The endless applications of blockchain technology
By Louis Fourie
The advent of the Internet has forever changed the way we share information. Blockchain is changing the way we do business.
This form of distributed ledger technology (DLT), which uses advanced cryptography to store data on peer-to-peer computer networks, has been called by many tech enthusiasts as the solution to almost all of the known challenges of humanity. Many believe that blockchain will eventually eliminate the need for intermediaries in transactions and transform not only our financial systems, but the entire economy, energy markets and supply chains.
While blockchain is the solution to many problems, it is not a panacea and should not be viewed as a one-size-fits-all technological solution. The blockchain is still maturing and the journey only started recently. He has now moved beyond his humble beginnings in cryptocurrency and banking and is transforming many other industries. After all, the application of a transparent and verifiable ledger of transaction data without central supervision is virtually endless.
Adoption in all sectors
Various industries and companies are now embracing the use of blockchain, such as equity and hedge fund trading, wills and inheritances, loans and credits, insurance, auto construction, trucking, air travel, accommodation reservations, construction, real estate, energy management, healthcare. , government / public records, voting, gun tracking, law enforcement, retail, agriculture, mining, education and entertainment, to name a few.
The current speed at which blockchain technology is adopted is unprecedented. Businesses and governments increasingly recognize that this technology has far-reaching implications in many areas.
Switzerland as a crypto nation
The most astonishing example of the adoption of blockchain technology is probably Switzerland with 960 companies active in blockchain research. Zug, the heart of the Crypto Valley, is currently the fastest growing tech hub in Europe with 433 companies, 4,400 employees and a total valuation of the top 50 companies of 3,800 billion rand as of February 2021. In this township, Bitcoin has been accepted as a means of payment for transactions and taxes.
The reasons for Switzerland’s attractiveness for blockchain innovations seem to be:
A progressive and united political system – Regulatory frameworks in Switzerland are extremely business-friendly and currently constitute the most advanced regulatory framework in the world for digital financial assets and cryptocurrencies. The Swiss Blockchain Federation (SBF), a public-private partnership bringing together actors from the blockchain sector, businesses, academia, science and government, was formed to create an innovative blockchain ecosystem and promote Switzerland as a that blockchain site. The SBF focuses in particular on the token economy, token offerings, banking, cybersecurity, industry, value chains and regulation.
Private Sector Support and Economic Incentives – The Swiss franc is a strong and stable currency, and the country has a very high productivity rate leading to the highest GDP per capita in the world. A friendly business environment is further created through excellent national and global business networks, flexible labor laws, low bureaucracy, sophisticated and respected legal system, low corruption, availability of investment capital, low corporate and personal taxes and high levels of service. The introduction of the world’s top two crypto banks (SEBA Bank and Sygnum Bank) is an indication of the maturity of the financial sector.
Attractiveness for tech talent – Switzerland is currently number one in the world for the ease of attracting and retaining world-class talent. It has a high quality education system and one of the highest per capita investments in research and development. It also has many Nobel Prize winners. Wage levels are high without increasing labor costs because productivity levels are exceptionally high.
Africa and South Africa
Although far from the level of Switzerland, South Africa is no exception to the adoption of blockchain. Blockchain technology is therefore unmistakably disrupting the business and government arena in South Africa, especially at a time when the world is plagued by countless corrupt transactions, inadequate record keeping and transactions that are often untraceable. The main reason for the growing adoption of blockchain is the poor track record of governments, institutions, and organizations that have made citizens distrust people in positions of power.
Although many governments and businesses in Africa implement proper and thorough processes, the multitude of non-compliant or untrustworthy stakeholders existing within the supply chain are often difficult to manage and can harm the name of company or institution.
Already in 2018, President Cyril Ramaphosa announced that a “Commission on the Fourth Industrial Revolution” would be created in partnership with the private sector to promote new technologies, such as blockchain. This 4IR commission was formed in April 2019 but has so far delivered very few concrete results, with the exception of a report published in October 2020 with a high level analysis of the fourth industrial revolution. and some recommendations.
Fortunately, some interesting uses of blockchain technology have emerged in South Africa:
Authentication of diamonds across Africa
Some companies operating in Africa are known to fail to meet regulatory standards, which has resulted in a lack of confidence in the authenticity and ethical sourcing of their products. Blockchain has proven to be an excellent technology to alleviate these issues by verifying the origin and quality of products.
South African diamond company De Beers has started using a blockchain platform called Tracr to ensure its diamonds are genuine, conflict-free, and natural. Blockchain provides a permanent and immutable record for every registered diamond from the moment they are mined.
Blockchain-based property registry
The Center for Affordable Housing Finance in Africa (CAHF), research consultancy 71point4 and Seso Global have formed a partnership to create South Africa’s first blockchain-based real estate registry. The South African government has built more than three million RDP homes since 1994, but close examination of deeds office data revealed that only 1.9 million of these properties have been registered. Administratively, registering these properties is a complex task, as many grant recipients no longer live there. Properties are often rented, sold informally, or the beneficiary has died. Blockchain technology allows data to be stored in a decentralized and secure tamper-proof database that can be updated without any loss of historical data. The first phase consisted of nearly 1,000 government subsidized properties located in Makhaza, Khayelitsha that were not registered in the land title register. Blockchain has provided the City of Cape Town with an accurate and up-to-date register of real estate ownership, enabling them to collect revenue and facilitate building plan approvals.
A long way to go for South Africa
Although the South African blockchain ecosystem is growing and there is tremendous energy and enthusiasm, especially in the start-up sector, South Africa is still far behind Switzerland and even some African countries. The regulatory framework in South Africa is hostile, government participation in the blockchain ecosystem is weak, the economy is struggling, labor laws are inflexible, bureaucracy is widespread, corruption is high, taxes on companies and individuals are high and service levels are extremely low. South Africa further has limited blockchain technical resources and a limited ability to attract world-class talent.
Although world-class work has been done by the South African Reserve Bank, overall there is relatively little knowledge about blockchain and its potential in government. All sectors, institutions and government services must therefore explore blockchain and DLT enough to understand its meaning and application.
The contribution of blockchain technology to a country plagued by corruption is immense. With blockchain, there is no anonymity to hide behind – steadfastness and transparency reduce the possibilities of fraud and corruption.
Blockchain is a complex technology that has the potential to disrupt many aspects of business, the economy, and our society. It remains a very versatile technology that can be designed to meet the exact requirements of its users.
While the results of the blockchain race are still uncertain, the technology has great potential to rethink how the interaction between countries, businesses and individuals occurs across the world. Intelligent risk management and a holistic view of operational exposures, legal and regulatory issues will be essential for blockchain to deliver measurable value in the future.
Considering that blockchain is already inspiring institutions, investors, brands and entrepreneurs around the world, South Africa could be missing out if we don’t take the bold step of seeing how it could enable better systems, transactions or operational processes in our country and our organizations.
Professor Louis CH Fourie is a technological strategist
* The opinions expressed here are not necessarily those of the IOL or the titles sites