Blockchain is a revolutionary technology for developing nations, presenting solutions to structural challenges like property registration, financial inclusion, and supply chain barriers. Enhancing transparency, efficiency, and curbing corruption, this technology can attract investments, bolster global competitiveness, and empower local communities and businesses. Moreover, blockchain could address existing infrastructural limitations, enabling swifter and more effective digital solutions in these nations.
Based on market research by PwC, the primary application of blockchain that holds immense potential in economic value generation is provenance. This technology has an extraordinary ability to assist companies in verifying their products’ origins and monitoring supply chain movements, thus minimizing fraud and contamination issues. PwC estimates this will boost the global GDP by approximately $962 billion by 2030. Other driving factors for blockchain adoption include better access to payments and financial tools valued at $433 billion and identity management at $224 billion. Deloitte’s 2021 Global Blockchain survey revealed that about 52% of financial service industry respondents see substantial blockchain potential in verifying customer billing instructions and curbing fraudulent activities. From the same survey, around 51% of respondents believe blockchain will enhance financial inclusion, while 48% think it will assist in conducting customer identification checks.
Unique challenges faced by developing countries necessitate a specialized approach in formulating blockchain regulations. This technology can address some of the major issues these nations confront, such as financial inclusion and government transparency. Here are recommended regulations to maximize blockchain benefits in developing countries:
Promote Financial Inclusion: Blockchain can serve millions currently unreachable by traditional banking systems. Regulations should support innovations fostering financial inclusion, like digital currencies or decentralized financial platforms.
Prioritize Education and Training: Dedicated efforts are essential to educate the public, developers, and authorities about blockchain technology. Regulations should encourage educational initiatives for safe adoption and enhancing local expertise.
Stimulate Public-Private Partnerships: Blockchain-based solutions, like land certification or aid distribution systems, are more effective when governments collaborate with the private sector. Regulations should facilitate such partnerships.
Consumer Protection as a Priority: Given the considerable potential risks in the blockchain space, regulations must ensure that consumers in developing countries receive added protection.
Enhance Infrastructure: Reliable IT infrastructure is crucial for blockchain implementation. Regulations should support digital infrastructure investments.
Seek Technical and Financial Assistance: To craft and implement effective regulations, developing countries should leverage technical and financial aid from developed nations and international organizations.
Strengthen Intellectual Property Rights (IPR): Regulations should back local innovation by protecting IPR and providing incentives for research and development in blockchain technology.
Emphasize Cybersecurity: Developing nations must ensure they possess the expertise and resources to tackle blockchain-related cybersecurity challenges.
Special Support for SMEs: Given the critical role of SMEs in developing economies, regulations should provide incentives or dedicated resources to aid SMEs in leveraging blockchain.
Boost Government Transparency and Accountability: The use of blockchain in public administration should be encouraged through regulations to improve transparency and accountability.
With the right approach, blockchain regulations can play a pivotal role in aiding developing countries to leverage this technology for sustainable growth and development. Collaboration among all stakeholders will ensure that maximum benefits are reaped with minimal risks.