Every day you hear about Blockchain technology, Bitcoin, ICO, Ethereum but do you understand what blockchain, cryptocurrency, and Smart Contracts are? How does it all work? How can blockchain be used to drive business growth? How will blockchain impact the Nigerian digital economy? How will blockchain change the world? This article is aimed to answer all these questions.
What is BlockChain?
The Blockchain can be best described as a diary that is almost impossible to forge. The blockchain is an undeniably ingenious invention that has revolutionalized the Financial Technology (Fintech) Industry. Since its inception, the blockchain technology has evolved into something greater and powerful having an estimated market size of over 540 Million DOllars in 2018.
BlockChain a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.
In 2008, Satoshi Nakamato conceptualized the distributed blockchain. It would contain a secure history of data exchanges, utilize a peer-to-peer network to time stamp and verify each exchange, and could be managed autonomously without a central authority. This became the backbone of digital currencies such as Bitcoin and Ethereum.
BlockChain adoption in Nigeria.
Since these are still relatively uncharted waters, many governments around the world have frowned upon blockchain while just a few are making plans to incorporate its applications to improve their economies. Unfortunately, this is not the case in Nigeria. The Central Bank of Nigeria (CBN) has cautioned Nigerians to be wary of investments in cryptocurrencies, asserting that virtual currencies are not accepted legal tenders in the country.
According to data from LocalBitcoins, Nigeria came second in the world’s peer-to-peer (P2P) Bitcoin transactions in 2017 outpacing major European countries, the United Kingdom and the United States of America. This data shows us that the adoption of BlockChain and Cryptocurrencies can be great in Nigeria if the government can find innovative ways to leverage its usage.
BlockChain And Business Growth.
When finally matured, the decentralized BlockChain system is going to change the way we transact business or manage assets. Along the way, it will transform banks and other financial institutions, hospitals, companies, and governments among others.
1. Cross-Border Payments.
Making global payments is very slow, costly, error-prone and open to money laundering. It takes days if not longer for money to move from one country to another. Blockchain makes global payment fast and secured making it easy to transact businesses with customers in other countries and get paid instantly.
Several existing blockchain-based payment processing services are based on Bitcoin. Some of these are designed for the relatively small subset of businesses trading directly in Bitcoin. But other payment processing solutions address a much larger audience by using the Bitcoin distributed ledger to transfer payments in conventional currencies.
2. Improved Digital Security.
Digital security is a massive problem in the world. Thousands of hackers are out there trying to steal peoples identity. Imagine never having to worry about your digital security or that of your customers ever again. Blockchain technologies make tracking and managing digital identities both secure and efficient, resulting in seamless authentication and reduced fraud.
Be it banking, healthcare, national security, citizenship documentation or online retailing, identity authentication and authorization is a process intricately woven into commerce and culture worldwide. Blockchain technology offers a solution to many digital identity issues, where identity can be uniquely authenticated in an irrefutable, immutable, and secure manner.
3. Supply Chain Tracking.
Most of the companies in the world have ERP and supply chain management software yet, there are limited visibility and details about the whereabouts of a product at any given moment. Blockchain can ease the tracking of items across the global supply chain.
The product can be tracked at every stage creating the record of the location, who handled it and when. It can also record details like temperature, internal pressure at each point to help retailers be assured of product safety. This could possibly solve the problem of lost or damaged products in the shipment and increase accountability at each point. Due to an accurate, specific and immutable nature, retailers can resolve issues easily.
4. Digital Marketing & Advertising.
“Blockchain marketing” is the buzzword for 2018. So much so that the Interactive Advertising Bureau (IAB) released their “Blockchain for Video Advertising” whitepaper detailing how blockchain technology will revolutionize the digital advertising and have ripple effects throughout the marketing industry. As technology continues to evolve, new iterations of the blockchain may offer more value to marketing and advertisers.
In today’s marketing campaign, it is common for a marketing platform to claim 20,000 impressions delivered on a campaign while the advertising says they were only 10,000 impressions. In this circumstance, it is difficult to tell who is right and who is not. The blockchain could then be used to verify for each source the exact number of impressions.
5. Smart Contracts.
Smart contracts solve the problem of intermediary trust between parties to an agreement and can make it easy to transact business without the fear of been duped by a business partner. It defines a set of conditions to which all parties using the contract mutually agree upon. Once the required conditions are met, certain actions are executed and all members of the network get to the same result by executing this action.
There are multiple ways in which Smart contracts can be used. For instance, in case of insurance claims, all contracts(claims) can be recorded on a blockchain, thus eliminating multiple claims being registered by one user. Concurrently, the user is also not scammed out of a claim by the company stating that they have already issued a payout.
One could argue that BlockChain is not going to be fully adopted or implemented in Nigeria anytime soon. While that could be true, it’s still important for business owners to be educated and prepared for the digital revolution that is coming.
The takeaway from this topic is that FinTech solutions such as BlockChain can definitely play a part in driving both business and economic growth in Nigeria. However the technology cannot achieve this alone, the government has a greater role to play by quickly adapting to changes in technology and providing the right regulations to guide its usage in Nigeria.