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Blockchain’s Greatest Impact Will Be in Developing Countries, Says UPenn Lecturer
Thankfully, one of the industries which have harnessed the immense potential of blockchain technology is the energy sector. Blockchain solutions are now available to provide clean and affordable energy but also to make it easily accessible especially to people in underdeveloped nations. Blockchain technology can be utilized to trade clean energy with your neighbor without having to go through utility companies. This would effectively reduce the cost of energy and enable easier access to energy supply, since every building on the blockchain would be interconnected through a peer-to-peer network using an energy grid.
Blockchain startups that are leading the charge in providing underdeveloped countries with reliable and affordable energy include Sun Exchange and WePower. Sun Exchange gives its users the opportunity to earn bitcoins by providing energy to developing countries.
Through their platform, users can buy a fraction of a solar panel that will be installed in a school or hospital in Africa in exchange for a monthly lease rent. This would make electricity more affordable and accessible in communities where solar panels are installed, while allowing users owning solar cells to make a profit.
Naveen is the Founder and CEO of Allerin, a software solutions provider that delivers innovative and agile solutions that enable to automate, inspire and impress. He is a seasoned professional with more than 20 years of experience, with extensive experience in customizing open source products for cost optimizations of large scale IT deployment.
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Open Menu. Blockchain and Developing Countries. Leave your comments Post comment as a guest Name Required :. Submit Comment Agree to terms and condition. Ashley Stubbs. This is an exciting opportunity for developing countries to bridge the gap with developed nations.
Kelly Stockley. They will never outperform developed countries because they are always one step ahead of them. Cassie Bartlett. Danny Harrison. Share this article. While these uses are all of the incredible importance regarding simplifying our lives and increasing the efficiency of our business and personal experiences, they are hardly essentials. But there are some applications of blockchain in already developed, Western countries that can help society. Once such instance is in the healthcare sector.
Patients records can be stored on a blockchain, all in one place so that they can be viewed by any medical professional that needs to do so. This means that up to date eye, dental, blood, physical, and even psychological records can be kept in one place, thus eliminating the chance for error or a medical professional not having a clear view of the whole picture. One of the key benefits of it is that it is immune to fraud, tampering, and deception meaning that it is pretty useful in the fight against corruption.
With almost 1 billion people living in so-called undeveloped countries, there is hope as new technologies can offer significant changes to these countries by improving their institutions, governments, and even living conditions. Blockchain technology has been put forward as a technological solution to many problems that plague developing countries, but getting the ball rolling is a bit of a challenge.
One of the leading issues in underdeveloped countries is their weak institutions, and this often leads to the failure of various development programmes that are suggested for implementation. Corruption, for example, is more likely to occur in impoverished parts of the world where a lack of law enforcement is an issue.
Another issue is the lack of social trust , such as a lack of faith in legal institutions and social heterogeneity. The concept of social trust supports economic growth, and it improves overall living conditions through more education, better investment rates and improved governance.
Possible solutions include offering loans to people in undeveloped areas where they are not easily able to access regular financial institutions , a blockchain based property register, monitoring government and institutional spending, implementation of digital identity documents and records, and even voting in general, local, and council elections.
Budget tracking mechanisms that use the blockchain for record keeping and verification will be integral to stamping out miss-spending and corruption in developing countries. Because the ledger is public and cannot be changed or tampered with, every penny that is spent must be accounted for and is open to scrutiny.
This means that all expenditures can be tracked and analysed and issues such as embezzlement and the funnelling of money can be eradicated, or at the very least, significantly decreased. The fact that blockchain is decentralised, not controlled by any one entity and is unable to be tampered with means that it is perfect for use in countries where transparency is not one of their strong points. By forcing these countries to be transparent and to do what they say they will do with funds, votes, and documents, significant steps can be taken towards developing into a first world country.
While most of the excitement around blockchain is happening in the Western world, its real potential for the benefit of humanity lies in undeveloped or developing countries. Trust is such an essential part of a functioning society, and in these types of countries, trust is something that is practically non-existent.
By using the blockchain which provides immutable trust and confidence in the transactions that are put on its ledger, these countries can start to build trust in every aspect of government and its institutions. From tracking government spending or projects from agencies such as WHO, UN, and EU, to regularising the voting process, there is an untold number of ways that blockchain technology will make a massive difference to these countries. Whilst, of course, it is important and profitable to understand how blockchain can impact our lives in the Western world, and the benefits that blockchain will bring us are quite astounding, there is more need for this technology in developing countries.
The most alarming aspect of this legacy governmental corruption is that these aids and grants are embezzled by unscrupulous agents in the government.
However, with the adoption of blockchain technology by these countries, the problem of corruption can be effectively tackled. Blockchain features such as improved security, transparency, immutability that is, once transactions are stored on the blockchain, they cannot be altered , and its decentralized nature make it a valuable tool in the fight against corruption. Blockchain technology has the potential to positively impact developing and underdeveloped countries in more ways than can be imagined.
