Blockchain in the Middle East
MeterQubes assessment and analysis
The growth of Blockchain is emerging as one of the biggest tech innovations in the last 3 decades, considered second only to the advent of the internet. In general-parlance, blockchain and cryptocurrencies have been used interchangeably; but this disruptive technology is capable of much more than generating digital currencies. The CEO of IBM, Ginni Rometty quoted, “what the internet did for communications, blockchain will do for trusted transactions”. While the technology is still building up and gaining traction, it is on its way to revamping the global economy in general and financial services & governance ecosystems in particular.
The wordplay in the name describes how the technology works; the name itself hands over what “blockchain” does. In simpler words, this digital technology records every digital transaction involving the user and provides a decentralized consensus protocol. This means that there is no central authority deciding the fate of a transaction. Why is that important? A single entity can be hacked, can take wrong decisions that reduce the value of your holdings and otherwise refuse to honor the transaction. But in a decentralized framework, the power of the “crowd” is more important than any so-called “authority”.
Every validated transaction forms a block and gets added to the public ledger (the blockchain) and completes the transaction. A survey conducted by Deloitte implies that the technology is gaining momentum as priority investments among various companies are turning in its focus on the blockchain. 39% of the survey respondents have shown interest in investing US$5 million or more in blockchain in the coming year. A global market of around US$0.67 billion in 2017, blockchain is estimated to expand to US$10.58 billion with a CAGR of 58.39% during the forecast period 2017–2023. In some really optimistic approaches, researchers are even estimating a whopping US$ 23.3 billion growth by 2023. The major key driver in these estimates, whether conservative or optimistic, is the increased interest of financial institutes in investing in this robust technology. The transparency and efficiency offered in transactions via blockchain make it a more reliable and scalable investment for the financial institutions.
The Rise of Blockchain: Companies Adopting the Technology
Introduced in 2009, the blockchain lately has been buzzing globally with an increased rate of research and adoption. In a span of last three years, blockchain has attracted a lot of attention. Various countries are implementing this technology across industries like finance, healthcare, governance, real estate, and security among others. A few companies that have adopted the technology in their seams are mentioned below:
• Google (Mountain View, CA)
Google, the humongous search engine has made remarkable investments in the technology, including Veem, a payment startup facilitating payments in different currencies with Bitcoin as an intermediary holding.
• ING (Amsterdam)
The banking giant created a dedicated team for blockchain in 2016 and has launched around 8 pilot projects since then. In 2018 along with Credit Suisse, the bank implemented the first legal euro securities swap with R3’s blockchain.
• Intel (Santa Clara, CA)
Intel’s Hyperledger Sawtooth platform facilitates companies in creating their own blockchains. The users of this platform include marquee names like Cargill, T-Mobile, and the Tel Aviv Stock Exchange.
• JPMorgan Chase (New York City)
The largest bank of the US has created Quorum, is a confined version of Ethereum that helps enterprises to advance the back-office tasks to the blockchain-powered ledgers. The bank has recently announced JPM Coin which will empower real-time payments between institutions.
Blockchain and the Middle East
The Gulf Cooperation Council governments (GCC) are taking up initiatives to leverage blockchain technology to solve scalability, trust and cost issues in multiple governance and business ecosystems.
Blockchain in the GCC: Overlook
UAE wants to become the first government to integrate the blockchain in its functions. The government, in April 2018, established the Emirates Blockchain Strategy 2021, which aims to exploit the technology, and by 2021, onboard 50% of government settlements onto this platform. According to International Data Corporation, it was estimated that the spending by the Middle East and Africa in the blockchain technology would reach US$80.8 million by the end of 2018, increasing from US$38.9 million in 2017 (up by 107%).
Recently the Dubai government announced a collaboration between the Smart Dubai office and the Dubai Future Foundation by the name “Dubai Blockchain Strategy” which aims to make it the first city that will be fully powered by blockchain, by 2020. With around 20 projects in its basket, the city’s government is leaving no stone unturned to achieve the title. Another country in the Middle East that is investing heavily in blockchain development is Bahrain. It is targeting adoption of the technology throughout the country, with financial services acting as the pilot.
The GCC has taken some remarkable steps to incorporate blockchain in government operations by providing a supportive environment for the technology’s growth and expansion. In this light, some steps taken are:
• The regulatory vehicle of the Dubai International Financial Centre (DIFC), Dubai Financial Services Authority (DFSA) has launched “Innovation Testing License” to facilitate FinTech firms to examine their concepts based on blockchain technologies within its territory.
• The Abu Dhabi Global Markets (ADGM) regulator, Financial Services Regulatory Authority (FSRA) introduced the RegLab sandbox, one among the spearheads of licensing frameworks for FinTech in the area. The hubs were additionally opened in Bahrain (Bahrain FinTech Bay) and the KSA (FinTech Saudi).
Blockchain is not the future. It is the present. The United States is seeing such massive shortage of blockchain engineers that their salaries have skyrocketed by 500%-1000% in a couple of years.
Leaders in many countries are afraid of this innovation and have tried to clamp down the technology and its applications. This is because blockchain brings transparency and puts the power back in the hand of the users. Leaders in the Middle East have been visionary and have adopted this technology to not only improve their governance but to create the next hotbed of innovation. The next wave of trillion dollar companies will not come out of Silicon Valley but from Blockchain universe that breaks down the barriers imposed on our society by the current legacy technology.
Welcome to a world of possibilities, powered by blockchain.
Co-founder & CEO at Meterqubes.io
Ahmed Al Marjeby has a Proven track record as a serial entrepreneur having founded 2 companies generating 1+ million in revenue. Specializing in blockchain and AI business application enabled him to venture into launching a decentralized crypto exchange — MeterQubes featuring secured ecosystem, real-time matching system, and AI.