We see the term bandied about all the time these days, but blockchain remains an elusive concept to many – even those with a keen eye on blockchain-centric technologies such as the famous cryptocurrency Bitcoin.
Essentially, blockchain is simply a collection of ‘blocks’ (or records) that is constantly growing and are all linked together using cryptography. Each block is uniquely individualized by its own cryptographic hash of the previous block, as well as a specific timestamp and any relevant transactional data.
Because it’s an open and distributed ledger, blockchain is highly secure and unable to have its data modified. That’s why it’s the ideal solution for highly sensitive tasks such as recording and verifying transactions between two parties – such as a currency exchange.
What this all boils down to is that blockchain is merely a way to pass information from A to B – a complex process, absolutely. But it carries no transaction cost (although there is an infrastructure cost) and each transaction is verified by potentially millions of computers around the world. This makes it virtually impossible to falsify every record in a single chain, making it arguably the most secure way to transact – especially sensitive and financial data – between two parties.
While some regions have been cautious about adopting blockchain in any real quantity across industries, the UAE has undoubtedly positioned itself as the market leader when it comes to blockchain usage in the Middle East. So much so that the country has ambitions to “complete 50% of government transactions at the federal level using blockchain by 2021,” according to CryptoGlobe.
While it’s taken several years for other countries in the region to wake up to the potential of blockchain, they too are beginning to utilize blockchain across a range of applications, including public services, security, commercial payment systems and even humanitarian aid. This is an intelligent move for blockchain in the Middle East, as PwC predicts that by 2030, around 10% to 20% of the global economic infrastructure will be running on blockchain-based systems.
Those who fail to adapt to this ubiquitous peer-to-peer transactional model could well be left in the dust.
That’s not to say there aren’t inherent risks for businesses looking to adopt the blockchain model. The most notable is that because blockchain is a P2P model, there’s no need for a central intermediary. This potentially exposes the transferring parties to new risks that were previously managed by that intermediary.
Another relates to endpoints, which is where the blockchain meets humans, so there will always be the potential for vulnerabilities when human error is a variable in the equation. Despite these concerns, many believe blockchain’s capabilities – and particularly its security strengths – far outweigh any minor problems that may never eventuate.
When thinking about blockchain in business and how to best utilize it for organizational success, it’s important to reflect on how other industries are using the technology. Because while cryptocurrency in the Middle East is still in the burgeoning stages of acceptance – with Bitcoin becoming the first crypto in the region to be regulated (in Bahrain) just this year – there’s far more to blockchain than what the media shows us, especially for businesses.
For savvy business leaders in the Middle East, there are two key markets for blockchain that can not only elevate the enterprise as a tech-forward market leader, but also protect its assets far better than any traditional security measure.
As with any new technology, it’s vital that organizations assess its capabilities before pouring valuable investment funds into in-house integration. But when it comes to blockchain, its wild successes in recent years more than prove it’s a productive, innovative and overall secure asset that can be used to streamline processes and protect sensitive business data