This is largely due to the fact that they have no access to banking services. The current limitations faced by banks and financial institutions when it comes to the unbanked can be solved using blockchain technology.
Issues such as identity verification that is essential to KYC Know Your Customer implementation can be solved using blockchain technology, as every user is assigned a unique digital identity on the blockchain network.
Also, unlike traditional banks, no physical presence is needed. This means people in the most remote areas can have access to quality banking services on the blockchain network. Companies taking the lead in the provisioning of banking services to the unbanked through the implementation of blockchain technology include Everex , OmiseGo , Humaniq , and a host of other blockchain startups. Access to affordable, reliable energy Inability to provide the people with reliable and affordable energy has been a great limitation to the growth of developing economies.
Thankfully, one of the industries which have harnessed the immense potential of blockchain technology is the energy sector. Blockchain solutions are now available to provide clean and affordable energy but also to make it easily accessible especially to people in underdeveloped nations. But there are some applications of blockchain in already developed, Western countries that can help society. Once such instance is in the healthcare sector. Patients records can be stored on a blockchain, all in one place so that they can be viewed by any medical professional that needs to do so.
This means that up to date eye, dental, blood, physical, and even psychological records can be kept in one place, thus eliminating the chance for error or a medical professional not having a clear view of the whole picture. One of the key benefits of it is that it is immune to fraud, tampering, and deception meaning that it is pretty useful in the fight against corruption. With almost 1 billion people living in so-called undeveloped countries, there is hope as new technologies can offer significant changes to these countries by improving their institutions, governments, and even living conditions.
Blockchain technology has been put forward as a technological solution to many problems that plague developing countries, but getting the ball rolling is a bit of a challenge.
One of the leading issues in underdeveloped countries is their weak institutions, and this often leads to the failure of various development programmes that are suggested for implementation. Corruption, for example, is more likely to occur in impoverished parts of the world where a lack of law enforcement is an issue.
Another issue is the lack of social trust , such as a lack of faith in legal institutions and social heterogeneity. The concept of social trust supports economic growth, and it improves overall living conditions through more education, better investment rates and improved governance.
Possible solutions include offering loans to people in undeveloped areas where they are not easily able to access regular financial institutions , a blockchain based property register, monitoring government and institutional spending, implementation of digital identity documents and records, and even voting in general, local, and council elections. Budget tracking mechanisms that use the blockchain for record keeping and verification will be integral to stamping out miss-spending and corruption in developing countries.
Because the ledger is public and cannot be changed or tampered with, every penny that is spent must be accounted for and is open to scrutiny. This means that all expenditures can be tracked and analysed and issues such as embezzlement and the funnelling of money can be eradicated, or at the very least, significantly decreased.
The fact that blockchain is decentralised, not controlled by any one entity and is unable to be tampered with means that it is perfect for use in countries where transparency is not one of their strong points. By forcing these countries to be transparent and to do what they say they will do with funds, votes, and documents, significant steps can be taken towards developing into a first world country.
While most of the excitement around blockchain is happening in the Western world, its real potential for the benefit of humanity lies in undeveloped or developing countries. Trust is such an essential part of a functioning society, and in these types of countries, trust is something that is practically non-existent. By using the blockchain which provides immutable trust and confidence in the transactions that are put on its ledger, these countries can start to build trust in every aspect of government and its institutions.
From tracking government spending or projects from agencies such as WHO, UN, and EU, to regularising the voting process, there is an untold number of ways that blockchain technology will make a massive difference to these countries.
Whilst, of course, it is important and profitable to understand how blockchain can impact our lives in the Western world, and the benefits that blockchain will bring us are quite astounding, there is more need for this technology in developing countries.
By implementing a variety of blockchain based projects in these jurisdictions, we can bring these countries up to the standards of Western nations and give them a chance to develop their economy, democracy and society further. As computers are often too costly in some areas, this means that implementing blockchain technology would be a little bit difficult.
By encouraging the implementation of all types of technology in developing countries, steps can be taken towards implementing blockchain which will significantly improve the quality of life for people living there, as well as society as a whole.
The first step, however, is to convince all the naysayers that blockchain is what it says it is, and also to enable these countries to gain access to the technology and resources that they need to improve their economy and society.
Blockchain is without a doubt the future; it is just how we go about implementing it that will decide the level of its adoption and success. Being used to the society working efficiently, we rarely question what else could be done.
Hence, the developing countries are likely to see benefits first. Read more about the impact of blockchain technology. Megan was born in Poland but from a young age always sought to expand her horizons to a more cosmopolitan way of life. At 19 she moved to the hub of tech and culture where she studied at City University in London.
Keen on understanding media platforms and social interaction Megan graduated with a degree in Media and Sociology. Looking forward Megan began to invest both her time and money into new industries and one, in particular, got her attention: Blockchain.
Blockchain Technology In Developed vs Developing Countries: Which One Should Adopt It First?
