Economic backwardness is associated with poverty and a lack of access to the formal economy. Blockchain can help solve this problem. According to Kevin Werbach, developing countries such as India, Kenya, and others in East Africa are discovering more blockchain applications.
They are implementing decentralized block technology that promises a secure, peer-to-peer mechanism for verifying information. Blockchain is finding innovative applications in banking and financial services, supply chains, agriculture, and managing land title records in emerging economies.
Blockchain Technology in a Nutshell
Blockchain technology is an advanced database mechanism that allows for the open exchange of information within a business network. The blockchain database stores data in blocks linked together in a chain.
Among other features:
- Blockchain cloud services make it easy to collect, integrate and share transaction data from multiple sources.
- The data is broken down into standard blocks linked to each other using unique identifiers in the form of cryptographic hash functions.
- Blockchain provides data integrity with a single trusted information source, eliminating data duplication and increasing data security.
- In the blockchain system, fraud and data manipulation are impossible since you can only change them with the permission of the quorum of the parties.
- You can exchange the blockchain registry but not change it.
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Development Potential of Emerging Economies
People are actively discussing blockchain as it develops gradually, and several countries and companies have adopted an approachable and upbeat perspective on progress. The advancement of blockchain technology is accelerating, although the majority of interest and funding keep an eye on Western industrialized nations like the United Kingdom, Switzerland, Malta, and most of the European Union’s member states.
Technology has also brought a fresh wave of change to these nations. However, emerging nations, such as those in East Asia, the Middle East, Africa, and the South American continent, may not offer ideal circumstances for the development of blockchain technology due to their low economic growth and inadequate infrastructure.
Because of this, blockchain technology will provide developing nations with concentrated areas with significant economic reform and progress prospects. Its use in developing countries is virtually endless, enabling them to advance their development more quickly.
According to the Managing Director of the International Monetary Fund (IMF), Christine Lagarde, blockchain can help financial markets function more efficiently. In developing countries, it will ensure respect for property rights, increase market confidence and promote investment.
How Blockchain Can Help Developing Countries
People can use blockchain technology in any industry that creates and uses databases, including the banking and financial industries, registries that include information about people’s identities and assets, and the recording of property rights.
The so-called “financial inclusion” of developing nations’ populations—i.e., the development, distribution, and upkeep of infrastructure enabling their citizens to access micropayments—is the most prominent area of potential blockchain application.
Financial inclusion would encourage trade, small businesses, and cash flow in the nation’s economy.
The Security of the State System Will Be Significantly Improved
In emerging regions, the infrastructure is not well-built, there is a lack of fundamental information security, and there is a high level of government corruption.
The information provided by subordinate government agencies to the relevant departments is consistently faulty in nations like the Congo, Guinea, and other African countries.
One kind of centralized processing is the ability to call any information from subordinate units. Hackers can readily exploit the information system in such circumstances. Therefore, all stored data might be lost, damaged, or even destroyed due to malicious interference.
The entire system’s security may be considerably improved thanks to blockchain technology. Each location will disseminate and keep all government data. Each department maintains a shared ledger that is encrypted using a hashing method. You cannot make up information. The system will still function normally even if a hacker can access one of the nodes and steal some data.
Blockchain Will Help Increase the Level of Automation
Many developing nations still rely on manual labor and paper-based processes to complete tasks instead of taking advantage of the ease and speed that computers and the Internet have brought about because of underdeveloped science and technology.
For instance, most are based on paper records in distant mountainous regions and harsh settings in nations like Africa.
You may put your company’s licensing information in a block in advance using blockchain technology. You may look at the links in the blockchain to demonstrate them to others. The paper is already in the block, so there is no need to search for it. There is no way to alter the data in the chain. It significantly reduces the need for labor, cuts down on material and financial resources, raises the level of automation, and gradually makes it easier for emerging nations to switch from the workforce to computers and the Internet.
Up-To-Date Situation: Specific Cases
Situations on the example of countries:
- In India, to integrate blockchain into a land title project, a blockchain software business, ConsenSys Ventures, has been collaborating with the National Transformation Institute of India (NITI Aayog) to improve land registration.
- In Kenya, to offer microcredit to suppliers, IBM has teamed up with Twiga Foods, an African B2B logistics network of booths and grocery shops. These loans were designed to assist retailers in purchasing and managing additional goods.
- In Nigeria, to clean up the river belt, the Niger River’s toxic levels have been monitored using blockchain technology.
These are examples of countries that continue incorporating blockchain technology into their economies.
Emerging economies, such as India, have taken it upon themselves to adopt innovations enabling them to catch up to other countries. The use of blockchain technology is one of them. It is leading the path for future development, which is why growing companies place so much emphasis on it.
It’s vital to examine the market’s current difficulties to comprehend how blockchain might benefit emerging markets. Unable, unreliable, and non-verified market data is one of emerging markets’ main issues.
Another frequent issue is that most transactions in developing economies still depend on the actual currency exchange. It is time for rising markets to look at new avenues for growth and technological innovations that can assist them in resolving all of these issues.