Md. Mizanur Rahman ACS :
“Blockchain” technology is being considered one of the latest inventions of the modern age. It is a digital concept to store data. It allows value exchange without the need or trust of a central authority. The idea of blockchain technology was first come out in a research paper called “Bitcoin: A Peer-To-Peer Electronic Cash System” in 2008. Satoshi Nakamoto, a pseudonym is considered the inventor of this technology but still now the true identity of the person or group behind this name has not yet been disclosed. Simply, it is a system that allows a group of connected computers to maintain a single updated and secure ledger. According to Lakhani and Lansiti, “A blockchain is an open, distributed ledger that can record transactions between parties efficiently and in a verifiable and permanent way”. Being a new technology it is assumed that it will change the world eliminating poverty and reducing unemployment. Especially being decentralized many works of the same nature can be done simultaneously with this new technology.
l How does Blockchain work?
Firstly, a user will start a transaction (block) signing it with the private key. Actually, private key will generate a unique digital signature and will also ensure that nobody can change or reverse it. Even, if anyone tries to modify or alter the information, the digital signature will be changed drastically. As a result nobody will be able to modify it. After that, the transaction will get broadcasted to the verifying users. Here the blockchain platform can use various mechanisms to verify the authentication of the respective information. These mechanisms are called consensus algorithms. Once the authentication of the transaction is verified by any user, then it will get a place in the ledger. It will also contain a timestamp and a unique ID to secure it further from any alteration or modification. Each block links the previous block. This developing blockchain is managed in a peer-to-peer network. It needs to mention that every transaction is checked automatically in every ten minutes.
l Blockchain Applications
It has a nearly endless amount of applications across almost every industry. The most important application of blockchain technology is the “Smart Contract”. This is basically a computer program that can perform the terms of a contract automatically. It’s another reliable application is that; it can be used to control the ownership of the property which is called “Smart Property”. Besides, this technology is used in Capital Market, Banking Sector, Insurance payouts, Supply Chain Management, Data Management, Public Service Management, Identity Management, Anti-Money Laundering, Real Estate & Land title registration, Crowd funding, The sharing Economy, Shipping Industry, Protection of Intellectual Property, Digital survey, Digital payment, Digital IDs, Food safety, Tax regulation & Compliance, Artificial Intelligence, Logistics Operation, Ticketing system of Air Lines and Railways, Data Sharing, Digital Voting, Weapon Tracking, Global Money Transferring, Auditing, National Payment System, Bond issue, LC issue, SME Loan Management etc.
l Banking Sector
Blockchain has very good potentiality in banking sector. It has already got much popularity in many countries. There is no doubt that it will make the banking sector more efficient. The technology that is used in Cryptocurrency can also be used by the banks to secure their transactions. The Bank of Thailand has been using the blockchain technology from 2019. In Thailand 8 other banks are also using this technology; Bangkok Bank, Krungthai Bank, Bank of Ayodya, Kasikorn Bank, Siam Commercial Bank, Thanachart Bank, Standard Chartered Bank Thai & HSBC. They are using this technology as their pilot project. “R-3” the blockchain based software developer of New York, USA has developed software for them. Recently, The Central Bank of Cambodia has joined with the Japan’s Soramitsu Company and launched a digital transaction system in Cambodia using the blockchain technology. Moreover, transaction through blockchain will not require any addition fees. As a result, the unnecessary expenditure in the banking sector will be reduced greatly.
l Insurance Sector
The insurance sector is facing a lot of problems; inefficiency, fund crisis, fraud, human error and cyber attack. Blockchain optimizes the efficiency, security and the transparency of the insurance sector. As a result if any complain comes from the policy holder, then the “Smart contract” will dissolve it immediately. It saves billions of hours of paperwork each year. The blockchain’s ledgers being decentralized, it is not possible to do any corruption or manipulation. Moreover communication among the concerned parties can be improved through this technology. Nine companies have been using the blockchain technology since 2017 to revolutionize the insurance sector; BEENSET, GUARDTIME, FIDENTIAX, B3I, DYNAMIS, LEMONADE, FIZZY, TEAMBTELLA & ETHERSC.
l Capital Market
The blockchain technology can protect the interest of the grassroots investors by improving information access, reducing systematic risk, settlement time and also operational costs. Moreover monitoring systematic risk, fund raising, asset management, book keeping system will be comparatively easier which will bring dimension in the capital market. Securities and Exchange Commission of Thailand has already implemented the blockchain based bond and security which gives easier access to the investors in the capital market. The Australian Securitas Exchange (ASX), the world’s 16th largest financial exchange in the world is using the blockchain technology. Myanmar has also declared to use the blockchain technology to run its capital Market.