This was implemented in the Bitcoin system. In , Bitcoin was created as the first blockchain app. Nevertheless, it is worthwhile to understand that the blockchain technology can be used in any systems with interconnected information blocks.
Simple Explanation of the Blockchain Technology Blockchain is a chain of blocks that cannot be modified and which contains one or other information. But this is a crude technical example. Imagine an island. People live on this island. Assume that the number of people is It does not matter how people got to the island, the main thing is that they are already there.
Among them there are doctors, artisans, tailors, carpenters, hunters, cooks and other people with useful skills. For a fair assessment of each other's work, these islanders decided to use the stones for cash settlement among themselves. The larger the stone, the more it costs. Once, the group decided to simplify the procedure for the turnover of stones.
So that you people do not have to carry a pile of stones every day, and somehow transfer them among each other. And then, one day a group of people decided to write down in the register how many stones each of people have. Then they put all their stones in one big cave. Every evening they talked and, at the same time, exchanged the information concerning the number of stones they passed on to each other.
It turns out that on an island there was no intermediary who would record the transferred money and was engaged in it all the time. The absence of an intermediary saves the physical and material resources of inhabitants. So, everyone is busy with an important task for the group survival, and, at the same time, live in a certain harmony.
The same thing is blockchain. Roughly speaking, this is a decentralized register and everyone in the world knows how much money on each wallet but does not know to whom this purse belongs. This arouses great interest among enthusiasts, private companies and even states.
The development of blockchain applications is of interest to many developers, leaders of different states, and amateurs. Five Countries Embracing the Blockchain Technology Gradually, since , the geography of cryptocurrency distribution and blockchain solutions have become wider and wider. As of early , digital currencies were firmly entrenched in the territories of a number of countries that showed high interest in the introduction and blockchain development under the regulation of their jurisdictions.
Because of the high interest in the crypto-currency market, the leaders of some countries indirectly or directly have to take regulatory measures on the turnover of cryptocurrency, supervision and mining. This has already led to the creation of a number of bills designed to settle cryptornics. USA The USA, being a territory with a free economic zone, has become a haven for many stock exchanges where cryptocurrency blockchain implementation trading is conducted. FinCEN employees collect and analyze financial transactions.
In , the bureau found it necessary to regulate transactions relating to the exchange of cryptocurrency for cash or transferring money to bank cards. The same regulation goes through the operation of exchanging fiat money.
Similar projects to regulate the turnover of cryptocurrency are necessary for combating money laundering, sponsoring terrorism and other monetary crimes. In the first quarter of , USA Internal Revenue Service released a guide to the taxation of operations with bitcoins and other virtual currencies. Management applies to both current operations and past transactions. For the purposes of paying federal taxes, bitcoins are treated as property.
That is, those who purchase bitcoins as an investment instrument will receive a profit from "capital gains" when selling bitcoins, and not profit from "exchange rate differences". In connection with multiple cases of illegal financing of ICO projects, the Security and Exchange Commission SEC has developed a method for controlling tokens, which will reduce the threat that ICOs will not be able to fulfill their tokens within the specified time limit.
Canada Legal regulation of operations with cryptocurrencies in Canada provides for a cryptocurrency as a means of payment, which is noted by a large number of installed bitcoin-ATMs. Also, in Canada, there are programs that will allow people better understand blockchain technology and blockchain architecture. The Canadian government also introduced the development of a digital version of the Canadian dollar. Governmental authorities that perform adjustments to operations with cryptocurrency only if necessary.
The main task, at the moment, is to monitor the development of the digital currency and blockchain technologies. The Canadian Ministry of Finance in January reported that it does not recognize Bitcoin as a means of payment. However, the Bank of Canada representative voiced a different vision of the situation. It was pointed out that insignificant autonomous financial systems, like Bitcoin, do not pose a significant threat to the Canadian financial system.
Various negotiations in the government of Canada gave a course to the consideration of the issue at the level of legislation.
The bill, proposed in June , was approved by the Governor-General of Canada. If governments are the main target of blockchain technology initiatives, then digital government and state capacity must take center stage. Early evidence suggests that blockchains can make a difference when aligned with existing digital government institutions, strategies, priorities, and platforms.
This, in turn, indicates that a more nuanced approach to the interplay between blockchains and key digital government components is required. For starters, governments in the Global South should capitalize on existing South-South and North-South cooperation agreements and networks to extract more information on ongoing blockchain deployments in the public sector.
Collaboration across government peers on a global scale could add more value than published reports and thus help avoid pitfalls that pioneers in the sector have unexpectedly faced. Looking at the way blockchains can tackle core digital government themes and bottlenecks will be as important, if not more.
For example, government interoperability has traditionally been one of such issues. More often than not, public entities happen to run their own technology platforms that almost never talk to each other. On the other hand, citizens and stakeholders will surely benefit from having one-stop shops to undertake all the business they do with government. To reach this point, government platforms must be able to converse among themselves. Governments have thus developed government interoperability frameworks that promote public sector integration.
