Last year, GDC launched what it claims is Africa’s first bitcoin mining facility. Blockchain is the cornerstone of bitcoin innovation.
How fast is Ghana adopting modern technology concepts and practices? How well are Ghanaian companies and citizens able to shift their lives and operations from manual, paper-based processes and practices into the realm of computing and digital platforms? Several months ago, Nii Quaynor, the chairman of Ghana Dot Com (GDC) and a Ghanaian technology legend who is often described as the “father of the internet in Africa” said, “digital currency and transaction frameworks for the internet are the next step” for the continent.
Designed to inject the trust element in technology-enabled transactions, blockchains are built on shared ledgers where participants write transactions in near real-time to an unbreakable chain that becomes a permanent record of an asset or transaction. This is viewable by all parties in the transaction. Blockchain thus allows businesses to work together in a new way resulting in lower cost, faster transactions and less risk.
In this way, blockchains can be used by individuals who want to complete transactions involving multiple parties. Large organizations may also want to use blockchain to collaborate across organizational silos. Entire industrial complexes and multinational firms could tap blockchain to handle complex transactions across different jurisdictions. Governments could also be able to use blockchain in the service of citizens. The use of blockchain technology to manage nonfinancial applications around things like land registries and voting exercises could prove to be truly transformative for governments.
Blockchain thus has the potential for profound impact, bringing wholesale change to organizations and local and national economies. Technology industry experts have recently opined that blockchain technology will do for transactions what the internet did for information — and in the relatively near future.
Two recent studies released by IBM’s Institute for Business Value (IBV) has found that banking and financial markets are adopting commercial blockchain solutions much faster than initially expected. 15% of banks and 14% of financial market institutions globally interviewed by IBM plan to adopt full-scale, commercial blockchain solutions in 2017. And within the next three years, 65% of banks expect to have blockchain solutions in production.
To highlight a specific example, the Japan Stock Exchange and London Stock Exchange Group are two leading bourses collaborating with IBM to explore blockchain to manage risk and bring additional transparency to global financial markets.
Bringing the matter closer home, the assumption that there is a relative paucity of technology or fintech capital in Africa as against other emerging and matured economies will be debunked, as industry players begin to showcase the improved business performance benefits of blockchain. And in Ghana, blockchain technology looks set to be a viable option for national, regional and municipal institutions and agencies currently revamping their public procurement policies and processes.
Blockchains are thus set to accelerate the flow of capital and the creation of wealth, in our economies and interactions — both domestically and across geographic boundaries. Very likely, new business models and services built and delivered on blockchain networks will accelerate access and liberate those that were once locked out of efficient value creation to fully participate in an “all-in” global economy.
While blockchains can powerfully improve businesses’ efficiency, trust and value, chief executive officers and chief technology officers especially must carefully evaluate where blockchains can be used to gain improved efficiency and support new business models. Their blockchain journey must begin with a lot of soul searching and critical self-review of their operational goals and objectives. I recommend that they consider the following three questions:
How fast should we move? Early movers in the blockchain adoption race may have an advantage as they are setting business standards and creating new models that will be used by future adopters of blockchain. We’re also finding that these early adopters are better able to anticipate disruption, fighting off new competitors along the way.
How can we scale across business networks? Once blockchain technology has scaled across multiple participants, they can anticipate achieving the kind of network effects that can drastically reduce the frictions that curb growth.
How can we innovate with new revenue models? As new entrants and business models emerge, banks may be forced to defend current revenue streams or move to where the money will flow next. New revenue models must anticipate the potential for disruption in areas core to the business today and in the future. As the market evolves, blockchain technology may add at least one new revenue stream; and so, the potential to monetize reference data looms large.
In diverse industries and sectors, blockchain technology will change the way chief executives, chief technology officers, chief risk officers and chief marketing officers do their work.
In the emerging blockchain economy, the role of third-party intermediaries to broker trust and/or to reconcile will increasingly be called into question as we reinvent new processes that eliminate the need for such reconciliation and intermediation.