Most people immediately associate the term blockchain, which refers to a sort of decentralized ledger technology, with cryptocurrency. However, it’s crucial to remember that bitcoin was only one of blockchain’s first and most successful applications; most experts feel that the technology’s potential for other uses is limitless.
What Is Blockchain Technology and How Does It Work?
A blockchain, in the broadest sense, is a system for recording data, albeit it differs from a traditional database in the manner data is maintained; data in a blockchain is stored in such a way that it is difficult or impossible to edit, hack, or trick the system.
Blockchain technology promises a safe, peer-to-peer verification system. In a decentralized ledger, each “block” in a blockchain maintains a record of transactions. In a peer-to-peer network, the blocks create a “chain” when combined.
Blockchain Technology’s Applications
This remarkable technology provides the required infrastructure for the global tracking and transaction of digital currencies in a decentralized, anonymous manner. While blockchains enable the operation of cryptocurrencies, their functionality has applications beyond that. Banking and fintech payment industries, for example, have already expressed a strong interest in blockchain technology.
The potential uses of blockchain technology are diverse, ranging from insurance and real estate to crowdfunding and data management, and it’s probable that new ways of incorporating this technology into the mainstream corporate sector will emerge in the future.
However, there is one crucial use of blockchain technology that exists outside of its more traditional corporate applications: the integration of blockchain technology in various ways is aiding some of the world’s emerging economies. Blockchain technology is being used in banking and financial services, supply chains, agriculture, and monitoring property ownership records in countries as different as India, Kenya, and East Africa.
Among its many benefits (the most important of which is the ability to keep data private), blockchain technology claims to speed up and reduce transaction costs, as well as increase financial inclusion by giving more chances for individuals who do not have easy access to financial services.
Individuals in many places of the world lack simple access to banking services. Users all across the world will be able to use blockchain technology to obtain banking services that they would not otherwise have access to. Individuals in emerging economies, where traditional banks are not easily available, could use blockchain technology to gain access to these services. One application is the use of blockchain for instantaneous money transfers across nations with minimal costs and delays.
ConsenSys Ventures, a blockchain software company based in India, has collaborated on a land titling initiative with the National Institution for Transforming India (NITI) Aayog, the Indian government’s policy think tank. ConsenSys Ventures recently secured a deal with the state government of Andhra Pradesh to use its technology for a variety of purposes, including land titling, supply chains, and health data. 1
IBM worked with Twiga Foods in Kenya to provide micro-finance loans to vendors. Twiga Foods is a business-to-business logistics platform for kiosks and food stalls across Africa. These loans were designed to assist sellers in purchasing and managing additional inventory. IBM’s objective was to create a blockchain-enabled loan platform that could assess food suppliers’ creditworthiness.
In Nigeria, blockchain technology is being used to track toxic levels along the River Niger, where attempts to clean up the riverbed are underway. The data is used by international organizations that support these initiatives as part of their reporting responsibilities. 1
Haiti, which has been ravaged by hurricanes and earthquakes over the last decade, stands to profit from blockchain as well.
The Haitian government has proposed that blockchain technology be used to record and register property transactions, voting, intellectual property, and other bureaucratic activities. The Banque de la République d’Haiti said in 2019 that it was planning a pilot initiative to produce a digital version of the Haitian Gourde using blockchain technology. This project’s purpose is to strengthen Haiti’s domestic payment system and increase financial inclusion. 3
Blockchain Technology’s Future in Emerging Markets
Emerging nations are the most prospective benefactors of blockchain technology, according to Paul Domjan, former global head of research, analytics, and data at investment bank Tellimer (formerly Exotix). Because “frontier markets in Latin America, Sub-Saharan Africa, and South Asia trail well behind [in the field of ownership registration], with average performance less than half that of the best-performing economies,” he claims, they are well positioned to profit from blockchain.
Mark Dummett, the program director at Amnesty International, has expressed cautious support for the use of blockchain in efforts to address these and other issues plaguing developing countries, saying, “You should be wary of technological solutions to political and economic problems, but blockchain could be useful. We’re not opposed to it.”