Blockchain is a particular way of organising digital information for a purpose in an application.
Digital transformation on the other hand produces digital information, some of which benefit from Blockchain style of organising digital information.
Thus, the link between blockchain and digital information is natural.
At the core of the digital economy are computing and internet technologies which create cyberspace that enable digital transformation and blockchain.
Data in today’s cyberspace has become increasingly centralised and often located in successful internet companies on the market.
The consolidation on a decentralised internet network has occurred through competition to serve users seeking the ease of use and other services.
It so happens that traditional regulation in entity based, which favour a few centralised organisations under under regulation.
However, these centralized organizations may become single point of failure. These corporations optimize to shareholder value making them somewhat opaque. Additionally, vulnerabilities and other operational malfunctions such as security infraction which reveal user information or user privacy compromised.
That is the user as an owner is not in control and not empowered.
To reverse this trend, new technologies attempt to empower the user including reducing involvement of intermediaries by applications level decentralization. Blockchain is one such technology with great promise and questions.
Bitcoin started its Blockchain in 2009 after the Banking bubble and it’s introduction was to challenge the norm with a currency system with limited and fixed amount of money in circulation. It also came with a decentralized public ledger called blockchain and an ecosystem of service providers.
Ghana is not new to Blockchain and crypto currency. Since Bitcoin mining operation started in 2015, there’s been engagement with government, regulators, financial intelligence center and others.
There’s been workshop from blockchain academy and annual conference from blockchain network.
The system sought to build trust using cryptographic technologies and a mechanism of agreement on the state of accounts on the immutable decentralized time ordered ledger, through a process known as consensus. Other blockchains emerged notable amongst them is Ethereum, which introduced in 2015 a variant of Bitcoin blockchain with software programs that exist on blockchain. This unleashed the industry with a wide variety of coins for various purposes and Decentralized Finance (DeFi) applications. This further caused new types of coins called non-fungible tokens (NFTs) that can represent rights to digital art, digital goods and physical goods.
All these innovations have raised numerous challenges to regulation. Firstly, regulators attention tends to be linear while the growth in innovation is exponential creating pressures. Secondly the decentralized nature of blockchain coupled with its global reach created concerns around money laundering, terrorism financing and other criminal activities.
Others have argued the confirmation of transactions called mining consumes too much electricity and terrible for the world not mentioning that existing system also consume appreciable amount of electricity. There has to be a cost to permission less trust that there’s no double spending which the blockchain sensure.
Lastly, the value of these private coins depend on user acquisition and therefore volatile by nature and been portrayed as a major consumer protection concern.
Note that amidst all these issues associated with blockchain, digital and cryptocurrencies, we have new converts notable among them are governments issuing CBDC and corporations who are also rushing to issue stable coins. We congratulate Bank of Ghana for its eCedi initiatives.
There are additional responsibilities that the user of such systems must learn how to protect its secret keys in similar way mobile money users protect PIN numbers but as the transfers are non-reversible, a user can’t afford any mistakes and must take extreme precautions.
The potential of blockchain extends beyond finance and banking applications to applications that require immutability, supply chain management, rights and certificates, and many more. Securing government documents by blockchain have been cited as low hanging fruits to show blockchain use cases. Above all traceability and audit ability of blockchain have proven attractive to enthusiasts.
Governance initiatives are necessary for safe adoption of Blockchain. In Ghana,GDC has been asking to be regulated since 2015. In the early years the barrier was how to regulate an unknown technology. Along the way the industry was during underground following some unfavourable happenings in the finance sector. It was not till 2021 that GDC was approved to operate in the Bank of Ghana sandbox. While this is good for Ghana can do, it also shows that regulation takes time, and we can miss opportunities. The global industry is already consolidating, and global companies have built up wallets while local companies were restrained and law abiding.
A country has gone further and recognized Bitcoin as legal tender and volcano devasted Tonga is in recent news about how crypto currency helped in restoration…We as a country should move forward and adopt crypto currencies through innovation regulation. As with all technology waves, the early bird catches the worm. We are hopeful that Blockchain technologies do not suffer same fate as internet where we went from over 100 local ISPs in 90s to the handful of multinational companies providing internet services today.
The policy environment should support Ghanaian companies to venture into providing crypto currency services locally before market captured by international.
