Why blockchain carries hope in fight against Africa's trade cancers

Bitcoin may make headlines when its value crashes or climbs, but the blockchain technology behind the controversial cryptocurrency could help Kenya and indeed the continent overcome some of its biggest developmental challenges.

Leishen Pillay, partner at Hogan Lovells, says blockchain could present new ways to help overcome challenges which continue to stymy the continent’s growth, like corruption and a lack of infrastructure.

“Corruption and fraud are classic problems. Yet, people are still looking at them through the lens of how we have always tried to solve them in the past. We need to fully embrace the way technology can offer new solutions to these age old problems,” says Pillay.

He argues that blockchain offers a new approach to combatting corruption because of its ability to create and store encrypted records which can be verified, but not altered or deleted.

“The best way to explain how blockchain works is to think of the Lego blocks you may have played with as a child. Blockchain uses an algorithm to layer data sets on top of each other just like you use different layers of Lego blocks to build a wall.  The higher you build a wall of Lego, the more difficult it becomes to remove any of the Lego blocks inside it – especially the ones lower down. In the same way each layer of new data encrypted in a blockchain increases the integrity of the layers below it, so no single data set can be deleted or manipulated in any way.”

However, it is not just this layering process which ensures that data stored on a blockchain is so secure. Blockchain is also decentralised – which means it simultaneously stores data on a large number of computers instead of just one.

“Blockchain makes use of a distributed ledger. A traditional ledger – that is a book or piece of software used to record transactions – only stores transactions in one place. Blockchain stores each transaction on a network of millions of computers around the world, which makes it virtually un-hackable,” explains Pillay.

He says these attributes make blockchain technology ideal for keeping records which need to be protected from fraud and corruption. Property deeds, identity documents, hospital records and vehicle registration documents can all be securely stored using blockchain technology.

“Imagine we could place public finances on a blockchain accounting system where each transaction is recorded and can be traced. This can greatly improve transparency through ensuring there is an inalienable record of every governmental transaction which can be used to verify that funds are spent appropriately.”

But Pillay says the possible applications for blockchain technology in Africa go far beyond the administrative sphere. For example, a combination of blockchain and the internet of things could be used to continuously monitor the temperature of vaccines in a cold chain.

“Certain vaccines need to be kept below a certain temperature until it is administered to a patient. A connected smart device can monitor the temperature of the vaccine and create a tamper proof record if the cold chain is broken at any time. This removes any uncertainty around whether the vaccine can be administered safely.”

The decentralised nature of blockchain also means that this technology can implemented without the need for large infrastructure upgrades in Africa.

“Blockchain can be utilised in Africa even if the infrastructure needed to support it is not situated on the continent. All you need is a data enabled mobile phone. A system can be built and housed anywhere in the world and still be accessed from Africa. Infrastructure does not need to provide the bridge that gives Africa access to these technologies anymore, your smart device can now become that bridge.”