What is Blockchain and its potential in Africa, in simple terms?
This article is also available in French here.
The Internet has profoundly transformed our lives and the emergence of platforms such as Uber or Airbnb have completely redesigned our societies and economies.
The current advance of new technologies is bringing the Internet into a new era of transformation, called “Web 3.0”. And the Blockchain is an important component of these transformations that will make “Web 3.0” more “intelligent”.
What is Blockchain technology?
Blockchain is a decentralised and distributed digital ledger accessible to all via the Internet. Blockchain is secured by advanced cryptography and has the potential to transform the way humans interact.
Blockchain technology is unique because it is :
- Decentralised, which means it doesn’t need an oversight body or a trusted third party to operate. It is based on peer-to-peer (P2P) exchanges.
- Transparent, as every exchange carried out between its users since the very creation of the blockchain in question is registered and remains accessible to all.
- Tamper-proof and secured: unlike more traditional databases, it is “distributed”. This means that different copies exist simultaneously on different computers called “nodes” of the network, which prevents the blockchain from being hacked.
- Autonomous and maintained by network participants. Indeed, the exchanges on the blockchain are recorded by network validators, who are themselves rewarded with“tokens” to maintain the network, hence the notion of “autonomous”. The “blocks of transactions” added one to another by the validators form a “chain”, hence the notion of a blockchain or chain of blocks.
What is the purpose of the Blockchain?
As the mathematician Jean-Paul Delahaye wrote, imagine “a very large notebook, that everyone can read freely, that everyone can write on, that is impossible to erase and indestructible.”
- The first function of the blockchain is, therefore, the database function. The blockchain creates a secure and immutable cryptographic record of any valuable transaction, whether, money, goods, property titles, contracts, votes, etc…
- The peer to peer exchange of resources, indeed thanks to the blockchain, no need for a third party or manual reconciliation to be able to exchange. The technology brings trust between two users (P2P), where normally an intermediary would have been needed.
- Another function offered by the blockchain is to monitor supply chains in a transparent manner.
As an example, the French retailer Carrefour uses it, to track several of its products such as eggs. This makes it possible to guarantee the traceability of its products to the consumer. The retailer explains “that applied to the food sector, the blockchain allows each actor in the supply chain (producers, processors and retailers) to fill in the traceability information that concerns them for each batch (dates, locations, farm buildings, distribution circuit, potential processing, etc.)”.
What potential for blockchain in Africa?
The blockchain represents an enormous potential for Africa, as the technology can compensate for the lack of infrastructure and the complexity of local systems. Citizens will, therefore, be able to rely on the blockchain as a tool of trust.
The blockchain is full of applications, but here are a few examples of concrete applications:
- For administrations, the blockchain can be used to register land titles in an immutable and transparent way. There are several ongoing projects in this field in Africa.
- Voting systems are also being tested on the blockchain, which could provide confidence and traceability of votes during an election.
- The blockchain will also have an important role to play in social and financial inclusion. Indeed, people will be able to rely on technology as a “giant computer” to exchange resources and thus create micro-economies across Africa.
What are the barriers to adoption?
Blockchain technology is still in its infancy, so innovators face technical barriers, particularly in terms of scalability and accessibility. Indeed, progress must be made to allow the technology to perform a greater number of operations, as quickly as possible but also to make the technology accessible easily to future users. The validation protocols for the blockchains must also be designed in line with the respect of the environment.
Regulation is another obstacle, as the technology is still misunderstood, which represents a resistance to change and an uncertain framework for innovators. Governments around the world must work to give legal value to the innovations introduced by the Blockchain as this is essential for the adoption of the technology.
For example, when Blockchain time stamping is recognised by the regulator, it can be legally admissible as evidence and become widespread.
What is the relationship between Blockchain and Bitcoin?
Bitcoin is the first application that was created using blockchain technology. Its inventor remains unknown to this day! We only know his pseudonym, Satoshi Nakamoto, but we don’t know whether it’s an individual or a group.
Blockchain technology is, therefore “the virtual infrastructure on which Bitcoin is based”.
Today other blockchains and other applications are being developed.
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Research & Strategic Consulting firm specialising in Blockchain and Emerging Technologies.
Maloya 5D Lab assists businesses, governments, regulators and academia in gaining a better understanding of blockchain and emerging technologies and how they can be used to achieve sustainable innovation as well as create new resilient economies.
