Blockchain is the latest buzzword being used among public and private sector companies. The technology is growing so fast that Middle East and Africa spending on blockchain will more than double to $80.8 million by the end of 2018 from a year earlier, according to US-based International Data Corporation (IDC).
We take a look at what this technology is all about.
What is blockchain?
Blockchain is a growing digital chain of transactions that are linked with each other using cryptography - a mechanism for secure communications - that creates an open ledger to record transactions in a fast and efficient manner. It is a database technology behind cryptocurrencies such as Bitcoin and can work as a real-time archive for recording the history of financial transactions, contracts, physical assets and supply-chain information.
There is no one person or entity in charge of the entire chain. It is an open network and everyone in the chain can see the details of each record. Every block is encrypted and can only be edited by its owner with a private key. If any change or edit is made the entire chain is updated in real time.
How does it work?
Each transaction is digitally encoded to certify its legitimacy and protect it. It ensures the digital security of transactions while reducing operational cost and speeding the decision-making process. The UAE plans to use blockchain for digital transactions, giving each customer a unique identification number that points to their information on the secure chain.
It is being adopted in a variety of commercial applications and it ensures that information and data on the blockchain cannot be hacked.
How does it help companies and governments?
Besides adding transparency, blockchain technology will help public and private sectors save time, effort and resources. It allows them to process their transactions at their preferred time from any place. Smart Dubai’s blockchain-powered Payment Reconciliation and Settlement System, which went live in October this year, allows transactions to be performed accurately and in real time, vastly increasing efficiency.
What is the UAE’s strategy on blockchain?
UAE unveiled the Emirates Blockchain Strategy 2021 in April this year. It aims to switch almost 50 per cent of government transactions into the blockchain platform in three years. By adopting blockchain, the UAE is expected to save 77 million work hours annually, Dh11 billion in transaction costs and regular document processing and 398 million printed documents a year.
The UAE plan includes four pillars focusing on citizen and resident happiness, government efficiency, advanced legislation, and global entrepreneurship.
The Dubai Government has its own blockchain strategy that aims to help the emirate become the first city fully powered by blockchain by 2020.