Blockchain tech: next wonder?
The term blockchain refers to a distributed, decentralised ledger, a database of transactions
The writer has a business administration and marketing background and is an upcoming private entrepreneur in Islamabad. He can be reached at saad.gul2@gmail.com
The world of fin-tech, smart data and artificial intelligence is abuzz with blockchain technology and the potential it promises for the future. Since Bitcoin’s inception in 2009 on the first-ever commercial blockchain, a new financial ecosystem worth billions of dollars continues to attract investment dollars from entrepreneurs, private investment groups, financial institutions and governments. However, it is gaining most traction in the West in terms of investment, acceptance and regulation.
The term blockchain refers to a distributed, decentralised ledger, a database of transactions. Every 'block' of information contains records of previous transactions, creating a comprehensive 'chain' of records. A blockchain ledger can record a wide variety of transaction types which are not limited to financial transactions only. Because information recorded on the blockchain requires approval from everyone within the network, many people see this technology as a means of enhancing both transparency and security. Blockchain records are encrypted using secure algorithms, making it difficult to tamper with transactions. They’re also auditable, allowing outside parties to see and verify the records.
According to a recent IBM blockchain research, government organisations across the globe are exploring use-cases for blockchains that can impact their jurisdictions. Government organisations, including public-sector finance institutions, are looking at how blockchain technology can positively impact operations in a number of areas such as financial transaction management, asset management, contract management and regulatory compliance.
Dubai wants to be the first blockchain-powered government by 2020, primarily focusing on licence renewals, payment of bills and visa applications. But, mind you, Dubai is not alone in these futuristic endeavours.
The Estonian government, for example, has been pursuing blockchain since 2008 to provide secure and more instantaneous citizen services such as healthcare and legislation to its residents. In the US state of Delaware, the government is piloting feasibility of registering companies, tracking shares and executing shareholder communications on blockchains. Other groups are exploring how blockchains could facilitate borderless services such as registering a company across national borders or facilitating cross-province or state tax collection.
Seems like quite exciting times are ahead with an ever-growing recourse to and reliance on block-chain technologies.
What about Pakistan? Are we really ready for this revolution? Well, we face a number of intellectual as well as technical capacity issues. The mindset, particularly among the top echelons of our government and finance institutions, such as the State Bank of Pakistan and most of the private commercial banks are still in a banking mode that is outdated.
Secondly, there is still a huge gap in the need and the availability of fast fibre-optic connectivity in Pakistan. The cost of computers and high-speed wifi is still relatively high in Pakistan. Mobile internet users as a percentage of the population was recorded at 21 per cent (for a population of 210 million) at the end of January 2018, according to a Global Digital report prepared by We Are Social and Hootsuite. But availability of real, high-speed 3G, 4G and LTE capabilities has enabled users to be able to bank online. While the West is preparing to completely shift to 5G services, most of the telephony is still based on basic digital telephony, with a dire need to improve access to fast internet for the 50 million-plus smartphone users.
While consumers will keep struggling for a high-speed internet — a prerequisite for drawing on blockchains, governments in countries such as Pakistan will also face the challenge of coping with fast-changing situations. Particularly the state-run institutions, usually known as reactive and inefficient, shall have to double up their efforts to catch up with the new trends.
Bureaucratic procedures involving government institutions, ie, issuance of new national identity cards, renewals of driving licences, registration of a limited company, transactions involving assets such as immovable property and vehicles are tedious and time consuming. These processes demand time because all departments concerned usually lack horizontal synergies and vertical integration. Integration, for instance, between the National Database Registration Authority, the interior ministry and private banks is still way off the present-day requirements. A lot of documentation is still manual and paper based. Integration of government departments through blockchain technologies presents a huge opportunity cost as it would save long queue as well as man-hours. This would also result in greater productivity and efficiency improvement.
