The concept of Blockchain technology was first coined in 1991 by Stuart Haber, Dave Bayer, and Scott Stornetta. Following their incorporation of a cryptographic sequence known as the “Merkle Tree”, this piece of innovation was used to verify any kind of data stored, handled and transferred in and between computers, it also ensured that blocks received in a peer-to-peer network are received undamaged and unaltered. Satoshi Nakamoto’s White Paper in 2008 further captured the global imagination of the impact the technology could impinge on every aspect of life.
The technology was originally developed as an accounting method for cryptocurrency transactions. Cryptocurrency is a digital asset that functions as a medium of exchange using cryptography to secure its transactions, and to verify the transfer of assets. It uses decentralised control as opposed to centralised electronic money and banking systems.
Blockchain operates as a real-time publicly distributed ledger. It uses an electronic system based on cryptographic proof rather than trust, meaning “the records it contains can be verified autonomously without the need to have a central entity.” Essentially it is easy to discover without involving a third party, whether any transaction on your ledger has taken place, which makes it a public ledger that everybody on record can verify. Anything on record may include financial transactions, contracts, regulatory compliance, voting systems, physical assets, and supply chain information. To use conventional banking as an analogy, blockchain compares to a full history of a financial institution’s transactions, and each block is like an individual bank statement.
The realisation that the underlying technology that operated cryptocurrencies could be isolated from the currency and used for all kinds of other interorganisational operations is being explored by administrations and businesses burdened by outdated management systems, red tape processes, and competing asset ownership claims.
Blockchain is providing a transparent and efficient model designed to reduce fraud and corruption in delivering private and public services. The Israeli government is widely known to have used this technology. The governance of Israel promotes the policy of a transparent government; with the benefit of the fact that recent innovations in communication and information technologies could have a significant improvement in parliamentary democracy. “This approach fosters informed policy-making processes, improves governmental services and has the potential to strengthen the trust between citizens and government.”
As a leading drone exporter, Airobotics, a start-up company based in Petah Tikvah Israel is the world’s first company to obtain authorisation from the Civil Aviation Authority of Israel (CAAI) to fly commercial unmanned drones in their nation’s airspace. Another Israeli Start-up company founded by Adi Ben-Ari applied blockchain to track/secure commercial drone flights and deliveries. In-flight data captured can be uploaded onto the same shared ledger providing a visual representation on an interactive map, this allows aviation authorities to plot the flights of all registered drones in real-time for safe interoperation of UAVs within the airspace.
Best practices on the Motherland
Though Sierra Leone was falsely reported as the first country to apply blockchain technology in tallying its presidential elections last month, a claim refuted by the country’s National Electoral Commission, the furor did lend to furthering the debate on the technology’s potential application in a country’s electoral process.
“Reports show that the continent loses $148 billion annually, making up 25% of Africa’s average GDP every year, to corruption”.
To address this issue, another application of blockchain is that of a budget tracking mechanism; by saving all transactions and expenditures in real-time allowing everyone within the network to be alerted on every update. Access to sufficient financial services is also a problem Nigerian citizens residing in rural areas face, with over half of Nigeria’s population still unbanked.
The mobile money initiative “M-Pesa” launched by Vodafone’s Safaricom mobile operator in Kenya has provided smartphone payments for the last 11 years. Through the simple method of texting little amounts of payment between users, the innovation has proved to be a success in providing a means of financial services to the rural population. With 30 million subscribers in 10 countries, the system processed a total of 6 billion transactions in 2016 at a rate of 529 per second. Despite this, the service still faces major challenges, after it was withdrawn from South Africa due to poor performance and efficiency.
Blockchain is being explored to provide a solution to this problem, without requiring a physical branch since it is operated on a distributed network, this will save users bank and telecom charges as in the case of mobile transactions, the idea is to create alternative financial structures, liberating Africans from the inefficiencies of the existing financial systems.
SMEs in Africa have been marginalised in regards to accessing sufficient credit from financial institutions to operate, despite contributing to economic growth through job creation, and other gaps in the market they fill.
“Different financial institutions could save information about the financial circumstances of their clients, including data about current loans, collaterals, interest obligations, income levels or past repayment rates. To protect privacy, customers have to authorise accessibility to their data.”
The potential of blockchain in Africa is endless, from improving the standard of education and healthcare to impacting transportation systems. Blockchain technology has created jobs that were not available 10 years ago, it is important that the continent as a whole continues to explore its benefits, and maintain pace with the technological advancements of the world at large.