This is accomplished by the development of digital gateways that mediate the conversations across different public platforms. Having a blockchain platform to support and enhance interoperability by ensuring the integrity and transparency of the public sector certainly has enormous potential El-dosuky and El-adl, The same goes for many of the other core areas of traditional e-government.
Blockchains can also have potential in enhancing state capacity. Many developing countries have designed decentralization or devolution strategies where both policymaking and fiscal management shifts from central governments to those in regions, states, and municipalities.
Implementation of such policies has however been challenging, particularly in low-income countries. Lack of overall capacity has been one of the main challenges local governments face accompanied by a potential decrease in fiscal resources.
Enter blockchains. For example, governments could set up one blockchain platform, a GovChain, to cater to all local governments. Financial resources could thus flow within the Gov-chan vis smart contacts, while local government offices can use the platform to support other government activities such as public information disclosure.
This is an area that might have great potential but remains largely unexplored De Santis, Along the same lines, it is possible to make a case for distributed policymaking. Many developing countries are characterized by socio-economic, cultural and geographical diversity that comprehensive national policies tend to ignore for the sake of universality.
At the same time, many countries also have national, regional, and local development plans that, for the most part, are not necessarily in sync. Finding a middle of the road approach where local diversity shines but, at the same time, falls within broader development policies set at higher levels of government is feasible. Again, a GovChain could make a key difference here. While complex, the challenges for adopting blockchains in the public sector of developing countries are not insurmountable.
On the other hand, the opportunities are just starting to pop-up and could be harnessed in the short-term if the links between technology, sustainability and government institutions are brought to the fore.
Developing countries are, for the most part, playing catch-up when attempting to harness the latest digital technologies such as blockchains, among many others.
This set of countries has also endorsed internationally-agreed development goals while devising their own national and subnational development plans. While juggling such agendas is not simple, governments can play an important role in promoting the link between technology and development while enticing all other actors and sectors to act in concert.
Undoubtedly, governments should lead when it comes to the modernization of public institutions, the deployment of digital government and the provision of public goods. This paper develops a conceptual framework aimed at grasping the dynamics between sustainable development, governments in the Global South and ICTs, introducing state capacity as both a means and an end. State capacity is required to achieve the various development goals and harness ICTs effectively.
Building state capacity is also a goal that will ensure development gains can be sustained in the long haul. The framework is then used to assess the relevance of blockchain technologies in such dynamics While still technologically evolving, blockchains offer unique traits and benefits that could make a difference if deployed strategically within governments in developing countries.
Unfortunately, on the ground evidence of blockchain implementation is still emerging while a closer examination of its relationship with digital government is almost absent. Use cases still dominate the scene and the core assumption is that blockchains will prevail as the overall disruptor with no partners in sight.
However, early evidence suggests that blockchains can add value when deployed as part of a team of digital technologies working in sync. Early implementations also indicate that adequate institutional support and endorsement are critical, especially from the public entities promoting digital government that had already identified a range of priorities as key targets.
Nevertheless, risks still abound, stemming from the limitations of the technology itself and its complexity, and calls for rapid institutional change which could push back existing political will. In addition, issues related to implementation costs and actual project management need further exploration.
The distributed nature of blockchain technology and its implications for governance systems has also upstaged digital government concerns. While linked to ongoing discussions on algorithmic governance concerning Artificial Intelligence and all its cousins, a blockchain-based perspective connecting these dots is missing in action.
Developing countries with low capacity states and nascent capitalist development might find such new governance options less palatable given pressing sustainable development demands and calls to sustain democratic governance regimes. If it is a real institutional technology, then blockchain technology should be a critical enabler for innovative institutional development.
Blockchains could also deliver the goods within existing institutional settings, thus making institutional change a matter of human agency, not technology. And that would undoubtedly be a critical achievement that could contribute to resilient long-term sustainable development. Publicly available datasets were analyzed in this study. The author declares that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
Instead, the concept includes nation-states that are at various stages of development as measured for example by the World Bank country income or lending categories, or the UNDP human development index, among others. Furthermore, development is a moving target as countries can and should travel across the various development categories in the medium-term, with some even transferring into the industrialized-country team, eventually.
The latter has grown exponentially since the late s and propelled economic growth in industrialized countries McKinsey, Governments however cannot outsource such functions so easily. Ethereum smart contracts have their own blockchain accounts which function in distinct fashion vis-a-vis user accounts. For example, the latest literature review on the subject published last Summer was only able to identify twenty one relevant papers Batubara et al.
Only six were published in academic journals. Moreover, most of these papers take a sectoral approach focusing on topics such as electoral processes, healthcare, and education, to menton a few. Alexandre, A. Kenyan gov't to use blockchain in new affordable housing project. Google Scholar. Andreasson, K. Andrikopoulos, V.
Asadullah, M. Poverty reduction during — did millennium development goals adoption and state capacity matter? World Dev. Atzori, M. Batubara, F. Baydakova, A. UN food program to expand blockchain testing to african supply chain. CoinDesk blog. Berryhill, J. Blockchains Unchained.
