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Tue 19 Jul 2016 03:05 PM

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Understanding blockchain and its growing importance in the UAE

Project Pen’s John Lillywhite talks to Moe Levin, founder of Keynote Events and a member of the UAE-based Global Blockchain Council, on the sidelines of the recently held 2016 Blockchain Conference

Understanding blockchain and its growing importance in the UAE
A number of government representatives and corporate executives discussed the future of most successful digital currency Bitcoin and Blockchain.

There’s one rule when interviewing futurist and the founder of Keynote Events Moe Levin on financial tech – fintech – and the mysterious ether-like ocean of information known as the “blockchain”: please don’t mention BitCoin. At least not from the get-go.

“Bitcoin proved that [blockchain] technology works. Bitcoin is one application using blockchain technology, where somebody who is in a database of bitcoin users sends money from one bitcoin wallet to the other wallet. It’s very, very simple technology, which proved the underlying technology of blockchain,” says Levin, in a slightly strained voice.

He continues, largely to get the issue out of the way, because when it comes to the blockchain, Levin makes it clear there are more important things to talk about: “Blockchain is like iOS or Android. It’s an operating system that has other applications build on top of it, like Whatsapp, Facebook or Google Chrome. These are built on top of the underlying technology [or operating system]. That’s it. And one of the applications on the “BlockChain IOS”, is BitCoin.”

Get it? So this isn’t an article on how BitCoin, crypto-currencies or new forms of digital financial transactions, are about to arrive in the UAE – although all these things were discussed at the recent Keynote Events 2016 ‘Blockchain Conference’ at the Burj Al Arab in May, sponsored by the Future Foundation and Smart Dubai.

This is about something much cooler, and perhaps more imaginative. The underlying technology that will power all of these things, and many other things you might not have guessed at.

Thankfully, one of the best descriptions we have read on ‘What is the Blockchain?’ comes from Levin himself. Pay attention. This is the technical bit.

“What the blockchain does is, it offers one language - one integral model – for all businesses to speak to each other efficiently, reliably, and in a way which is tamper proof.”

Imagine a digital information highway that automates cross-industry processes – it could be the payment of an invoice, the thousands of orders which might accompany the production of 4,000 pairs of shoes, or your medical and insurance data. These were all examples used by Levin in the course of our conversation, to illustrate the various applications of blockchain technology. All of this information is seamlessly encrypted and decrypted across the network, and only available to those with the correct encryption key, be your bank, your insurer, or your business.

Now here is why you should care. “Let’s say you want to buy a pair of shoes on Amazon. What you’ve given to Amazon is basically the information that you want to order the shoes. All the rest of the information doesn’t go to Amazon; the information about your shipping address goes to shipping and logistics directly, the banking information will go directly to the bank, so the transactions are split up depending on who needs to know what, increasing the privacy that you have when you buy a pair of shoes.”

But it is not just about privacy, or automating cross-industry financial transactions, or even replacing expensive Enterprise Resource Planning [ERP] systems, thus saving businesses money, improving efficiency, expanding profit, and potentially costing a couple of people their jobs.

When it comes to the blockchain, in the words of Eames from the famous futurist movie Inception, “You mustn’t be afraid to dream a little bigger, darling.” Why? Because the blockchain-powered future Levin describes is both compelling, and well, a little spooky too.

“Blockchain technology can be used for two autonomous cars to speak to each other, and tell each other which way to go, or share information about the road ahead,” Levin explains. “In the banking world where the ‘Know Your Customer’ [KYC] element can be quite cumbersome, you could have a central repository of all people, so less time would be spent on KYC, once a customer identifies themself as the individual on a blockchain.

“When you’re talking about government in the future, you might be able to talk about real-time taxation to the IRS, immediately – and if the taxation element of that transaction hasn’t taken place, it is immediately recognisable.”

Levin is at pains to emphasise that none of this has happened yet, but adds: “They will build these things, and it’s requiring a lot of high-level thinking on the part of governments and regulators.”

While the Brave New World of Blockchain might have some humanities graduates reaching for their dystopian novels, Levin does make a powerful point about the potential application of Blockchain transactions.

“It is harder to conduct bad business practices, or illegal or criminal or unethical business practices, like we may have seen in the past, when there is more transparency,” he says. “It’s harder for massive corporations to do incredibly risky credit swaps, or investments, when people or other companies can see that they are doing these things.”

Particularly in the UAE, given its position in a turbulent region, this is the kind of argument that Levin as an advocate for blockchain technology, is working to advance.

“There have been things in the media and politically that have hindered the growth of this technology. So you have banks and investors that just hear about Bitcoin – and they like, ‘No, I’m Out’, and investors who are worried that blockchain sounds like Bitcoin, and group the two together. That worry maybe amplified in the MiddlE East, and its unfortunate but that’s how papers get sold.”

For Levin, governments and private corporations need to get on board with blockchain because “from a purely technological perspective this is good technology that might be used by companies, and banks and governments.”

In the UAE, that message seems to be gaining ground, and quickly.

“I started planning [the Blockchain Conference] in November/December [2014] and nobody returned my phone calls”, explains Levin, towards the end of the interview.

“There was the same kind of worry – who is this guy, why is he trying to release a new kind of crypto-currency and topple the government or something?

“Then in February, the prime minister’s office via the Future Foundation launched a Global Blockchain Council, which was mandated to educate in promoting the technology. We partnered up to make a conference to show people what this is, what it could be, and provide a long-term vision of doing this in the years to come, and how introduce this new technology to the region.”

It might not be as interesting as anarchist crypo-currencies, Patrick Bateman style high-speed trading, or Dark Web black market digital economies, but you can be sure of one thing - unlike all of the above, within the next decade the blockchain will be everywhere. Including in the UAE. Just make sure you pay your taxes.

About the author:

John Lillywhite is a policy analyst and tech writer based out of the UAE.

Sanjay Singhvi 3 years ago

Blockchain technology simplified at least in terms of explaining What is Blockchain and it is not Bitcoin or any other crypto currency. It seems this technology is need of the hour and has potential to immensely benefit government and financial sector even in its initial stages. It will certainly help reduce financial risk and bring much needed transparency even at the lowest level of transaction chain.

MT3 3 years ago

The key concept here is trust. That issue is hugely multifaceted but a good place to start is to ask "who owns/controls blockchain". Everyone who wants to? No-one? Are those two sides of the same coin depending upon your philosophical standpoint? Probably. But if the answer is anywhere in between, that's when it gets complicated and, of course, for this technology to have the applications people claim it can - which are technically, of course, highly feasible - the answer has to be somewhere in between before any major bank or corporation is going to consider signing up in any meaningful way rather than sticking a cautious toe in the water as some have with bitcoin. Put another way who do you sue when things go wrong?

I'd also like to understand the concept of why having a language that is not tamper-proof is an advantage - I assume it's a typo.

Interesting article though - thanks.