Blockchain; a dark Horse in Nigeria's Economy

‌A blockchain cannot be described as a revolution, it is a tsunami-like phenomenon, slowly advancing and gradually enveloping everything along its way by force of progression.
- William Mougayar, Author of The Business Blockchain                        ‌

You might have heard the term blockchain a few times and it was almost always followed by the word cryptocurrency,  but you probably paid no attention to it. Well, it's high time you did.‌‌‌‌

The year 1962 marked the first time a census held under an independent government in Nigeria. The exercise which set out to estimate the total number of people living in the country is touted to be the first (and last) legitimate census ever.

When we conducted the census in 2006 or so, the raw figures said we were over 200 million; when they went and processed the figures it came down to 140 million.
‌‌- Fmr. Governor, Cross Rivers State, Donald Duke (2010)

However, since 1962 the national census has held four times, and each time it was surrounded by controversies. Why? Because in Nigeria, the figures gotten from a census are used to determine federal allocation which funds the budget of states in Nigeria.

In essence, the higher the number of people recorded in a region, the more money that region is entitled to. This could (and has) create(d) an avenue for corruption by incentivising its perpetrators to manipulate the figures in their favour.

The use of falsified figures to plan forms part of the reasons why a community would have "out-of-school children" because the federal schools are "filled up". It could also explain why many government hospitals are overcrowded due to poor planning stemming from under-reported figures in some states.

In 2010, when Donald Duke granted an interview to Sahara Reporters about how elections are rigged, he mentioned that technology could solve the problem. He then went ahead to narrate the how. What he described then was a system that prevents duplication of votes by allocating a unique one-time ID to voters and parties. So, on the day of the election, an intending voter is supposed to just access a system where they can “log-in”, choose the ID of the party they want to vote for, confirm and voila! Vote submitted.  

His solution implicitly called for a national database and an efficient identity management system, which Nigeria is still trying to get right as we speak. So far, they have used the traditional web portals for registering voters and conducting elections.

How about we gave elections, in particular, a chance to utilise another emerging technology? Say, Blockchain.

The use of blockchain in identity management might just be the silver lining to this persistent problem.

What is Blockchain in English, please?

A blockchain is aptly defined as a growing list of records, called blocks which are linked using cryptography.

Blockchains, some of which are readable by the public are used by cryptocurrencies in order to reduce human interference in verifying and maintaining records.

Satoshi Nakomoto (the name used by the unknown person or people who developed bitcoin) is said to have conceptualized the first blockchain in 2008. The following year, he implemented blockchain as a core component of bitcoin, a cryptocurrency. Where the blockchain serves as a public ledger for all transactions on the network.

So, how does blockchain work?

In Cryptocurrency parlance, a block is a data structure ^[1], that holds many transactions and other information necessary to validate the block, it is used to record a new transaction with the corresponding timestamp. Its application spans several fields (more on this further down). Transactions could mean different things. For example, in Bitcoin, transactions refer to the sending of money between parties. While, for Ethereum ^[2], transactions can mean the execution of a function. Once each block is completed, it’s added to the chain and this consequently creates a chain of blocks. Thus, leading to the term “blockchain”.

Cryptocurrencies are digitally signed to prevent tampering, they are used to process many transactions and could be used in solving complicated math problems. These problems predictably become more difficult over time as the blockchain grows. People who solve these equations are called Miners and they earn in cryptocurrency.

Safety

The blockchain is decentralized, meaning it doesn’t exist on one single server and is readily available for anyone to view (if it is a public blockchain), this makes the process transparent. Data is stored on peer-to-peer networks, and by having a decentralized storage system, blockchain networks lack centralized points of vulnerability that computer crackers can exploit. Also, there can be no central point of failure.

Distributed Ledger

Distributed ledger is digital data which is shared and can be replicated across different geographical locations, companies and sites. the data stored has no central database or central administrator.