Beyer, S. PubMed Abstract Google Scholar. Bishr, A. Dubai: a city powered by blockchain. Innovations 12, 4—8. BreakerMag BreakerMag blog. Brown, A. How much evidence is there really? Mapping the evidence base for ICT4D interventions. Casey, M. New York, NY: St. Martin's Press. Comin, D. If technology has arrived everywhere, why has income diverged? Coppi, G.
Cozzens, S. Davidson, S. Blockchains and the Economic Institutions of Capitalism. De Filippi, P. Blockchain and the Law: The Rule of Code. De Santis, R. Dexter, S. Mango Research blog. Diallo, N. Dutton, T. Dwyer, R. El-dosuky, M. GIZAChain: e-government interoperability zone alignment, based on blockchain technology. PeerJ Preprints 7:ev1.
Estevez, E. Electronic governance for sustainable development — conceptual framework and state of research. Falkon, S. The story of the DAO — its history and consequences. Medium blog. Fernando, A. Interested blockchain for social impact? Here are the projects you should know.
Ferrarini, B. Distributed Ledger Technologies for Developing Asia. Manila: Asian Development Bank. Foster, C. Why efforts to spread novel ICTs often fail.
Frankenreiter, J. The limits of smart contracts. Gomez, R. The changing field of ICTD: growth and maturation of the field, — Electron J. Guarda, D. Gulf News Harry CultHub blog. Hau, M. Heeks, R. E-government as a carrier of context. Public Policy 25, 51— Do information and communication technologies ICTs contribute to development? Hernandez, K. Blockchain for Development — Hope or Hype? Hughes, L. Blockchain research, practice and policy: applications, benefits, limitations, emerging research themes and research agenda.
IDB Illinois Blockchain Initiative The Illinois Blockchain Initiative. ITU Core List of Indicators. Janowski, T. Implementing sustainable development goals with digital government — aspiration-capacity gap. Janssen, M. Lean government and platform-based governance—doing more with less. Jones, M. Smart dubai launches blockchain-based payments for government. The Block blog. Juskalian, R. MIT Technology Review. Kapoor, K. Rogers' innovation adoption attributes: a systematic review and synthesis of existing research.
Kenyan Wallstreet Kenyan Wallstreet blog. Kewell, B. Blockchain for good? Change 26, — Lamport, L. Time, clocks, and the ordering of events in a distributed system. ACM 21, — Lemieux, V. Evaluating the use of blockchain in land transactions: an archival science perspective. Law J. Levi, S. Macrinici, D. Smart contract applications within blockchain technology: a systematic mapping study. McKinsey Meadows, D.
Millard, J. Open governance systems: doing more with more. Murphy, J. Ndou, V. E-government for developing countries: opportunities and challenges. Nelson, P. O'Connell, J. OSTechNix Blockchain 2. OSTechNix blog. Pisa, M. Reassessing Expectations for Blockchain and Development. Center For Global Development. Blockchain and Economic Development: Hype vs. Podder, S. Rahman, H. IGI Global. Reijers, W. Ledger 1, — Rustum, A. DLT access control comparison. B9lab Blog. Salah, K.
Blockchain for AI: review and open research challenges. IEEE Access 7, — Savoia, A. Measurement, evolution, determinants, and consequences of state capacity: a review of recent research.
Simoyama, F. Triple entry ledgers with blockchain for auditing. State of Illinois Sullivan, C. E-residency and blockchain. Law Sec. Szabo, N. Formalizing and securing relationships on public networks. First Monday 2. Szczerbowski, J. Transaction Costs of Blockchain Smart Contracts. Law Forensic Sci. Tanui, C. The Kenya blockchain taskforce concludes its report. Tapscott, D. How does it work? After the set-up of a jointly created database, there is a register of all assets in a table for everyone to check in.
Therefore, we are able to transfer money or identities, or energy, or reputation because all transactions are recorded and the ownership shifts from one account to another. Furthermore, this is possible directly from customer to customer without an intermediate bank or otherwise trusted entity. In addition, blockchain offer redundant storage.
This allows a blockchain system to be robust against potential errors. Similar to the internet for information transmission, a blockchain will still operate even if several nodes drop out of the network. Weak institutions: Usually, people trust institutions like big banks and national Governments: blockchain allows us to trust solely in the technology. Luis Bezzenberger from Brainbot Technologies, engages in partnerships with enterprises as well as with start-ups which seek to leverage blockchain technology to innovate.
His firm creates core building blocks to scale the technology towards broad adoption of public blockchain systems. Decentralised Apps DApp combine smart contracts stored in a blockchain and a user interface.
They offer a decentralised storage place similar to a cloud and allow exchanges between users. This happens without operators, in a decentralised way. Blockchain technology could reinvent the democratic voting process, with a trustworthy system. Compared to developed countries, developing countries are far more likely to be impacted by blockchain technologies. Some of the advantages are listed below:.
