The world today is at the cusp of a technological boom. Among the technologies conceived by this boom, Blockchain technologies are one such revolution that offers myriad development opportunities.
It is ancient history when blockchain technology was merely used for minting cryptocurrencies such as bitcoin and Ethereum to name a few. There is also a misconception regarding blockchain – that since cryptocurrencies are banned so must be blockchain technologies. Minting cryptocurrencies happens to be one such attribute of blockchain – among several others.
Blockchain technologies are a “distributed ledger that connects a decentralized network on which users can send transactions and build applications without the need for a central authority or a server.” The transactions associated with this ledger are secured by the digital signature of the owner. This digital signature makes every transaction done through this ledger, authentic and tamper-proof.
The use of blockchain technologies is no longer limited to developed economies.
Africa and the rest of the world have shifted towards using blockchain technologies for boosting their socioeconomic growth in e-commerce and entrepreneurship. They can be used for many purposes as they remove intermediaries, reduce costs, provide rapid transactions, usher transparency, and enhance credibility.
Blockchain technologies have been heralded for their applications in banking and finance, real estate, supply chain, energy, healthcare, tourism, and education sector. According to the World Bank Group, the global average cost of sending $200 to low and middle-income countries is 6.9 per cent, which invariably reduces the remitted amount sent to the households. SDG 10(c) aims to reduce the cost of remittance to less than three per cent in 2030 as part of the SDG agenda.
Remittances contribute to about $21.84 billion of foreign exchange for Pakistan. From a macroeconomic stability standpoint, it has immense potential to be utilized. The volatile rupee, uncertainty, slow and expensive transfers, and inconveniences caused by banks and FATF requirements hinder the progression of foreign exchange reserves. Blockchain technologies are imminent for cross-border transactions. Pakistan adopted it in 2008 for cross-border remittances from Malaysia through Vaylou in partnership with Telenor Microfinance Bank for combating terror financing and money laundering. The use of blockchain technology has been lauded by the OECD and many higher-ranking officials of Pakistan as a “step towards financial inclusion and technological transformation”.
The real estate sector of Pakistan has been marred with discrepancies related to the lack of information about potential buyers and sellers, and accurate market prices. Blockchain operates on a secure and decentralized system, and can be used to facilitate monetary transactions, and manage clients’ profiles, and property details. Keeping records of transaction history and clients’ profiles can help settle ownership disputes and the emergence of Ponzi schemes that are quite prevalent in the real-estate sector of Pakistan.
In the health sector, it has proven to be helpful in the database management of patients and medical staff, patients’ personal information, health history, and data related to their test results. It can store humongous amounts of data making storage of data easier to access and share while maintaining secrecy.
In the government sector, its application ranges from health insurance to welfare programs. Blockchain technologies are noteworthy in fraud detection and prevention, data verification, and storage for streamlining associated activities and addressing the problem of financial inclusion. The usefulness of blockchain technologies in storing and recording data cannot be stressed enough. They can be used as a tool to combat corruption or malpractices.
Pakistan has a rather astounding history of burning or tarnishing records especially when it comes to mega-development projects. Blockchain offers a cost-effective, traceable, end-to-end encrypted, and hack-proof solution to this problem. Similarly, the Sindh police department has recently adopted a blockchain-based Resource Management System for managing inventory and inventory distribution of police warehouses across the whole province for automating transactions.
Electoral voting in Pakistan always becomes a casket of controversies related to voter fraud such as fake voting, double counting, and counting errors. Blockchain technology offers traceable and automated blockchain-based voting applications accessible through mobile phones to ensure transparency in elections.
The energy crisis in Pakistan has perturbed industrial growth and development in Pakistan. Blockchain technologies are potentially useful in rural electrification through renewable energy methods such as solar, wind, biogas, and microturbines. The decentralization of renewable energy has led to the use of smart grids. However, the real challenge lies in the regulation and monetization of microgrids which makes people reluctant to buy or sell microgrids and use them for energy generation. Blockchain technologies possess a plethora of user-friendly energy-based applications. It can maintain records of peer-to-peer energy transfers and regulate the consumption of energy on microgrids. Globally, blockchain technologies are also being adopted in the agriculture and tourism sector.
With the evolution of blockchain technologies in Pakistan, many ventures in Pakistan such as Info grains, SoluLab, Softtik Technologies, Genesis Lab, and Relymer are committed to offering solutions based on Blockchain technologies. The Pakistan Blockchain Institute (PBI) is also offering educational, research, and consultation services about blockchain in Pakistan.
Pakistan is still in its infancy to adopt blockchain technologies and its true potential is yet to be realized. Fairly recently, the president of Pakistan spoke about the need for the adoption of blockchain technology and expressed his concern regarding problems associated with data silos in the regulatory functions of the government during a meeting with the president of the BSV blockchain association, Jimmy Nguyen. It was suggested to give training to government officials including ministers and employees and to put a ‘National Blockchain Strategy’ in place for Pakistan.
To make an efficient policy-induced ‘National Blockchain strategy’ –at both the government and sectoral levels – the government needs to engage policymakers, blockchain experts, and public-private stakeholders. The Global Blockchain Policy Centre established by the OECD in 2019 can be used as a reference point for policymakers and governments on blockchain and other Distributed Ledger Technologies (DLT).
The main objective of this centre is to help governments to address the challenges associated with the blockchain and DLT (Distributed Ledger Technologies) to harness the opportunities it offers – across sectors – for achieving policy objectives. Therefore, Pakistan needs to move towards context-specific and policy-induced adoption of blockchain technologies, not only to initiate dialogue and discussions but also to devise solutions to reap the benefits of blockchain technologies for economic development.Maria Ali, "Block chain for Pakistan," The News. 2022-10-27.
Keywords: Economics , Economic growth , Economic stability , Monetary transactions , Cryptocurrencies , Pakistan , BSV , DLT , OECD