When most people hear the word blockchain, which refers to a type of decentralized ledger technology, they immediately connect the term with cryptocurrencies. However, it is important to keep in mind that bitcoin just happened to be one of blockchain’s earliest and most popular applications; most experts believe that the potential for other applications of blockchain technology is vast.
- In the most general sense, a blockchain is a system for recording information, although it is distinct from a typical database in the way it stores information; the information in a blockchain is stored in such a way that makes it difficult or impossible to change, hack, or cheat the system.
- This impressive technology provides the support necessary for the decentralized, anonymized tracking and transaction of digital currencies around the world.
- While blockchains allow for cryptocurrencies to function, their functionality has applications beyond cryptocurrency.
- In diverse countries such as India, Kenya, and East Africa, blockchain technology has found uses in banking and financial services, supply chains, agriculture, and in managing land ownership records.
What Is Blockchain Technology?
In the most general sense, a blockchain is a system for recording information, although it is distinct from a typical database in the way it stores information; the information in a blockchain is stored in such a way that makes it difficult or impossible to change, hack, or cheat the system.
Blockchain technology promises a secure, peer-to-peer mechanism for verifying information. Each "block" in a blockchain contains a record of transactions in a decentralized ledger. Taken together, the blocks form a “chain” in a peer-to-peer network.
Applications for Blockchain Technology
This impressive technology provides the support necessary for the decentralized, anonymized tracking and transaction of digital currencies around the world. While blockchains allow for cryptocurrencies to function, their functionality has applications beyond cryptocurrency. For example, banking and fintech payment companies have already demonstrated a major interest in blockchain technology.
From insurance and real estate to crowdfunding and data management, the potential applications of blockchain technology are numerous, and it's likely that there will continue to be new ways of adapting this technology to the mainstream business world in the future.
However, there is one important use of blockchain technology that exists outside its more traditional business applications: Some of the world's emerging economies are benefiting from the integration of blockchain technology in various ways. In diverse countries such as India, Kenya, and East Africa, blockchain technology has found uses in banking and financial services, supply chains, agriculture, and in managing land ownership records.
Among its many advantages (first and foremost being its ability to keep data secure), blockchain technology also claims to speed up and reduce the cost of transactions, and boost financial inclusion by providing more opportunities for those without easy access to financial services.
In many parts of the world, individuals do not have easy access to banking services. With blockchain technology, users across the globe could access banking services where they otherwise wouldn't have the opportunity. Particularly, individuals in emerging economies where there are not standard banks readily accessible could make use of blockchain technology to access these services. One specific application is the use of blockchain for instant transfers of money between countries and without major fees and delay times.
In India, ConsenSys Ventures, a blockchain software firm, has worked with the National Institution for Transforming India (NITI) Aayog, the Indian government’s policy think tank, on implementing blockchain in a land titling project. ConsenSys Ventures also signed an agreement with the Andhra Pradesh state government for an array of uses for its technology, including in land titling, supply chains, and health records.
In Kenya, IBM partnered with Twiga Foods, a business-to-business logistics platform for kiosks and food stalls across Africa, to extend micro-finance loans to vendors. These loans were intended to help vendors buy and manage more inventory. IBM's contribution was to build a blockchain-enabled lending platform that could determine the creditworthiness of the food vendors.
In Nigeria, blockchain technology has been used to monitor toxin levels along the River Niger, where efforts are underway to clean up the river belt. International organizations that are funding these projects rely on this data as part of their reporting requirements.
Haiti, the victim of hurricane and earthquake damage caused over the last decade, also stands to benefit from blockchain.
The Haitian government has suggested that blockchain technology could be used to record and register property transactions, voting, intellectual property, and other aspects of bureaucracy. In 2019, the La Banque de la République d’Haïti announced that it was considering a pilot program utilizing blockchain technology to create a digital version of the Haitian Gourde. The goal of this project would be to improve the domestic payments system and promote financial inclusion in Haiti.
The Future of Blockchain Technology in Emerging Economies
For Paul Domjan, former global head of research, analytics, and data at investment bank Tellimer (formerly Exotix), emerging nations are the most promising beneficiaries of blockchain tech. He argues that, because "frontier markets in Latin America, Sub-Saharan Africa, and South Asia lag far behind [in the area of ownership recording], with average performance less than half that of the best-performing economies," they are primed for the benefits of blockchain.
Amnesty International program director Mark Dummett has voiced cautious support for the integration of blockchain into efforts to address these and other problems plaguing developing nations, saying, "You have to be wary of technological solutions to problems that are also political and economic, but blockchain may help. We're not against it."
The Bottom Line
Besides the applications listed above, supporters of blockchain believe that it could enhance the distribution of government services in these nations, help to provide identity services, and even help to enhance freedom of speech and anti-corruption activities as well.