By CPA Peter Kibet Kitur
Unleashing The Potential
Blockchain technology has emerged as a revolutionary concept in the world of digital transactions. It refers to a specific form of distributed ledger architecture, which stores transactions in a list of blocks, which are linked cryptographically. It was first introduced in the design and development of cryptocurrency, Bitcoin in 2009 by Satoshi Nakamoto. It is a shared ledger of transactions between parties in a network, not controlled by a single central authority.
It is a form of distributed database of records or public ledger of all transactions or digital events that
have been executed and shared among participating parties. Each transaction in the public ledger is verified by consensus of a majority of the participants in the system and once entered, information
can never be erased. A ledger can be equated to a record book; it records and stores all transactions between users in chronological order.
Instead of one authority controlling this ledger, an identical copy of the ledger is held by all users on the network, called nodes. It’s a new aspect of data handling. Blockchain contains a certain and verifiable
record of every single transaction ever made. Bitcoin, a digital currency, uses blockchain technology. Blockchain can be used in both Permissioned and Permissionless models and is applicable in education, governance, finance & banking, healthcare, logistics, cyber security, media, legal, power sector among
others.
Blockchain can be set up either in Public / Permissionless or Private / Permissioned configurations. This article explores the key features of blockchain, its applications in various sectors, and the global adoption of this transformative technology. In E-Courts, data from multiple entities such as police, judiciary, legal
department, is stored in a coordinated manner. When applied in healthcare domain, the technology allows patient health records to be stored in tamperproof manner on national level Blockchain.
Role based and privacy enabled access can be given to patient data stored on Blockchain. Doctors
of any hospital across network, like a county or a country, can access patient history when a patient visits any hospital in the network. Shared Blockchain infrastructure avoids duplication of asset data and maintains transaction history on assets in a consistent manner. For government data management, usage of Blockchain technology ensures vigilance, transparency and possibly avoids insider attacks on the crucial data related to governance matters.
The main concern of government data management is trust and accountability which are very well
supported by the Blockchain technology. Blockchain technology and cryptocurrencies have become popular throughout the world. The awareness and adoption of Blockchain technology are growing fast. Many countries have recognized the potential of Blockchain technology and are trying to become the
global pioneers.
Features of Blockchain technology
(i) Distributed
Blockchain is a distributed ledger, meaning that the database is maintained and held by all nodes in the network. No central authority holds or updates the ledger, rather each node independently constructs its own record by processing every block, deciding if it is valid, then voting via the consensus mechanism on
their conclusions.
Once a change in the record is agreed, each node updates its own ledger. This is not comparable with traditional databases which are stored and maintained centrally making them
susceptible to hackers and criminals.
(i) Immutable
Once a transaction is added to a blockchain ledger, it cannot be undone. This immutability is one of
the principal aspects that contribute to the trustworthiness of blockchain
transactions.
(i) Agreed by consensus
No block can be added to the ledger without approval from specified nodes in the network. Rules regarding how this consent is collected are called consensus mechanisms.
Limitations of blockchain technology
Scalability: Currently, there is a limited number of transactions that can be nexecuted per time unit on most blockchains. Due to the size limitations of individual new blocks on the chain and the redundancy of linked previous blocks, the speed of processing transactions is very low. Scaling blockchain-based projects to industryscale is a key challenge that needs to be addressed or worked around.
Privacy: Most blockchains do not currently provide sufficient levels of privacy as required for government
and enterprise applications. While the major public blockchains reveal data and metadata publicly and permanently, many private and permissioned blockchains allow some form of privacy.
Interoperability: Working towards an increase in interoperability, achieving this as an industry-wide standard will require additional time.
Infrastructure: Blockchain-based system will rely on the existence of functioning and reliable infrastructure, including internet connectivity. In the absence of these, the technology will not work.
Data quality: Blockchain technology ensures data integrity and not data quality. The data stored on a blockchain is only as accurate as it was when entered. Especially as data cannot be retrospectively cha nged, high standards on data quality are required in theapplication of blockchain technology.
Integration: Blockchain systems can be difficult to integrate within existing system landscapes. It is thus necessary to include the integration with legacy systems into the technical design choices. Advances towards open, interoperable standards serve this goal.
Adoption of blockchain across the globe
Throughout the world, many countries have launched platforms and services using Blockchain technology and many vendors are offering Blockchain as a Service to the customers.
(i) China has planned Blockchain based identification system for smart city infrastructure. This system will assign a unique, global digital ID to Chinese smart cities, aiming to improve the connectivity and data sharing between these cities.
(ii) Kenya Government announced in October 2018 plans to deploy blockchain technology to manage government housing project of 500,000 units. The technology would create an efficient allocation of the houses to the deserving cases and would establish public trust in the manner of the allocation.
(iii) European Blockchain Partnership (EBP) aims to use Blockchain and distributed ledger technologies
to develop a trusted, secure and resilient European Blockchain Services Infrastructure (EBSI) to meet the highest standards in terms of interoperability, privacy, cyber security and regulation in applying policies.
(iv) Keyless Signature Infrastructure (KSI) is a kind of Blockchain designed in Estonia. This technology is used in Estonian government to prove the authenticity of the electronic records. They have also implemented X-Road enabling different organization to exchange information securely.
(v) United Arab Emirates has Smart Dubai initiative enhancing everything from healthcare and
education to traffic management and environmental sustainability.
(vi) The Brazilian government is focusing on Ethereum platform for developing various
applications including voting.
(vii) Chile is using Ethereum platform to enable transparency in energy bgrid by tracking data and finances related to it.
(viii) Switzerland is offering digital IDs through Ethereum platform.
(ix) Canada is using Ethereum platform to bring transparency in the spending of government grants.
(x) The Monetary Authority of Singapore (MAS) is focusing on using Blockchain technology
in financial and technological domains. They are working towards designing a solution for securing healthcare data and also smart contracts are adopted by Insurance companies.
(xi) Zug, in Switzerland, is the first place in the world to accept Bitcoin payments for tax purposes. They have successfully developed Blockchain based voting system.
Conclusion
The global landscape is witnessing a growing momentum in the adoption and implementation of blockchain technology. To fully capitalize on the potential benefits offered by this technology, it is imperative for countries to develop comprehensive strategies at a national level. Globally, efforts are being made on adoption and implementation of Blockchain based applications. In order to reap the benefits of this technology, there is a need for a strategy on Blockchain technology in a country level.
And as technology continues to evolve with associated security threats such as hacking and cybercrimes, secured technological adoption is the only better option available to embrace new ways of doing things.
Blockchain technology promises to meet these definitions. Kenya should not be left behind in blockchain
technology adoption in Health care provision, general elections voting, energy, and fight against corruption, tax collection and administration among many other areas where the technology fits.
By harnessing the power of Blockchain, the country can position itself as a leader in embracing innovative solutions that drive progress and prosperity.
CPA Peter Kibet Kitur is a Tax consultant with Bon and Drew Associates. He also serves as ICPAK Central Rift Region’s Secretary and CPD Convenor and a member of ICPAK’s research and development committee.
Email: [email protected]
