Blockchain for Pakistan

The writer is ICT director and founding director of the Center for Information and Communication Technology at IBA.

Last year, Pakistan allowed the use of blockchain technology in the country, a step in the right direction. The decision was made to attract remittances from Malaysia. This resulted in a 13% increase in remittances in the first quarter. However, to understand how it will potentially impact different sectors of the country such as business, banking and government, to name a few, it is best if we also understand how it works.

Blockchain has gained a huge following in recent times due to its use in cryptocurrencies. Several countries have allowed blockchain to operate across their borders, including the United States, Canada, Australia, the United Kingdom, the European Union, Finland, Belgium, Cyprus and Germany.

Blockchain technology revolves around its use of blocks. These serve as storage spaces for information and, when full, connect to the previous block, eventually forming a chain as more blocks are filled. This chain is what gives the shares a certain permanence that cannot be changed, otherwise you risk getting caught.

Each block contains a hash. They are like fingerprints, and just like fingerprints, they are unique to each lock. Furthermore, each block also contains the hash of the previous block. This is why, if changes are made to a block, the block that comes after would know because the hash of the changed block will also change.

In addition to security, other benefits of using blockchain include better tracking, transparency, and greater efficiency. Taking these aspects into consideration, it is evident that the integration of blockchain technology can be beneficial for a country like Pakistan.

Blockchain can play an important role in solving Pakistan’s health problems. For the matter, the government needs to be proactive as countries like the UK, USA, Canada, Estonia, Russia and France have given citizens the power to control the delivery of their health care. As a result, information is accessed at a better pace and, therefore, authorities are in a better position to identify where services are needed most.

Optimistically, the blockchain can give Pakistanis more control over their medical records, which could directly affect the delivery of the system. Blockchain technology simplifies the supply chain and administrative processes in the healthcare sector. It can be instrumental in rationalizing prior authorization, which can reduce costs. Blockchain also allows hospitals to spot inaccurate information faster than they would on their own, and the potential risks of being hacked are minimal.

Blockchain technology has the potential to provide secure storage for government, citizens and corporate data. It can facilitate government by providing an official register of public and private assets. The blockchain-enabled digital identity mechanism can provide a comprehensive national database, storing each citizen’s personal information such as birth certificate details, marriage licenses, driver’s licenses, and passport information. In addition, by simplifying the data management mechanism for public services, a significant reduction in labor-intensive processes is achieved. Moreover, it not only reduces excessive costs, but also instills error-proof accountability mechanisms. Blockchain also provides a platform to make secure property transactions by registering title deeds.

In recent times, we have seen the government invent different philanthropic schemes for the disadvantaged. Prime Minister Imran Khan presented a multi-billion dollar economic package for citizens affected by the pandemic. Such projects require high levels of transparency which can eventually be achieved with the help of the blockchain.

Blockchain has the potential to improve the way agencies handle their most sensitive data. The increased level of security ensures a greater level of public trust and their cooperation with the judicial system. Blockchain technology also eliminates the possibility of vote buying and intimidation that normally occurs just outside polling stations or booths. It also improves the safety of voters multiple times by eliminating the need to leave home to vote. Furthermore, tampering and fraud are less likely to occur. The mechanisms devised by the blockchain are secure and interfering with data is extremely difficult given the limited time available for each block. This system has been applied in countries like India and has shown significant improvement in their voting process.

As early as last year, the banking sector already felt the impact of blockchain technology with the remittances the country was receiving. This impact can be carried further. In most cases, online transactions take between one and three business days. According to Santander, a European-based banking institution, these delays have cost the banking sector a significant amount of $ 15 billion – $ 20 billion.

The two main reasons for this delay are, firstly, the bank working hours and the volume of transactions that must be met. Blockchain easily solves this problem because it doesn’t stop. It keeps running 24 hours a day, seven days a week, no matter what volume you pay attention to.

Several countries are exploring blockchain as a viable payment option. Countries like Singapore and South Korea are at the forefront of this initiative, while England, China and Canada are also in line.

Most transactions, regardless of the industry they are in, require an intermediary to broker the deals offered by both parties. They act as a non-party to mediate the transaction for both parties which will also be fair to both. However, this normally costs both sides more than they should, and for a still developing country like Pakistan, bearing that additional cost is detrimental to development, especially when there is a way around this problem.

Blockchain technology can be your intermediary at no additional cost. With its implementation, an individual or company looking to broker a deal can have access to all information. However, this also means that the second party should have integrated the blockchain into their system as well. Otherwise, the whole point is controversial.

In addition, it can also reduce the time it takes to gather approval from all parties involved. Blockchain uses a peer-to-peer system where authorized persons must sign any transaction that enters the blockchain, reducing the time that would have been used to go to each person, one by one, for their approval. This shows how efficient the integration of the blockchain is in negotiating contracts or commercial agreements.

Developed countries such as the United States, China, and the United Kingdom have used blockchain for international trade. They do this because this technology makes the records of other countries, or even of the companies they are trading with, more transparent and available so that countries know what they are getting into.

Developed countries like China, Singapore, and South Korea have already received great benefits in using cryptocurrency as a payment method. It also encouraged investors to consider investing more money in these countries’ operations.

Getting the government to discuss how to regulate this is a good step forward for Pakistan as this can be a means of reducing the country’s poverty rate. In return, the fewer impoverished people a country has, the more likely it is to be able to pay the taxes Pakistan needs to meet the requirements set by the International Monetary Fund.

Blockchain has emerged as a major technological development that has the potential to solve global problems. It is time for Pakistan to start making the most of this new technology. Blockchain can prove to be crucial in improving the country’s economic system. Regulation of both blockchain and cryptocurrency should be put in place and proper implementation exercised.

Twitter: @imranbatada