Blockchain is the technology behind Bitcoin and many other cryptocurrencies. It is essentially a distributed ledger database for recording transactions, referred to as blocks.
But what really is blockchain. Most of us know it as “that hot topic”, “Bitcoin”, “that thing we should have bought in 2013,” we’ve heard of it, but we don’t really understand the minor details of it.
Blockchain technology enables users to share their ledger of transactions. The record of events gets distributed to all participants in a given network, who in turn use their computers to validate the transactions; as a result, terminating the need to have a third party intermediary such as a bank or central clearing center. Blockchain records can only be updated by consensus of a majority of the participants in the system and, once entered, information can never be erased – providing a detailed audit trail of all associated events.
Bitcoin was just one of the earliest to use blockchain technology, and has gained notoriety in the recent past, being valued at a peak of $20,000 before spiraling into free fall later in February. It however blockchain is more than just Bitcoin. It has gained a lot of traction especially amongst financial institutions, technology providers and other private as well as government bodies, who are exploring the potential of Blockchain for use in areas such as payments, settlements, capital markets, trade finance, smart contracts, digitization, identity management, and record keeping.
Blockchain is rapidly becoming popular particularly because of the absence of intermediaries, reduced transaction costs, reduced risk of corruption, certainty of all participants, the data is in real time, immutable records which discourages corruption, amongst many others. In summary it provides a faster and more transparent mode of trading; on top of this all it transcends geographical borders and time zones.
As in many other fields in technology, Africa is grabbing the reigns and leapfrogging its way into the digital age. Blockchain is one of these fields. A few cryptocurrencies have cropped up from the continent and though some of them are scams like Kenya’s Nurucoin, crypto currencies will still remain the future of transactions.
The future seems bright and rosy but it is not without a few barriers to the success of blockchain in Africa. The benefits are certainly apparent, however the bulk of the African population is still very new to such technologies. It may take a good long while to get people to warm up to it.
Besides this, the technology is also meeting its fair share of resistance in the financial front with industry regulators expressing their fears over issues such as money laundering and theft by online fraudsters. Central Bank Governor Patrick Njoroge has on occasion bashed digital currencies siting that bitcoin operations are conducted in shady unregulated regimes that make people prey to cyber fraudsters.
