Blockchain opportunities are limitless and without precedent – but industry players need to be proactive, not reactive. For governments and industries in the MENA region to pursue this technology, blockchain represents an invaluable tool with which to unleash a huge potential for growth and productivity.
Put simply, blockchain allows people to know, for certain, what is happening in the digital world. However, despite a huge buzz and a lot of investment, the mass global adoption of blockchain, so far, is still in a nascent stage: blockchain 1.0.
However, we are beginning to now see blockchain 2.0 and 3.0 unfold. While blockchain 1.0 is limited to currency, blockchain 2.0 is making “contracts” available without the need for a third-party, and blockchain 3.0 is a platform for ensuring integrity and non-repudiation of the information exchange between machines (IoT) and in man-machine relations.
We’ve seen the technology and its potential develop rapidly over the past few years, and many use cases across multiple industries are moving from experimentation into real life application. Thus, the noise levels and investment have significantly increased significantly worldwide, including in the MENA region and in particular in Dubai, which has the ambition to be a leader in its application.
While blockchain started in the financial services sector, its use cases are expected to be applied across a variety of sectors in the future. With the foundations of ‘blockchain 1.0’ being in the financial services sector, it continues to lead adoption.
Banks in the region are already using blockchain technology for remittances and instant settling of accounts and auditing, among other use cases. According to Gartner, over 50 percent of clients asking for test cases of blockchain technologies from consultancies are from the banking industry. We’re also seeing the ripple effect of Fintech centres setting up across the region to support the development of further use cases for the technology, including Hive and DIFC.
While solutions from the public and private sector would previously have been developed in isolation, the digital age and the ability of start-ups to innovate faster than their institutional peers will encourage governments to develop new relationships. As governments start to create the infrastructure for people to start new blockchain-based businesses, government departments will be able to work with established ones to tackle specific challenges using technology.
Already, in the case of Dubai, the emirate has moved from being a follower to a leader in the government application of blockchain, not just in the MENA region, but on a global level. Other countries – such as Kuwait, Saudi Arabia, Bahrain and Egypt – are on a similar footing and are investing in innovation centres for both the public and private sectors. With this has come an increased focus on regulations needed to apply safe controls around the technologies, which in turn will build maturity into the market.
In the case of blockchain, it’s apparent that the possibilities are still in their infancy. They lack the interoperability required for enterprise deployment and introduce new issues regarding identity management and data security. However, the technology will develop, existing business processes will change, and new business models will emerge.
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