Think of a large company with a data center operating about 20,000 computers that stores and maintains the database of the company. Assume the computers are kept in a large, secure compartment, and the company has complete control over the data and information saved on each computer, which they can access and use for business purposes.
Great, right? But here lies the problem with this style of data storage and control. What happens if the power supply in that location shuts down? What if the building is burnt down? What if an intruder tampers with any of the computers? What happens if there is a fire outbreak? In any of these circumstances, the data is lost or corrupted. What if there is a way out – an alternative that ensures that not all is lost after all?
Blockchain presents a solution that offers a new way of data handling. What it does is that it spreads out the data contained in a database across an extensive network of computers at various locations. The data lost or altered in one node (computer) at a particular location can easily be retrieved and detected since the other nodes will cross-reference and quickly pinpoint the exact node with the problem. This way, maximum security and fidelity of data are maintained.
Blockchain in a Nutshell
Blockchain is a kind of distributed ledger technology dispersed across multiple nodes at different locations to ensure the security and decentralization of data. This innovation fosters trust in data transactions without a trusted third party.
A blockchain structures its data into a framework of block codes. Here, information is collected together in groups called blocks. These blocks have a storage capacity with a storage space that can get filled up. Once a block is filled, it is connected to a previously filled block to create an incorruptible and encrypted chain of data known as the blockchain.
Benefits of the Blockchain Technology
Blockchain and its core characteristic of decentralization and as a tool for crowding out third parties and intermediaries offer the following benefits:
Unlike banks and government agencies with centralized nature of control, the transactions in the blockchain do not sit on a single server. Entries and transactions are distributed across a network of computers.
It implies that original versions are shared and stored in multiple locations simultaneously. Participating entities can easily access the information and transactions stored in blockchain, thus preserving transparency.
Due to the structure of blockchain, information written, distributed, and confirmed by participating entities is essentially immutable. New information is saved in cross-referencing blocks that can only be added in the add-only chain. It is impossible to manipulate previously stored data as the other nodes will pin any attempt to alter it. Blockchain maintains high data integrity, availability, and accessibility unless all the nodes are affected.
Blockchain security is attained, and trust is generated due to its decentralized framework. To succeed in altering blockchain, a hacker must ensure their new data aligns with over 50 % of the nodes.
Because data availability is not dependent on a single server, blockchain will continue to function even if individual nodes or participants withdraw from the network.
Participating entities can be rewarded economically for processing and validating transactions. The incentive is part of blockchain’s consensus mechanism to foster trust and encourage positive behavior among participants.
Blockchain in Africa
Despite the emergence of the blockchain ecosystem in the African continent and various countries oscillating between adoption and skepticism, blockchain has made significant progress in providing financial solutions across countries.
The blockchain utility has proven to be extremely useful in the African financial sector for the following reasons:
- Africa has the fastest-growing population.
- Africa has the highest percentage of unbanked and
- Underbanked people.
- Africa has the highest proportion of microbusinesses.
The reasons above contributed to why Africa became early adopters of mobile money, with over half of the global mobile money service operators located in Sub-Saharan Africa.
Africans are now actively exploring and implementing blockchain-based financial services to predict and invest with cryptocurrencies such as Bitcoin. Others are using it in reducing the cost of remittance payments, profit from community currencies, or community-related lending solutions.
According to reports, more than one-third of the Africa-based projects documented in the PositiveBlockchain.io database were invested in this sector.
Leveraging Opportunities in Blockchain
Blockchain is rapidly gaining popularity in different sectors in Africa, including the financial, logistics, legal, real estate, and healthcare sectors.
- Banking and Finance
By integrating blockchain technology into financial institutions, bank transactions and payments can process quicker with reduced charges regardless of the time of the day or week.
The established decentralized ledger technology will provide the opportunity of exchanging funds and sharing information between financial institutions in a manner that is easy, secure, and quick.
Healthcare providers’ data sharing and collaboration can be significantly hindered by compromised patients’ information, data error, lost record, and other types of fraud.
Blockchain technology ensures healthcare providers share access to their networks without compromising data integrity and security, thus, allowing maximum fidelity in data documentation and transfer among health fields. These documentations can be used for further research, ensure accurate diagnosis, effective treatment, and cost-effective care.
- Education sector
Since verification of academic credentials in universities, secondary and primary education is mainly done through the manual process, falsifying educational credentials is unavoidable.
Utilizing Blockchain technology could make the verification process easy and universally recognized, thereby reducing forgery or fraudulent claims of unmerited education credentials.
- Food industry
Blockchain technology can eliminate the hassle of product mislabeling, food recalls, authenticity, and confusion on the source of food-associated problems.
Blockchain provides a way to monitor the food supply chain from farm to the user. It promotes food safety by verifying the source of food material and tracing the origin of food contamination.
Blockchain technology in cryptocurrency offers people with unstable currency and financial infrastructures a far more stable currency.
With more functionalities and a more extensive network of individuals and institutions, they can run local and international businesses. In place of a central authority, blockchain leverages its decentralized data approach to reduce risk and minimize transaction duration and charges.
Blockchain is a dynamic field that follows the traditional method of accounting, be it digital or physical, where traders record diverse transactions on lists – also known as ledgers. While the ledgers are controlled by a central entity in a traditional setting, blockchain decentralizes control, ensuring that control is simultaneously given to multiple entities who share copies of the same ledger.
The blockchain pattern of control enables transparency, immutability among other benefits. Blockchain implements a sense of community and accountability, and when applied in Africa is capable of unleashing its potential. The technology will not only bring about cross-country harmonization but also will support economic and social development.
This is consistent with the continent’s vision of building a unified, progressive, and peaceful Africa. Blockchain technology has wide applicability in Africa, including healthcare, banking and finance, education, food, and cryptocurrencies. However, blockchain has some drawbacks, including a lack of scalability and insufficient privacy.
Blockchain technology also depends on functioning and reliable infrastructure like internet connectivity. For blockchain to thrive in Africa, internet development must be a core priority, as access to the internet and connectivity ensure the efficient running of the technology. An efficient regulatory framework will aid the adoption of blockchain in Africa.
By collaborating with stakeholders to better understand blockchain, policymakers will be able to govern the technology in a way that promotes innovation and exponential growth.