The project is still at an early stage. However, they want to establish an intra-university coin system to have a showcase that demonstrably works! If the students can proof that a blockchain technology based currency works, they might identify the need for implementation throughout Indonesia.
Ledger Tech Trend For Good
IEEE Access 7, — The blockchain is entirely resistant to tampering, hacking and unauthorised modification of technology data and it is an open, distributed ledger that can countries transactions efficiently and permanently. This is largely due to the fact that they have no access to banking services. Lean government and platform-based governance—doing more developing less. The second is asymmetric public key technology that generates public and blockchain keys for end countries. Five Countries Embracing the Blockchain Technology Gradually, sincethe geography of cryptocurrency developing and blockchain solutions have become wider and wider.
Blockchain and Developing Countries
Blockchain technology has the potential to positively impact developing and underdeveloped countries in more ways than can be imagined. This is largely due to the fact that they have no access to banking services.
The current limitations faced by banks and financial institutions when it comes to the unbanked can be solved using blockchain technology. Issues such as identity verification that is essential to KYC Know Your Customer implementation can be solved using blockchain technology, as every user is assigned a unique digital identity on the blockchain network. Also, unlike traditional banks, no physical presence is needed.
This means people in the most remote areas can have access to quality banking services on the blockchain network. Companies taking the lead in the provisioning of banking services to the unbanked through the implementation of blockchain technology include Everex , OmiseGo , Humaniq , and a host of other blockchain startups. Access to affordable, reliable energy Inability to provide the people with reliable and affordable energy has been a great limitation to the growth of developing economies.
The final report published February last year highlights the limitations of the technology, including the lack of successful pilots, scalability, interoperability, and lack of privacy Van Wagenen, So while Illinois follows the same path as some countries discussed above, technical limitations seem to have prevented success. In addition, the fact that the project was requesting specific legislative changes at the state level might have also ruffled some feathers.
The intersections between development, ICTs and developing country governments provide the fodder for the conceptual framework developed in this paper. Figure 2 below depicts such interconnections. Governments play various roles when it comes to sustainable development and ICTs, and are not limited to the digital government sphere per se.
But governments should lead to promote digital government within a sustainable development context. On the flip side, the traditional approach to e-government centers on the relation between the public sector and technology while assuming development outcomes are either the natural and automatic.
For example, the standard e-government transactional approach that emphasizes G2B, G2C, and G2G interactions—depicted in Figure 2 by the intersection between government and ICTs, has limited scope for targeting specific development gaps as the onus is on interactions among key sectors and stakeholders.
Having governments as part and parcel of the overall equation also demands serious consideration of the relationship between state capacity and both development and digital technologies. The dynamics between these three can be complex, bearing in mind that sustainable development itself encompasses four pillars governance included while digital government comprises three, as discussed in section Conceptual Framework above.
Nevertheless, the essential point is that state capacity is both a means to promote digital government and sustainable development and a goal in itself, as clearly established by the UN SDG agenda. For starters, and like most digital technologies, blockchains are exogenous to the national ecosystems of developing countries.
Governments thus continuously play catch-up with such technologies. A core issue here is the lack of local capacity to effectively harness the new entrant, even if the platform is Open Source and thus has no per-user licensing costs. Such capacity is not merely technical but also scientific and managerial as governments and partners should fully comprehend the inner workings of the technology to, for example, launch public bidding processes calling for the adoption of blockchains to support specific digital government priorities or gaps.
In this regard, blockchains are not at all different from previous digital technologies migrating into developing nations. While the complexity of blockchains might add additional entry barriers, governments are probably better off focusing on both the three underlying technologies that support it and the different types of blockchains, DLTs included, that are available.
Regarding the former, many countries in the Global South lack adequate cryptographic expertise, have weak public key infrastructures PKIs in place, and are not very familiar with consensus algorithms.
Furthermore, while peer-to-peer networking is readily available, limited Internet access will surely pose constraints to widespread utilization. As described in section Characterizing Blockchain Technology for the Public Sector above, developing country governments can choose among different types of blockchains and DLTs.
However, the first question they need to ask is if blockchain technology is the most optimal solution for the issue at stake.
Several models for making such a decision have already been developed Rustum, and should be further refined to fit developing country contexts. Selecting the adequate platform will mostly depend on the type of digital government priority under the radar screen. It is however possible to conclude that, in general, governments should opt for private or closed blockchains Atzori, , hybrids included.
On the other hand, in terms of the dissemination of public documents, information, and data, public or open blockchains can provide the right vehicle as they guarantee immutability, integrity, and transparency while ensuring pseudonymous access—or access based on self-sovereign identity, if available. The cases discussed in the country examples subsection yielded essential insights for deploying blockchains within governments.
The evidence compiled so far, which is still incipient, suggests that the technology can deliver when explicitly linked to both digital government institutional instances and digital government priorities and gaps. For the most part, successful blockchain implementation in emerging countries have either complemented existing digital government platforms and initiatives or provided a new solution to vexing issues that could not be solved otherwise.
