer, leveraging blockchain will eliminate the need for unnecessary middle parties. Hence, the term peer-to-peer transaction.
From the foregoing, we have explored the potential impacts blockchain technology can have on various sectors. The reality is that, here in Africa, the adoption of this transformational way of using tech is still in its inception. However, we can hope that it will gain momentum as this will accelerate the growth of our economy.
ICT Clinic by CFA is published weekly in the Sunday Punch