Will blockchain spark a revolution in the Middle East?

The Middle East could become a pioneer in blockchain applications, changing the workflow of organizations in the region.

Dubai plans to streamline government workflow by introducing blockchain, the distributed ledger technology behind the global cryptocurrency bitcoin.

With the launch of the Dubai Future Foundation initiative, the emirate has pledged to go all-in to create an open, shared blockchain database system by 2020. Dubai also recently launched the Global Blockchain Council , a public - private initiative to foster collaboration between government organizations, local businesses, and international startups to advance real-world applications of blockchain technology.

Nic Carey, co-founder and chairman of the Global Blockchain Council, said that people often misunderstand blockchain technology. In fact, it can be understood as a large spreadsheet program built in the cloud, which can be used by everyone but cannot be deleted or modified.

“ The network’s ledger is completely public, so anyone can verify transactions. In addition to being a means of payment, blockchain can also be used as a global property rights system, which has great potential for marginal, emerging and developing economies such as the Middle East. All types of collateral can be encrypted into the blockchain, including stocks, bonds, land deeds, etc. ”

According to experts, blockchain has a huge impact on local government institutions, reducing the huge impact of bureaucracy in the Middle East while making citizen transactions and processes more efficient. MR Raghu , senior vice president of research at Markaz (Kuwait Financial Center) , said that key processes in local governments still rely on paperwork, which slows down the completion of tasks and increases the level of bureaucracy.

He said:

“ Land registration is an important part of the economies of most Middle Eastern countries, but the process of registering land and transferring ownership still relies on paperwork. The digitization of real estate transactions will bring greater transparency and enhance liquidity in the market. ”

Raghu said key industries in the region that would benefit from faster and cheaper transactions include energy, healthcare, transport and remittances. “The GCC economy is fueled by oil. Millions of barrels of crude oil are exported every day to buyers around the world who pay them in US dollars. Currently, these payments are still made using traditional wire/check transfers or Swift payments, ” he said .

“ Cross-border payments take two to three days to complete. Blockchain payments only take about 15 minutes, almost instantly. Because transactions are decentralized, transactions can proceed as usual even if the two parties are in different time zones. ”

Completely transforming the workflow of regional governments and organizations

Mike Jones, EY’s ( EY ) Middle East and North Africa ( MENA ) region government and public sector leader , said governments in the region should explore blockchain technology to improve internal and external processes.

He said:

“ As a distributed ledger, blockchain provides a secure, time-stamped platform to spread the benefits of government activities and services to more areas, including operational costs, contract enforcement, risk management, citizen experience and transparency of government activities. ”

Jones said blockchain's uses could extend further, including helping governments collect taxes, transfer benefits, issue documents, record property, and ensure the integrity of product supply chains and government records.

He said that while using blockchain to assist public processes, regional governments also play a key role in adopting blockchain technology to promote better development of local economies, adding that regional governments should encourage early learning, develop a clear blockchain development plan and provide financial support.

" Government should act as a coordinator, creating regulatory frameworks, setting security and privacy standards, and building trust, " Jones said.

Blockchain Explained — Co-Founder Nic Carey ’s Perspective

Blockchain is a peer-to-peer network that allows multiple parties to transfer value in a secure and transparent way. This technology allows us to create a system where no one can taint, sabotage or control the system; trust between participants is no longer a necessary condition because the entire system is a trust mechanism; all participants have access to relevant information; and activities in the transparent system will be held accountable.

The transaction records on the blockchain are immutable, which means that once a transaction is written into the blockchain, it cannot be changed or deleted. In addition, the blockchain is maintained and verified by all users, so a central administrator is no longer needed. These features ensure the integrity of the system. With a few thousand lines of code, users can download an application on their mobile phones, and trading with others is as simple and effortless as sending an email.

In this regard, the Middle East is well-positioned to be a region for developing blockchain technology. According to Grant Niven , head of financial services consulting for the Middle East and North Africa at Wing On, the region has a mixed record of innovation in the financial sector, but the execution of a coordinated plan to leverage other technologies such as blockchain can ensure that the GCC and MENA " go beyond legacy payment infrastructure " and reap the rewards offered by digital and demographic dividends.

Niven said:

“ The best place to start is by building a flexible and strong regulatory infrastructure that leverages blockchain. Africa changed global thinking about the potential of mobile financial services. The United Arab Emirates and the wider Middle East can do the same with second-generation currencies and blockchain, given the right approach. ”

Carey suggested that improving some of the red tape in government and business could support economic development across the region. He said:

“ Intermediaries exist for a reason, and we no longer need them. Computer software and code can do the same thing without the waiting and bias issues. ”

“ I look forward to the profound impact blockchain technology will have on transparency and governance, leading to huge economic benefits for the countries that use it. ”