l Land Registry
Blockchain is considered to be a highly secure system due to its digital signature and encryption. It prevents the land document related fraud forgery. In this system both the seller and the buyer must have a digital decentralized ID. As a result it will reduce the ownership related problems. Moreover, it offers a distributed database where anyone can record and access information without the involvement of any centralized authority. Through this technology the seller of the land can transfer the ownership of the land legitimately to the buyer without needing the third party verification. United States, United Kingdom, Sweden & Netherlands have declared to introduce this technology in their land registry system.
l Shipping Industry
The Shipping Companies are becoming interested towards the blockchain technology because of the reduction of cost of data transmission or the documentation. It is assumed that minimum 20% of the total operating cost that is currently spent on the paperwork will be reduced. However, this technology is capable to reduce the cost of storing, sorting or updating data.
l Health Sector
Generally the patients need different information about diseases, doctors, medical offices, hospitals, pharmaceutical companies, medical insurance companies etc. Therefore it is very important to store and maintain these data properly. Besides, it is often seen that, the amount of drugs given to the same patient may vary according to the medical reports. Unless the new information is added to the report about the patient, it is difficult for the doctors to take the final decision. Moreover diagnosis reports are collected from different organizations. That’s why the confidentiality of the information should be maintained strictly. But, most of the time it may not be possible. For these reasons, the United States has declared to use the blockchain technology to solve the health related problems of its citizens.
l Railway
In the railway station it is a common picture that the passengers have to stand on long line for a long time while purchasing ticket. Sometimes the passengers suffer greatly due to the problems with the server. Moreover, some tickets are sold in the black market. These problems can be solved easily with the help of blockchain technology. The total amount of unsold tickets can be shown on the big screen. This will increase the confidence of the passengers. With the help of “Smart Contracts” and sensors, all the trains can communicate with each other. The problem of train delays will be removed with the help of this technology. Moreover, this technology can be used to check the driver’s license and driver’s authorization and also billing the infrastructure. Recently China, Russia and Australia have implemented the blockchain technology in their railways.
l Ride-Sharing
The blockchain technology can also be used in ride sharing service. Applying this technology, both the drivers and the passengers will be benefitted especially the cost of the passengers will be reduced.
l Digital voting
Sierra Leone, an African country used this technology to vote in 2018. The United States is also preparing to vote by this technology in the future.
l Limitations
Blockchain has some limitations also. Since the chains are open to every user equally. To protect the confidentiality of information, users have to be very selective. In addition, if the blockchain holds the correct record of entering, changing or deleting information, anyone can steal the login password of the user and can enter the wrong information. That’s why the users have to be very careful with their own device and login. Moreover, many exchange platforms are emerging and digital currencies are gaining popularity, but still it is not easy to trade with bitcoin for goods and services.
l Prospects of Blockchain in Bangladesh
Blockchain is being considered an effective technology globally. It has become popular around the world. Estonia & Dubai have already invested in this technology. Internationally it has $80 billion market. The “Maharashtra” state of India has announced to use the blockchain technology to launch its E-Governance. The “Maharashtra” state has also said that they will use the public cloud. They are predicting that it will create a market of USD 200 million and will save huge amount of money as all the information will be transferred to the cloud. Moreover, due to the use of blockchain, the security and the transparency of the information will be maintained properly.
Like “Maharashtra”, the whole world is now turning to the blockchain technology. Bangladesh does not seem to be lagging behind for too long. There is no doubt that, after the invention of internet, blockchain is being considered the biggest invention. With the new revolution in the internet media world, blockchain is also believed to bring about a revolution in the world of financial and information transactions. But, the blockchain infrastructure in Bangladesh is still in primitive stage. The good news is that our government has taken some initiatives to build a private blockchain platform for the government agencies through the “Bangladesh Computer Council”. It will enable government agencies to utilize the platform to ensure the security of critical data. Moreover our government has a plan to provide training to the IT professionals on blockchain from Japan and India. But, before starting this, we have to change our mentality. If we cannot change the mentality of a decentralized control, then this system will not work. We have to adapt with the new technology. If we cannot adapt with this, then we will go ahead, but the others will be far ahead of us. That’s why Kebin Hanley, the Director of the Royal Bank of Scotland said “If we do not find new ways of innovating and co-innovating, we run the risk of becoming ideally suited for a world that’s passed us by.”
(Md. Mizanur Rahman ACS is a Banker, working at Pubali Bank Limited. He is also an Associate Member of the Institute of Chartered Secretaries of Bangladesh (ICSB). He can be reached to this email: [email protected])