For government organisations, early collaboration with the private sector will ultimately be the determining factor which could set the pace of blockchain adoption across all industries. The private sector, particularly banking institutions and management institutions, could perhaps take the lead and offer partnerships for guidance to the public-sector institutions. This in return would help the private sector itself, which often complains of tardy and delayed responses by public-sector institutions. Let’s focus on encouraging such state institutions to embrace partnerships with private entities to rebuild trust with citizens, become transparent and start thinking in terms of larger interests of the country in challenging technological times ahead.
Published in The Express Tribune, May 11th, 2018.
The term blockchain refers to a distributed, decentralised ledger, a database of transactions. Every 'block' of information contains records of previous transactions, creating a comprehensive 'chain' of records. A blockchain ledger can record a wide variety of transaction types which are not limited to financial transactions only. Because information recorded on the blockchain requires approval from everyone within the network, many people see this technology as a means of enhancing both transparency and security. Blockchain records are encrypted using secure algorithms, making it difficult to tamper with transactions. They’re also auditable, allowing outside parties to see and verify the records.
According to a recent IBM blockchain research, government organisations across the globe are exploring use-cases for blockchains that can impact their jurisdictions. Government organisations, including public-sector finance institutions, are looking at how blockchain technology can positively impact operations in a number of areas such as financial transaction management, asset management, contract management and regulatory compliance.
Dubai wants to be the first blockchain-powered government by 2020, primarily focusing on licence renewals, payment of bills and visa applications. But, mind you, Dubai is not alone in these futuristic endeavours.
The Estonian government, for example, has been pursuing blockchain since 2008 to provide secure and more instantaneous citizen services such as healthcare and legislation to its residents. In the US state of Delaware, the government is piloting feasibility of registering companies, tracking shares and executing shareholder communications on blockchains. Other groups are exploring how blockchains could facilitate borderless services such as registering a company across national borders or facilitating cross-province or state tax collection.
Seems like quite exciting times are ahead with an ever-growing recourse to and reliance on block-chain technologies.
What about Pakistan? Are we really ready for this revolution? Well, we face a number of intellectual as well as technical capacity issues. The mindset, particularly among the top echelons of our government and finance institutions, such as the State Bank of Pakistan and most of the private commercial banks are still in a banking mode that is outdated.
Secondly, there is still a huge gap in the need and the availability of fast fibre-optic connectivity in Pakistan. The cost of computers and high-speed wifi is still relatively high in Pakistan. Mobile internet users as a percentage of the population was recorded at 21 per cent (for a population of 210 million) at the end of January 2018, according to a Global Digital report prepared by We Are Social and Hootsuite. But availability of real, high-speed 3G, 4G and LTE capabilities has enabled users to be able to bank online. While the West is preparing to completely shift to 5G services, most of the telephony is still based on basic digital telephony, with a dire need to improve access to fast internet for the 50 million-plus smartphone users.
While consumers will keep struggling for a high-speed internet — a prerequisite for drawing on blockchains, governments in countries such as Pakistan will also face the challenge of coping with fast-changing situations. Particularly the state-run institutions, usually known as reactive and inefficient, shall have to double up their efforts to catch up with the new trends.
Bureaucratic procedures involving government institutions, ie, issuance of new national identity cards, renewals of driving licences, registration of a limited company, transactions involving assets such as immovable property and vehicles are tedious and time consuming. These processes demand time because all departments concerned usually lack horizontal synergies and vertical integration. Integration, for instance, between the National Database Registration Authority, the interior ministry and private banks is still way off the present-day requirements. A lot of documentation is still manual and paper based. Integration of government departments through blockchain technologies presents a huge opportunity cost as it would save long queue as well as man-hours. This would also result in greater productivity and efficiency improvement.
For government organisations, early collaboration with the private sector will ultimately be the determining factor which could set the pace of blockchain adoption across all industries. The private sector, particularly banking institutions and management institutions, could perhaps take the lead and offer partnerships for guidance to the public-sector institutions. This in return would help the private sector itself, which often complains of tardy and delayed responses by public-sector institutions. Let’s focus on encouraging such state institutions to embrace partnerships with private entities to rebuild trust with citizens, become transparent and start thinking in terms of larger interests of the country in challenging technological times ahead.
Published in The Express Tribune, May 11th, 2018.