Opinion .. How can social and economic reforms in the region be accomplished through blockchain technology?

This article was written by Baha Hamadeh, Vice President of Communications, Insights Group, and the views below are those of the author and do not necessarily reflect those of CNN.

Blockchain technology is rapidly gaining momentum in the MENA region despite the fact that there are relatively low levels of public awareness and knowledge of this type of application regionally. The region’s increasing dependence on this technology depends to a large extent on the availability of regulatory frameworks and the empowering ecosystem, as well as confidence in the added value and security that this technology offers.

New economic activities, cost reduction, transparency and security are among the most prominent benefits that encourage institutions within the public and private sectors to adopt blockchain technology. While many expect this technology to revolutionize many sectors, it is still in the “proof-of-concept” stage and on its way to “mainstream”. However, this is encouraging news for our region, which faces many long-term social and economic challenges, where a revolutionary technology such as “Blockchain” can provide a valuable opportunity to bring about positive change.

The blockchain revolution and its applications across sectors

Globally, blockchain technology is increasingly affecting key sectors with pilot projects in place to evaluate its feasibility. Countries like the United States, Canada, China, Japan and countries in Western Europe are seeing incredible growth in Blockchain investments.

In persistence in developing a global supply chain platform, enterprise software giant SAP was one of the first to establish a blockchain consortium that included companies such as HP, Intel, UPS and Airbus. Today, there are dozens of such associations worldwide, bringing together businesses from various sectors such as banking, transportation, hospitality and more.

Blockchain solutions have not yet expanded to provide comprehensive and viable applications in the region or even worldwide. However, our region has begun to embrace transformative technologies that can have a positive impact on local communities and economies.

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We are currently seeing the emergence of blockchain technology in the region mainly within the digital currencies, non-fungible tokens (NFTs) and the financial services sector. As an early adopter of this technology, the financial services sector benefits from the “Blockchain” via banking transactions, overpayments, securities and investments.

In the coming years, massive blockchain spending is expected to be concentrated in the manufacturing, retail and professional services sectors. Business and IT services will also benefit from the majority of this year’s technology spending. Other sectors such as food and healthcare can benefit from this technology.

The potential of the “Blockchain” to meet the social and economic challenges in the region

Poverty, conflict, unemployment, poor quality of education and scarcity of resources such as electricity are some of the most common social and economic issues facing a number of countries in the MENA region. Against these challenges there must be opportunities, because there is no doubt that a number of sectors will benefit from so-called Web3 applications.

Governments and supply chains

Governments can use blockchain, for example, to keep records such as real estate transactions, budgets, student loans and humanitarian aid. These use cases can reduce corruption, fraud and costs by eliminating ambiguity and confusion over typical government transactions and paper use. In another example, port authorities in some parts of the world use blockchain technology to track shipments by developing tamper-free methods. The purpose is to ensure that payments reach the parties involved and to eliminate fraudulent accounts and money laundering.

Give

Corruption is a pervasive problem in many Middle Eastern countries, especially those in conflict, who, despite the willingness of donors to support their humanitarian efforts, are often reluctant to do so for fear of abusing their donations. Blockchain offers donors and charities a high level of transparency about how their contributions are distributed among the beneficiaries. Technology is likely to play a crucial role in increasing donations such as food, medical supplies, education and infrastructure. This step can alleviate poverty and improve the quality of life in marginalized communities.

Property rights

Burglary is another form of corruption. Anti-piracy organizations and local authorities work hand in hand to crack down on counterfeit music, movies and more. Purchasing songs and music with cryptocurrency can eliminate copyright infringement. As a result, a favorable environment for emerging artists can emerge, enabling them to reach their audience directly without incurring the cost to distributors and the loss of piracy.

Health care

The blockchain can also serve as a global platform for patients’ medical records, eliminating the risk of security breaches, erasures or data tampering. Availability of decentralized restrictions on medical data can help generate ideas for disease control, while supporting the allocation of humanitarian aid in countries experiencing conflict or war.

property regulation

Land ownership records in our region are shrouded in mystery and vulnerable to bribery. Blockchain technology allows for tracking of land ownership history, verification of registrations, background checks for parties, payments, title deeds and taxes. In more developed markets such as the UAE, some property developers market properties as a means of trading. Owners can now issue blockchain-based tokens, which represent the value of their shares in a particular asset. In addition, many developers and real estate agencies have started selling virtual land and property in the form of NFTs.

Energy and the “sharing economy”

Another major challenge in the region, especially in countries experiencing or coming out of turmoil, is the lack of a regular energy source. But with the help of the blockchain, consumers can share their energy with their neighbors for an on-demand fee. It is a useful option, not only in unstable environments, but also within developed regions, where the “sharing economy” model of modern consumption is becoming increasingly popular, especially among millennials. With the increase in short-term rents for some products and services and their gradual replacement for the full ownership of one person or entity, the use of “Blockchain” can achieve positive results for companies and individuals in the region in terms of addressing pollution and conserve resources.

Reducing the unemployment rate

Any new technology can make a huge impact if it can provide financial inclusion. Blockchain technology has proven useful for lenders who want to provide small loans to people in marginalized communities who do not have access to banking services. Street vendors, for example, need minimal financial support to set up food stalls. Blockchain allows small business owners to borrow money without being subject to the comprehensive and complex credit ratings that banks currently require, thus reducing unemployment.

According to the World Bank, there are 1.7 billion people around the world without a bank account. For those living in remote or conflict areas where there are no banks, blockchain can provide a useful solution. Technology also facilitates faster and more cost-effective transactions, such as the overpayments that many families across the region rely on to ensure a decent living.

food sector

Furthermore, consumers can track their food from farm to kitchen through blockchain technology. For our specific region, consumers may be able to determine if a food is halal based on the food source and preparation methods. They can also check various aspects of food security and quality or the source of food contamination.

Many benefits and a long way to go

The potential benefits of blockchain technology are very clear. Although this technology has been around for almost 15 years, we need to be patient to perfect the applications it offers in all sectors.

When a new drug is manufactured or an innovative treatment is developed, it undergoes a series of rigorous testing and approvals before being given to patients. It can take months and even years before tangible benefits are realized. Even the most promising innovations face obstacles throughout their pilot phase. The nature of the “Blockchain” is no different from a groundbreaking tool that is on track to reach its full potential, and this technology appears to be a promising panacea for a range of social and economic issues facing our region in the facing.

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