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Blockchain is gathering momentum in the Middle East, as banks and government agencies in the region overcome their initial suspicions and embark on projects using the technology.
Pooja Chokshi, head of strategy and partnerships at Blockchain, said there was a general consensus that blockchain technology will reengineer the way value is exchanged. “We see banks and governments investing in pilot projects that will allow them to harness the privacy, transparency, efficiency and security this technology offers. This is what we expect to happen in the Middle East.”
In October 2016, for instance, Dubai-headquartered bank Emirates NBD announced it has partnered with EdgeVerve to run a blockchain pilot network in conjunction with Indian-based bank ICICI.
But despite this progress, blockchain remains in its formative years and will “require further development to be truly scalable,” said Chokshi. “We will need investments to develop additional consumer-friendly applications.”
“We hope to help educate businesses and the government in the region about the technology and, if it makes sense, work with them on blockchain pilots in the region that prove its transformative power,” she said.
Chokshi said it’s time money caught up. “Bitcoin is the first implementation of a digital asset and is the only blockchain protocol in widespread use. It allows users to transact directly without any third-party intermediary.”
Dubai is certainly one country in the region pioneering the technology. The Smart Dubai Office, for example, has signed a memorandum of understanding with Avanza to implement a citywide blockchain-based payments platform.
Avanza’s Cipher platform will be used to create a blockchain payment system for Dubai government, and it is set to go beyond that, with Smart Dubai Office planning to roll it out across all its existing 38 partner government entities, partner financial institutions and government departments to set up the first blockchain-based building block for its financial transactions.
The platform will enable each of these entities to process instant payments and reconciliations across the Cipher network, to create a streamlined process for more efficient service.
Blockchain explained – in the words of co-founder Nic Carey
Blockchain is a peer-to-peer network that allows multiple parties to transfer value in a secure and transparent way. The technology allows us to create a system in which: no one can corrupt, sabotage or control the system; trust between participants is not necessary because it is embedded in the system itself; access to all relevant information is available to participants; and activity in the system is held to account through transparency.
The record of transactions on a blockchain is immutable, which means once a transaction is added, it cannot be altered or deleted. Moreover, the blockchain is maintained and validated by everyone who uses it, thus eliminating the need to trust a single central administrator. These features guarantee the integrity of the system. With a few thousand lines of code, users can download apps on their phones that allow them to effortlessly make transactions with anyone else – as easily as sending an email.
Meanwhile, in compliance with the Abu Dhabi Economic Vision 2030, Abu Dhabi Securities Exchange (ADX) said it is deploying blockchain technology as part of the innovation culture adopted in the emirate.
Rashed Al Blooshi, chief executive, Abu Dhabi Securities Exchange, said Blockchain is the most innovative technology in digital transactions. “It represents the second generation of the internet and has enabled ADX to join the elites of the top 10% of institutions globally who have already taken steps in adopting this technology,” said Al Blooshi.
He noted that Blockchain enables financial transactions between two participants in a safe, trusted and irreversible way, without relying on a third party, which in turn entails cost reduction and an increment in the transparency and efficiency of those transactions.
“Adopting blockchain technology in our projects comes in alignment with the digital transformation of Abu Dhabi’s government services as we constantly strive to introduce new ways that ease the process of doing business in the emirate,” he said.
Back in Dubai, with the launch of the Future Foundation initiative, the emirate has committed to putting all its documents on blockchain’s shared open database system by 2020. Dubai also recently founded the Global Blockchain Council, a public-private initiative that brings together government teams, local businesses and international startups to foster the technology’s development in the real world.