Why Africa needs blockchain

Bitcoin may make headlines when its value crashes or climbs, but the blockchain technology behind the controversial cryptocurrency could help Africa overcome some of its biggest developmental challenges.

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Leishen Pillay, partner and Head of Technology, Media and Telecommunications at Hogan Lovells South Africa, says blockchain could present new ways to help overcome challenges which continue to stymy the continent’s growth, like corruption and a lack of infrastructure. The potential application of blockchain and other disruptive technologies within the African context was one of the key topics discussed at the 2nd annual Hogan Lovells Africa Forum, recently held in Johannesburg.

“Corruption and fraud are classic problems. Yet, people are still looking at them through the lens of how we have always tried to solve them in the past. We need to fully embrace the way technology can offer new solutions to these age-old problems,” says Pillay.

He says blockchain offers a new approach to combatting corruption because of its ability to create and store encrypted records which can be verified, but not altered or deleted.

“The best way to explain how blockchain works is to think of the Lego blocks you may have played with as a child. Blockchain uses an algorithm to layer datasets on top of each other just like you use different layers of Lego blocks to build a wall.  The higher you build a wall of Lego, the more difficult it becomes to remove any of the Lego blocks inside it – especially the ones lower down. In the same way, each layer of new data encrypted in a blockchain increases the integrity of the layers below it, so no single data set can be deleted or manipulated in any way.”

However, it is not just this layering process which ensures that data stored on a blockchain is so secure. Blockchain is also decentralised – which means it simultaneously stores data on a large number of computers instead of just one.

“Blockchain makes use of a distributed ledger. A traditional ledger – that is a book or piece of software used to record transactions – only stores transactions in one place. Blockchain stores each transaction on a network of millions of computers around the world, which makes it virtually unhackable,” explains Pillay.

He says these attributes make blockchain technology ideal for keeping records which need to be protected from fraud and corruption. Property deeds, identity documents, hospital records and vehicle registration documents can all be securely stored using blockchain technology.

“Imagine we could place public finances on a blockchain accounting system where each transaction is recorded and can be traced. This can greatly improve transparency through ensuring there is an inalienable record of every governmental transaction which can be used to verify that funds are spent appropriately.”

But Pillay says the possible applications for blockchain technology in Africa go far beyond the administrative sphere. For example, a combination of blockchain and the internet of things could be used to continuously monitor the temperature of vaccines in a cold chain.

“Certain vaccines need to be kept below a certain temperature until it is administered to a patient. A connected smart device can monitor the temperature of the vaccine and create a tamper-proof record if the cold chain is broken at any time. This removes any uncertainty around whether the vaccine can be administered safely.”

Another possible African application for blockchain is to assist in combatting the sale of counterfeit cigarettes.

“This problem is very prevalent in Africa and to curb it manufacturers are now exploring the idea of storing the serials numbers of batches of cigarettes on a blockchain so they cannot be altered in any way.  A store owner would then be able to scan the serial number on each batch of cigarettes he receives to confirm it against the blockchain and verify if it is a legal delivery from the manufacturer.”

The decentralised nature of blockchain also means that this technology can be implemented without the need for large infrastructure upgrades in Africa.

“Blockchain can be utilised in Africa even if the infrastructure needed to support it is not situated on the continent. All you need is a data-enabled mobile phone. A system can be built and housed anywhere in the world and still be accessed from Africa. Infrastructure does not need to provide the bridge that gives Africa access to these technologies anymore, your smart device can now become that bridge.”

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