Economists have been exploring people’s behavior for thousands of years, how we make decisions, how we act individually, in groups, and how we exchange value. They have studied the institutions that facilitate our trade such as legal systems, corporations and marketplaces. There is now a new technological institution that will fundamentally change how we exchange value and it is called the Blockchain.
We are now entering a further and radical revolution. We can lower uncertainty not just with political and economic institutions, like our banks, our corporations, or our governments but we can do it with technology alone. So what is a blockchain and how can it be used in Botswana?
A blockchain is a form of technology that is a decentralized database that stores a registry of assets and transactions across a peer-to-peer network. It is a public registry of who owns what and who transacts what. The transactions are secured through cryptography. Over time, that transaction history gets locked in blocks of data that are then cryptographically linked and secured. This creates an immutable and forge-proof record of all of the transactions on this network. This record is then replicated on every computer that uses the network. It is not an app nor is it a company.
If I was to compare it to something I would say google docs or Wikipedia. We can see everything on Wikipedia, it is a composite view that is constantly changing and being updated. We can also track those changes over time on Wikipedia, and we can create our own Wiki’s because at their core they are just a data infrastructure. On Wikipedia, it is an open platform that stores words and images and the changes to that data over time. On the blockchain, you can think of it as an open infrastructure that stores many types of assets. It stores the history of custodianship, ownership, and location for assets like the digital currency bitcoin and other digital assets like a title of ownership of IP. Of course, there are other technical details to the blockchain but at its core, that is how it works.
Blockchain lowers uncertainties and uncertainties can take place in three forms in every transaction; Not knowing who we are dealing with, not having visibility into transactions, and not having recourse if things go wrong. Blockchain allows for us to create an open global platform on which any attestation about any individual from any source can be stored. This allows us to create a user-controlled portable identity more than a profile. It means you can selectively reveal the different attributes about you that help facilitate trade or interaction. An example could be a government-issued ID or that you are over 21, by revealing the cryptographic proof that these details exist and are signed off on. Having this portable identity around the physical world and the digital world means we can do all kinds of human trade in a brand-new way. Therefore blockchain can help with identity management.
The second uncertainty that we often face is just not having transparency in our interactions. As a person, you always want to ensure that the same goods that you saw are the same ones that arrive in the mail and that there is some record of how it got to me. This is true for not just electronics but many goods and data, things like medicine, luxury goods, or any data or product that we do not want tampered with. Using the blockchain we can create a shared reality across all non-trusting entities. By this I mean all of the nodes in the network do not need to know each other or trust each other because they each can monitor and validate the chain for themselves. Think back to Wikipedia, even though it has multiple readers and writers it has one single truth. So we can create that using blockchain. We can create a decentralized database that has the same efficiency as a monopoly without actually creating a central authority. So all of these vendors and companies can interact using the same database without trusting one another.
It means for consumers we can have a lot more transparency as a real-world object travels along we can see its digital certificate or token move on the blockchain adding value as it goes. This is a whole new world in terms of our visibility.
The last uncertainty we often face is one of the most open-ended and its reneging. What if you do not deliver? will I get my money back? Blockchains allow us to write code binding contracts between individuals and guarantee that those contracts will bear out without a third-party enforcer. This is one of the most exciting ways that blockchain lowers our uncertainties because it means to some degree we can collapse institutions and their enforcement. This means that a lot of human activity can get collateralized and automated. This will push a lot of human intervention to the edges the places where information moves from the real world to the blockchain. Therefore the one thing that keeps the blockchain secure and verified is our mutual distrust.
Blockchain is slowly becoming popular across the world especially in the tech and finance space because of its ability to function without a central authority and also store data in a tamper-proof way. My belief is that it would also be beneficial to a variety of industries in Botswana other than tech and finance, particularly those that are prone to fraud, ones with a huge trail of paper records, and outdated legacy technology. These could include; Healthcare, real estate, supply chain, and others.
Blockchain possibilities in the healthcare environment are endless as there are number of possible use cases. It can be used to manage electronic medical record data, protect healthcare data and track disease and outbreaks across the country. The use of blockchain can help health care providers and researchers develop groundbreaking drugs and therapies based on people’s genomic profiles.
The government can also benefit from the use of blockchain in several ways including voting applications and personal identification security. Blockchains can not be forged and nor can the data within them be manipulated. They can hold digital IDs, certificates of any kind, even passports on their immutable ledger. This data can be accessed and viewed at any time in a completely transparent manner, which will bolster international travel. Similarly, voting on-chain in a truly decentralized and transparent manner eliminates the middleman and any question of voting manipulation or fraud.
Blockchain is a good fit in the supply and chain management industry. There is a lot of uncertainty and risks. Will I get my goods? Blockchain-driven innovations in the supply chain will have the potential to deliver tremendous business value by increasing supply chain transparency, reducing risk, and improving efficiency and overall supply chain management. A blockchain supply chain can help participants record price, date, location, quality, certification, and other relevant information to manage the supply chain more effectively. The availability of this information within the blockchain can increase traceability of material supply chain, lower losses from the counterfeit and gray market, improve visibility and compliance over outsourced contract manufacturing, and potentially enhance an organization’s position as a leader in responsible manufacturing.
Real estate can also benefit from the use of blockchain as well. Real estate transactions are often conducted offline involving face-to-face engagements with various entities. Although these still work the introduction of blockchain could eliminate the need for a middle man in transactions, improve trust among transactors, act as a record-keeper, speed up all contracts, leases and transactions, improve liquidity, reduce fraud, and reduce costs and fees. It would allow parties to a deal who generally do not know each other, to trust that the seller actually has true ownership of that property and see without any question or any doubt that there are not any claims against the title of that property.
So instead of all our uncertainties slowing us down and requiring institutions like banks governments or corporations we can use it to collaborate and exchange faster and openly. This technology is at its infancy stage so we still have to carry out a lot of experiments some of which will fail. But there are tons of people working on this from financial institutions to technology companies, start-ups, and universities around the world and Botswana can tap into this as well. And one of the reasons is that it is not just an economic evolution. It is also an innovation in computer science. Blockchains give us the technological capability of creating a record of the human exchange of all kinds of digital and physical assets and even of our own personal attributes in a totally new way. So in some ways, blockchains have become a technological institution that has a lot of benefits of the traditional institutions that we are used to using in society but it does this in a decentralized way. So I think we need to start preparing ourselves because we are about to face a world where distributed autonomous institutions have quite a significant role in different industries including real estate.