In both cases, the technology was not deployed in a standalone fashion. Integration with other digital technologies was also part of the process. This is perhaps a crucial point as blockchains seem to add real value when brought in as a new member of an existing technology team. In this light, it is possible to suggest that smart contracts could become really intelligent if they could effectively interact with Deep Learning algorithms and platforms, for example Salah et al.
While not having a happy ending, the Illinois experience sheds light on the risks of deploying blockchains. Technical limitations of the blockchain platforms selected for the various pilots helped stall the project. The initiative also attempted to address its governance implications. Consequently, specific legislative changes were requested to the local assembly, including biometric-based notarization, self-notarization of documents and several other measures to improve the management of public land records State of Illinois, While having potential for increasing state capacity, demands for institutional change, grounded mostly on technological grounds, might not take off if local decision-makers have not been involved in the process from the start.
Surely, this is not unique to blockchains. But the fact that the technology is also touted as governance and institutional changer e. As discussed in subsection Blockchains, Development and Governments, blockchain deployment in developing country governments is still in its infancy. Hype, complexity, lack of successful implementation, and an overemphasis on cryptocurrencies and new financial markets are factors that might help explain this state of affairs—not to forget the fact that blockchain technology is still maturing.
The conceptual framework presented in this paper targets this gap by providing governments and development practitioners with potential entry points to explore the effective deployment of blockchain technology systematically. If governments are the main target of blockchain technology initiatives, then digital government and state capacity must take center stage. Early evidence suggests that blockchains can make a difference when aligned with existing digital government institutions, strategies, priorities, and platforms.
This, in turn, indicates that a more nuanced approach to the interplay between blockchains and key digital government components is required. For starters, governments in the Global South should capitalize on existing South-South and North-South cooperation agreements and networks to extract more information on ongoing blockchain deployments in the public sector. Collaboration across government peers on a global scale could add more value than published reports and thus help avoid pitfalls that pioneers in the sector have unexpectedly faced.
Looking at the way blockchains can tackle core digital government themes and bottlenecks will be as important, if not more. For example, government interoperability has traditionally been one of such issues. More often than not, public entities happen to run their own technology platforms that almost never talk to each other.
On the other hand, citizens and stakeholders will surely benefit from having one-stop shops to undertake all the business they do with government. To reach this point, government platforms must be able to converse among themselves. Governments have thus developed government interoperability frameworks that promote public sector integration. This is accomplished by the development of digital gateways that mediate the conversations across different public platforms.
Having a blockchain platform to support and enhance interoperability by ensuring the integrity and transparency of the public sector certainly has enormous potential El-dosuky and El-adl, The same goes for many of the other core areas of traditional e-government. Blockchains can also have potential in enhancing state capacity. Many developing countries have designed decentralization or devolution strategies where both policymaking and fiscal management shifts from central governments to those in regions, states, and municipalities.
Implementation of such policies has however been challenging, particularly in low-income countries. Lack of overall capacity has been one of the main challenges local governments face accompanied by a potential decrease in fiscal resources. Enter blockchains. For example, governments could set up one blockchain platform, a GovChain, to cater to all local governments.
Financial resources could thus flow within the Gov-chan vis smart contacts, while local government offices can use the platform to support other government activities such as public information disclosure.
This is an area that might have great potential but remains largely unexplored De Santis, Along the same lines, it is possible to make a case for distributed policymaking. Many developing countries are characterized by socio-economic, cultural and geographical diversity that comprehensive national policies tend to ignore for the sake of universality. At the same time, many countries also have national, regional, and local development plans that, for the most part, are not necessarily in sync.
Finding a middle of the road approach where local diversity shines but, at the same time, falls within broader development policies set at higher levels of government is feasible. Again, a GovChain could make a key difference here. While complex, the challenges for adopting blockchains in the public sector of developing countries are not insurmountable. On the other hand, the opportunities are just starting to pop-up and could be harnessed in the short-term if the links between technology, sustainability and government institutions are brought to the fore.
Developing countries are, for the most part, playing catch-up when attempting to harness the latest digital technologies such as blockchains, among many others. This set of countries has also endorsed internationally-agreed development goals while devising their own national and subnational development plans. While juggling such agendas is not simple, governments can play an important role in promoting the link between technology and development while enticing all other actors and sectors to act in concert.
Undoubtedly, governments should lead when it comes to the modernization of public institutions, the deployment of digital government and the provision of public goods. This paper develops a conceptual framework aimed at grasping the dynamics between sustainable development, governments in the Global South and ICTs, introducing state capacity as both a means and an end.
State capacity is required to achieve the various development goals and harness ICTs effectively. Building state capacity is also a goal that will ensure development gains can be sustained in the long haul. The framework is then used to assess the relevance of blockchain technologies in such dynamics While still technologically evolving, blockchains offer unique traits and benefits that could make a difference if deployed strategically within governments in developing countries.
