The "Why Blockchain" Question in MENA

Posted 2021-04-29 孔穴来疯

Blockchain conferences are so rampant in Dubai that one can hop around one to another on a daily basis. Even for non-blockchain related conferences, there has to be one speaker who talks about blockchain, and undoubtedly, that session gets the most attraction.

Yet, every conference tends to have similar topics, similar set of speakers, and sometimes the same crowd networking with each other, again.

The blockchain buzz is not unique to Dubai, but MENA region as a whole. Blinded by the conference glory, one can easily get lost and forget the most fundamental question that everyone has to ask (and be able to answer): why (on earth) blockchain?

This article is an effort to answer the above question by summarizing my thoughts and observation. The article assumes that reader has basic knowledge of blockchain technology.

Govtech as the foundation

Dubai pioneers Blockchain adoption in the region, if not in the world, by announcing its plan to become paperless by 2020. Though it may seems self-contradictory that a central government is determined to adopt a decentralized technology, Dubai has provided the best answer to the question of “why blockchain”: Blockchain is used as a way to better govern, regulate, and service its citizens

Most government entities around the world have disconnected systems that functions in silos. To get one’s driver’s license, one might have to visit multiple departments, before realizing that sh/e has to wait for multiple weeks to get the final paperwork done because the person in charge is out on holiday. Such legacy system causes headaches to governments because they suffer from extensive paperwork, and risk to fraud.

Blockchain and its distributed ledger system is here to connect all fragmented system, and hence provide transparent & singleton view of citizen’s identity, data, needs & wants.

The why blockchain question can be particularly addressed by the “paperless” strategy because by solving paper issue, government and citizens alike could streamline complicated service process, perform less manual work, make fewer errors, and ultimately make use of their time to do something more creative and productive.

Why is Govtech important? Government might be the only institution that interacts with all players in a nation state: from enterprise, to SME, to citizens, to NGO, and to external government entities. It serves as an irreplaceable core of a society’s functioning.

If government could transform itself with blockchain, it can invite the rest of the societal players to join the ecosystem. A simple example is tax. Everyone pays tax. If taxation is on the chain, wouldn’t it be the first step to elevate a society to more transparent and fair governance?

Hence, govtechs could be the catalyst for society’s blockchain adoption

Other than Dubai, other nation state has also accelerated blockchain adoption. Saudi Arabia, in the light of its Vision 2030, is another avid conference - organizer. It has even announced to launch a digital currency that could be used for transactions between the region’s banks. Though follow up after the announcement has been scarce, it is still pleasing to see that such ideation has been in the cooking.

Regional Characteristics

MENA is a unique region due to its history and cultural background.One prominent characteristic is the rule of Sharia - Islamic law that governs many governmental entities and society in general.

Digression: Sharia, a body of moral and religious law derived from Islamic, as opposed to human legislation. The law is practiced among Muslims and covers all spheres of one’s life ranging from diet, prayer, marriage, politics, trade regulations, and of course economics activities such as banking.

Islamic Financing is the most Sharia-compliant industry. Compared to non-sharia financing, It prohibited any form of interest-bearing products. In this case, financial institutes have designed products such as Sukuk (the Arabic name for financial certificates) in which Sukuk owners will be given partial ownership of a property built by the investment company and collect profits as a form of rent.

Question is: how do you prove which sukuk certificates are being back by which assets, and whether profits gained are truthfully from the assets?

Blockchain solves the problem. Assets can be tokenized and issued as Sukuk certificates, stored securely on the chain. Profits gained from the assets can then be directly distributed to sukuk owners. Hence, blockchain grants Islamic financing a much-needed layer of transparency.

This layer of transparency, unexpectedly, is essential for traditional financial products as well. Hence, MENA blockchain innovation should not limit itself to regional use case, but expand its horizon to use case that can go viral globally.

Conclusion:

Fancy titles, packed audiences, and busy agenda.

Each blockchain conference is intense in its own way. Some argues that the buzz is essential to spread awareness, others condemn it in fear that the public might be misled to more speculative view of the technology

In my view, that aha moments when you don’t need to fill out paperwork to get your car registered will come once quality products are being adopted by governments, enterprises and individuals alike. More importantly, the product has to answer the essential question of “why blockchain” in order for it to last.

With the government spearheading, MENA could become the hub of blockchain innovation to the world.

作者简介：Shuyao (孔姝尧 ) @ConsenSys                  

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