Blockchain is a suite of technologies that make it possible to store records of financial transactions and other such information in chronological order. In other words, blockchains are digital ledgers. What makes these digital ledgers groundbreaking is that they are distributed and decentralised, meaning they can be used to store trustworthy, accessible information.
BLOCKCHAIN TECHNOLOGY IN AFRICA
Think of it as its name suggests: a line of blocks connected by a chain, with each block representing a piece of information. Say the last block that was added to our chain contains the information “Naomi sold the land to Issa”. If Issa decides to sell the land to Asha, a new block is created to join the chain. This block contains the information “Issa sold the land to Asha.” As with every new addition to the chain, this block needs to be verified by all computers connected to the blockchain’s network. Through a complex system of mathematical puzzle-solving and security measures, each block is not only verified, but can be accessed by any member of the network.
HOW DO BLOCKCHAIN TECHNOLOGIES WORK?
You may have heard of blockchain as the technology that underpins Bitcoin. However, the potential of blockchain technologies extends far beyond powering cryptocurrencies, and its many uses are already being ambitiously explored within the African continent;
- Land ownership disputes: in cases where official paperwork is difficult to come by, reliable records of land transactions can be stored on the blockchain.
- Trust in financial institutions: with blockchains comes transparency, and with transparency comes trust. We know that information stored on blockchains is accurate, and all additional information is added separately along with a record of every single previous modification. Trust facilitates financial transactions and contacts, and is therefore great for the economy.
- Fairer elections: because all modifications are visible and public, keeping a record of votes on a blockchain greatly limits the risk of fraud.
Blockchain technologies show great promise in solving certain pernicious problems in African nations. However, more investment in its development is needed before it can become widespread. At the moment it is also most beneficial to tech-savvy Africans, who for instance are using their crypto-wallets to mitigate the threat of inflation. Therefore, in order to put this technology to the best and most productive uses, we must first understand it.
Digital ledger – a collection of financial accounts, or a record of transactions.
Bitcoin – the world’s most well-known cryptocurrency.
Cryptocurrency – a kind of virtual money, all transactions of which are recorded using digital ledger technologies, typically blockchains. Cryptocurrencies can be used to invest and make purchases, just like any other currency.
Crypto-wallet – a virtual wallet in which people store their cryptocurrency.