Unfortunately, on the ground evidence of blockchain implementation is still emerging while a closer examination of its relationship with digital government is almost absent. Use cases still dominate the scene and the core assumption is that blockchains will prevail as the overall disruptor with no partners in sight.
However, early evidence suggests that blockchains can add value when deployed as part of a team of digital technologies working in sync. Early implementations also indicate that adequate institutional support and endorsement are critical, especially from the public entities promoting digital government that had already identified a range of priorities as key targets.
Nevertheless, risks still abound, stemming from the limitations of the technology itself and its complexity, and calls for rapid institutional change which could push back existing political will. In addition, issues related to implementation costs and actual project management need further exploration.
The distributed nature of blockchain technology and its implications for governance systems has also upstaged digital government concerns. While linked to ongoing discussions on algorithmic governance concerning Artificial Intelligence and all its cousins, a blockchain-based perspective connecting these dots is missing in action. Developing countries with low capacity states and nascent capitalist development might find such new governance options less palatable given pressing sustainable development demands and calls to sustain democratic governance regimes.
If it is a real institutional technology, then blockchain technology should be a critical enabler for innovative institutional development. Blockchains could also deliver the goods within existing institutional settings, thus making institutional change a matter of human agency, not technology. And that would undoubtedly be a critical achievement that could contribute to resilient long-term sustainable development.
Publicly available datasets were analyzed in this study. The author declares that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest. Instead, the concept includes nation-states that are at various stages of development as measured for example by the World Bank country income or lending categories, or the UNDP human development index, among others.
Furthermore, development is a moving target as countries can and should travel across the various development categories in the medium-term, with some even transferring into the industrialized-country team, eventually.
The latter has grown exponentially since the late s and propelled economic growth in industrialized countries McKinsey, Governments however cannot outsource such functions so easily.
Ethereum smart contracts have their own blockchain accounts which function in distinct fashion vis-a-vis user accounts. For example, the latest literature review on the subject published last Summer was only able to identify twenty one relevant papers Batubara et al. Only six were published in academic journals. Moreover, most of these papers take a sectoral approach focusing on topics such as electoral processes, healthcare, and education, to menton a few.
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Blockchain and Developing Countries. Leave your comments Post comment as a guest Name Required :. Submit Comment Agree to terms and condition. Ashley Stubbs. This is an exciting opportunity for developing countries to bridge the gap with developed nations.
Kelly Stockley. They will never outperform developed countries because they are always one step ahead of them. Cassie Bartlett. Danny Harrison. Share this article. Related articles Technology. Naveen Joshi 4. Naveen Joshi 8. Latest Articles View all. Is SEO Worth it in ? Branding Checklist for Small Business Owners. The Importance of Upskilling in Business. What Will Influence Mortgage Rates in ?
And since computers are too costly in those areas, official documents are often typed by hand. Efficiency improvements in developing countries would open roads to productivity because people would have more time, says Crosbie. Ownership would be easier to establish. If you wanted to show someone you owned a piece a land, rather than investing a day in chasing down a paper document, you could simply show them a link on the blockchain. Crosbie says chain of custody is another use case.
Blockchain technology would enable someone to figure out if the brake pads they were buying for a car were real, so they would not run the risk of a serious accident. Or it could help ensure the vaccines received in a small village had been handled properly. Smart contracts applications that run on the blockchain and control the transfer of digital assets between parties could also provide value in areas where the legal system is too expensive, slow or untrustworthy.
And establishing an identity on the blockchain would be a core part of giving people access to services. As far as banking goes, mobile banking already exists in Kenya with M-Pesa and other mobile phone—related services. Ashley Stubbs. This is an exciting opportunity for developing countries to bridge the gap with developed nations. Kelly Stockley. They will never outperform developed countries because they are always one step ahead of them. Cassie Bartlett.
Danny Harrison. Share this article. Related articles Technology. Naveen Joshi 4. Naveen Joshi 8. Latest Articles View all. Is SEO Worth it in ? Branding Checklist for Small Business Owners. The Importance of Upskilling in Business. What Will Influence Mortgage Rates in ?
Monetary Policy Keeps Rates Unchanged. Democracy Dies in Decentralization. Use Both! Top Chatbot Marketing Trends to Explore in The most alarming aspect of this legacy governmental corruption is that these aids and grants are embezzled by unscrupulous agents in the government.
However, with the adoption of blockchain technology by these countries, the problem of corruption can be effectively tackled. Blockchain features such as improved security, transparency, immutability that is, once transactions are stored on the blockchain, they cannot be altered , and its decentralized nature make it a valuable tool in the fight against corruption.
Blockchain technology has the potential to positively impact developing and underdeveloped countries in more ways than can be imagined. This is largely due to the fact that they have no access to banking services.
The current limitations faced by banks and financial institutions when it comes to the unbanked can be solved using blockchain technology. Issues such as identity verification that is essential to KYC Know Your Customer implementation can be solved using blockchain technology, as every user is assigned a unique digital identity on the blockchain network. Also, unlike traditional banks, no physical presence is needed.