SA needs to get on board with blockchain
THE ADVENT of the internet has forever changed the way in which we share information. Blockchain is now changing the way we transact.
This form of distributed ledger technology that employs state-of-theart cryptography to store data across peer-to-peer computer networks has been branded by many technology enthusiasts as the solution to almost every challenge known to mankind. Many believe that blockchain will eventually eliminate the need for intermediaries in transactions and will transform not only our financial systems, but also the whole economy, energy markets and supply chains.
Although blockchain is the solution to many problems, it is not a cure-all and should not be considered as a single technology solution.
Blockchain has surpassed its humble beginnings in cryptocurrency and banking and is transforming numerous other industries. After all, the application of a transparent, verifiable register of transaction data without central supervision is practically infinite.
Blockchain is being adopted by various industries and businesses at an unparalleled rate. There is a growing recognition among businesses and governments that this technology has profound implications in many areas.
Probably the most amazing example of the adoption of blockchain technology is Switzerland, where 960 companies are active in blockchain research. In the canton of Zug, Bitcoin has been accepted as a form of payment for transactions and taxes.
The reasons for the attractiveness of Switzerland for blockchain innovations are:
◆ A progressive and supportive political system. Regulatory frameworks in Switzerland are extremely business-friendly, and the country has the most advanced regulatory framework for digital financial assets and cryptocurrencies in the world.
◆ Supportive private sector and economic incentives. The Swiss franc is a strong and stable currency, and the country has a high rate of productivity leading to the world’s highest gross domestic product per capita. A friendly business environment is further created through excellent domestic and global business networks, flexible labour laws, low bureaucracy, a sophisticated and respected legal system, low corruption, availability of investment capital, low corporate and personal taxes, and high service levels.
◆ Attractiveness to tech talent. Switzerland is number one in the world for ease of attracting and retaining world-class talent. It has a high-quality education system and one of the highest investments per capita in research and development. Wage levels are high without increasing labour costs, because productivity levels are exceptionally high.
Although not nearly at the level of Switzerland, South Africa is no exception to the adoption of blockchain.
Blockchain technology is indisputably disrupting the business and governmental arena in South Africa – particularly when the world is rife with countless corrupt deals, inadequate record-keeping and often untraceable transactions. The main reason for the growing adoption of blockchain is the bad track record of governments, institutions and organisations that has resulted in citizens distrusting people in positions of power.
In 2018, President Cyril Ramaphosa made an announcement that a “Commission on the Fourth Industrial Revolution” would be established in partnership with the private sector to promote new technologies, such as blockchain. The commission was formed in April 2019, but has until now delivered very few concrete results, except for a report published in October last year that contained a high-level analysis of the Fourth Industrial Revolution and made some recommendations.
Although the South African blockchain ecosystem is growing and there is a tremendous amount of energy and enthusiasm, South Africa is still far behind Switzerland and even some countries in Africa. The regulatory framework in South Africa is unfriendly, government participation in the blockchain ecosystem is low, the economy is struggling, labour laws are inflexible, bureaucracy is rife, corruption is high, corporate and personal taxes are high, and service levels are extremely low. South Africa also has limited skilled technical blockchain resources and a limited capacity to attract world-class talent.
Considering that blockchain is already inspiring institutions, investors, brands and entrepreneurs across the world, South Africa might miss out if we do not take the bold step to see how it might enable better systems, transactions or operational processes in our country and our organisations.