The use of public-key cryptography is implemented in blockchain security. A public key (a long, random-looking string of numbers) is an address on the blockchain in which tokens sent across the network are recorded as belonging to that address. A private key is like a password that gives its owner access to their digital assets or the means to use other features that blockchains now support. The blockchain stores data which is generally considered incorruptible because of its decentralization.

Blockchains make use of different consensus mechanisms such as proof-of-work which is an application of distributed ledger, to propose updates to the ledger.

The Fintech Association of Nigeria confirmed that after the Central Bank of Nigeria (CBN)  set up an industry committee to articulate a roadmap for Blockchain and Cryptocurrency regulation, it has reiterated that it will not obstruct the use of digital currencies in Nigeria.

With support from the government, the market for blockchain is an untapped potential goldmine. In an article on the top 7 blockchain companies in Africa to watch out for. Two Nigerian companies came first and fifth, Blockchain Tech Hub and Digital Abundance respectively.

The use of blockchain can push the growth of Nigeria in different sectors. This article looks at four potential blockchain applications in Nigeria. Namely: in administering elections, provisioning of better healthcare services, financial services,  and identity management.

In Administering Elections

Blockchain can be utilized in elections by creating a decentralized ledger of voters which contains all necessary information needed. This eliminates fraudulent cases of people registering more than once.

If this were adopted, we could see cases of where, the use of a distributed ledger (blockchain) for voting was tested in Sierra Leone during their last presidential elections which held in February. Although the tech was not used throughout the whole country, it was deployed to its populous cities.

The voting process was overseen by Agora, a Swiss-based blockchain start-up. Once the voting had taken place, up to 400,000 ballots were then entered into Agora’s blockchain. Agora CEO, Leonardo Gammar was delighted by how well the process worked and was excited about future possibilities.

"I strongly believe that this election is the beginning of a much larger blockchain voting movement.", he said.

In healthcare systems

Information exchange is scattered among various databases and is not readily available for use in Nigeria. With blockchain, this information can be amalgamated; giving medical professionals access to patients’ files from previous hospitals or wherever they sought healthcare before.

Other than these, blockchain can transform revenue cycle management, drug supply management, clinical trials and prevent fraud.

In financial systems

The block time is the average amount of time it takes for the network to create one extra block in the blockchain. Some blockchains create a new block as often as every five seconds. By the time of block completion, the incorporated data becomes verifiable. In cryptocurrency, this is practically when the transaction takes place, so a shorter block time means faster transactions in Nigerian banks.

The blockchain concept was pioneered within the context of crypto-currency Bitcoin, but engineers have imagined many other ways for distributed ledger technology to streamline the world. Stock exchanges and big banks, for example, are looking at blockchain-type systems as trading settlement platforms.‌‌- Fmr. White house Director of Communications, Anthony Scaramucci

In banking systems, faster transactions mean a lot, a delay in money transfer for a stock broker could mean loss in revenue because of the rapid change in price of stock which could have occurred while payment was being made. Transferring money around the world takes days or even weeks and with the inclusion of blockchain, this could is reduced drastically.

Financial intermediaries handle a lot of money distributing from one point to another and because of this they are most times the victims of fraud. The inclusion of blockchain will see higher security measures in place to prevent such from happening.

Banks will also be able to handle larger sums of money and increased volumes of transactions.

In identity management

Nigeria still faces the problem of not having a centralized database for its citizens. Without a database of its citizens, it creates problems tracking population growth, crime and monitoring development. Currently, Nigeria has four acceptable forms of identification:

• International passport
• Drivers license
• Permanent voters card (PVC)
• National identity card

All of these have separate databases and exist independently meaning you could create four separate identities. The inclusion of blockchain synchronizes all these platforms into one, consequently making it easier to undergo registrations because biometric data can be easily culled from a central database when necessary.

The blockchain is still a relatively new technology and everyone wants to get in on the action.

It is easy to get sucked into the hype of one of the fastest-growing new technologies. But it is important to understand that blockchain has its limits. It may not be a suitable replacement for all systems, only for those in which decentralization has an added benefit.