The global blockchain technology market was valued at $316 million in 2015 and is expected to reach $20 billion by the end of 2024. The blockchain technology is disrupting several sectors of the financial services industry, including retail payments, capital markets, and trade finance.
Fintech startups in the MENA have raised over $100 million in funding in the last 10 years, and Wamda’s State of Fintech report indicates the number of startups launched and investments raised will more than double by 2020, which underlines the growing momentum of blockchain.
In a PwC study, while 56 percent of respondents recognized the importance of blockchain, 57 percent said they were unsure about this trend. This is mainly due to the lack of awareness about this topic.
A blockchain is a public ledger of all executed cryptocurrency transactions, that connects the Bitcoin network.
Wondering about the buzz around blockchain, Grant Niven, associate partner, technology and transformation advisory, at Ernst & Young (EY) told Wamda that blockchain allows people to know for certain what is happening in the digital world.
Blockchains are replacing the ‘middle-men’: Today, every interaction you have online relies on a central trusted authority, whether it’s your bank giving you your statement balance, sending a remittance, or your email service provider telling you your message was delivered. Blockchain is then seen as a mechanism to establish trust without the middle-man, which increases efficiency and reduces cost in our day-to-day activities.
Innovation can benchmark blockchain adoption: Being in its relative infancy, it is very difficult to benchmark blockchain mass adoption for a region with hard and fast statistics, as you would, for economic growth and stability measuring the Gross Domestic Product (GDP) for example. However, the most visible way to benchmark blockchain adoption and investment in the region is by looking at the various public and private sector institutions, their approach to innovation, and centers that specialize in blockchain technologies and their application. We’ve seen other global centers such as London, Singapore and New York excel at being hubs for Financial Technology (FinTech) startups and global banks investing in blockchain led business models to support the global financial services sector over the last three-four years.
Dubai is leading the way: The MENA region has been building momentum with various initiatives springing up across the GCC in particular to foster the innovation agenda and use blockchain across multiple industries, in particular governments. Dubai has been taking a lead setting up of The Global Blockchain Council in 2016 by the Dubai Future Foundation. This government initiative brings together the public and the private sectors to identify test cases for new blockchain business models and has led to a huge swell of investment in the blockchain domain. Similarly, Dubai’s smart government initiative aims to record all government transactions on the blockchain, an initiative that could amount to savings of over $1.5 billion in document processing and more than 25 million hours in lost productivity.
The region is following suit: Dubai’s ambition to harness blockchain has reinforced the ambition of the wider GCC to take similar steps, with countries such as KSA, Qatar, Kuwait and Bahrain all following a similar footing investing in innovation centers for both public and private sectors and a number of high profile blockchain proof of concepts are now under way. Corporations and governments further afield such as Egypt are also making bold moves.
Various sectors can benefit from it: With its roots in the financial services sector, there has been a dramatic shift in blockchain use across a variety of sectors in MENA. The Internet of Things is one of these sectors. As more devices come into play in people’s lives, keeping them secure becomes inherent. Blockchain provides a foundation for this by cost effective and time efficient means of devices communicating together. This applies to a multitude of sectors, including energy, transport and utilities. Another industry that can utilize blockchain is healthcare, especially in the medical tourism industry. Patients that travel across borders to have procedures done do not have a real way to share medical information with their family doctor. Blockchain could help standardize this procedure so that patients’ home doctors know how to more effectively continue care. Other sectors such as real estate are actively testing smart contracts as a mechanism to register land deeds on the blockchain.
Feature image via Pixabay.