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WHAT YOU NEED TO KNOW ABOUT BLOCKCHAIN

The current year promises to be an exciting one for blockchain technology with improved interoperability and significant efforts from vendors to improve scalability, latency, and data privacy. Besides the banking and finance sector, blockchain technology has evinced strong interest in sectors such as manufacturing and healthcare with some interesting use cases.

According to the IDC Blockchain Spending Guide published in August 2020, spending on blockchain in the META region will grow by 3.5 times by 2024, registering a staggering compound annual growth rate (CAGR) of 36.37% for the 2020 to 2024 forecast period.

Manish Ranjan, Program Manager for Software & Cloud at IDC Middle East, Turkey and Africa, says, “Blockchain is a promising technology which has introduced a ‘trust layer’ in industry ecosystem. Many organisations across markets and industries within the wider Middle East, Turkey, and Africa (META) region continue to increase their investment in blockchain technology. Banking, financial services and Insurance (BFSI), retail and wholesale, logistics, manufacturing, and healthcare are the leading industry verticals investing in the blockchain technology in META region.”

The accelerated demand for blockchain solutions has prompted many big tech vendors to offer blockchain as a service, which helps businesses to access this technology without investing in-house development.

What are the key blockchain trends to watch in 2021?

Ali Al Shami, Country Manager - KSA & Bahrain, Red Hat, picks enterprise blockchain as one of the top trends, interest in which will continue to surge as businesses strive to streamline their processes at scale with complete visibility and control. “Another is blockchain-as-a-service (BaaS). As enterprises move forward with plans to equip themselves with blockchain infrastructure and technology, they will pursue this particular business model, which involves a third party installing, hosting, and maintaining the blockchain network in return for an agreed fee.

Ali Al Shami

Other trends will also be visible across the wider enterprise community, including supply chain optimisation and the introduction of central bank digital currencies,” he says.

Sunath Kolazhi, Vice President of Sales for Middle East & Africa, SettleMint, agrees that governments and central banks are actively exploring how they can leverage distributed ledger technology like blockchain to improve monetary and fiscal policy execution.

“Second is the rise of NFT’s or (non-fungible tokens) which have gotten a lot of attention in the media lately around its use in digital art. However additionally, NFTs have the potential to create digitised and fractionalised representations of real assets like land, diamonds, or other commodities,” he says.

Mohammed El Khateb, Consumer Packaged Goods Segment Director Middle East & Africa at Schneider Electric, says advances in blockchain technology could enable the food and beverage industry (F&B) to enhance traceability. In the US alone, food recalls and foodborne illnesses cost $77 billion per annum, including discarded products, loss of revenue, damage to corporate reputations and healthcare costs.

“Blockchain has the potential to be used in many different industries and contexts due to the high degree of transnational efficiency it provides. Moreover, blockchain should soon allow energy “prosumers” to buy and sell electrons. And EV’s will be doubling as storage capacities to help stabilise electricity grids when the demand for energy peaks,” he says.

Antoine Maisonneuve, Blockchain Program Manager, Orange Business Services, says blockchain will increase the efficiency and transparency of supply chains. “Today, the biggest blockchain projects in industry aim to automate supply chain track and trace processes. There is a large ROI incentive to link all partners on the same trusted network. It will have a major impact on the transparency and the efficiency of the transactions between companies, with a huge reduction in disputes. Tradelens – an open ecosystem of interconnected supply chain partners - is a perfect example.”

Another big trend in this space is the rise of private blockchains, where only a select group of stakeholders have the authority in the network.

Farid Faraidooni, Chief New Business and Innovation Officer, du, says it is important to clearly understand private blockchain. In simple terms, a private blockchain is a shared ledger(DLT) that is secured by traditional security techniques, such as limited user rights. Generally, security is provided to a private blockchain using private keys known only to the related organisation.

“A private blockchain is a category of the blockchain technology, where WriteRead permissions to the ledger might be restricted based on the organisation’s usability. And that’s why private blockchain provides more opportunities to businesses in terms of leveraging the blockchain technology for business-tobusiness use cases,” he says.

Al Shami from Red Hat says public and private blockchain are both

Antoine Maisonneuve Farid Faraidooni

DU HAS RECENTLY DEVELOPED UAEFLAVORED BLOCKCHAIN PLATFORM AS A SERVICE (BLOCKCHAIN EDGE). THIS LOCALLY HOSTED, CLOUDNATIVE BLOCKCHAIN SERVICE ALLOWS USERS TO PROVISION A PRIVATE BLOCKCHAIN NETWORKS ON MULTIPLE BLOCKCHAIN PROTOCOLS WITH COMPLETE NETWORK INTEROPERABILITY IN MINUTES ON DIFFERENT AVAILABILITY ZONES WITHIN THE UAE.

Manish Ranjan

attractive propositions due to the respective benefits they provide. For example, public blockchains provide greater network security and support enterprises in reducing costs, while private blockchains facilitate a higher number of transactions at greater speed. As such, it is likely that public and private blockchain will continue to co-exist over the coming years, especially given the fact that enterprises have different requirements and aspirations.

“Moreover, we will probably witness more types of blockchain emerge during this period, with a hybrid option that combines public and private blockchain to provide solutions certainly feasible,” he says.

Ranjan from IDC opines there will be an existence of a hybrid blockchain where both public (which is more decentralised), as well as private blockchain (i.e. more centralised), are being used for specific use cases. “At the same time, a few organisations consider running their own blockchain solutions. There are certain use cases that are best to be kept on the public blockchain while more specific one can go on private blockchain. Private blockchain enables organisations to have complete access control by setting up a permissioned network to validate who is allowed to participate. This will continue to gain traction among organisations looking to implement

Mohamed El Khateb Sunath Kolazhi

blockchain mainly for business-tobusiness (B2B) use cases where they want to have greater security and privacy,” he says.

Blockchain as a service (BaaS) is also expected to drive market growth in the coming years.

“The ‘as-a-service’ model of distribution has been key to the rapid adoption of several technology trends, including cloud computing, the internet of things (IoT), and artificial intelligence (AI). Blockchain is likely to be next, with companies including Amazon, IBM and Microsoft, all offering or developing tools and platforms enabling businesses to leverage the technology without making up-front investments in infrastructure and skills,” says Maisonneuve from Orange Business Services.

Kolazhi from SettleMint says the amount of resources needed remains challenging for enterprises aiming to move their blockchain use cases past proof-of-concept (POC) and into implementation. As a result, it makes sense to start looking for low-code and blockchain-platform-as-a-services to make a developer’s job as easy as possible when working with this nascent technology, he says.

Faraidooni from du says regionally and internationally, more and more companies continue to introduce new tools or developing valuable platforms that others can leverage without investing in advance. “This shows no signs of slowing down, meaning enterprises can accelerate their aspirations with peace of mind that upfront investment issues will not arise with blockchain-as-a-service.”

Du has recently developed UAEflavored Blockchain Platform as a service (Blockchain Edge). This locally hosted, cloud-native blockchain service allows users to provision a private blockchain networks on multiple blockchain protocols with complete network interoperability in minutes on different availability zones within the UAE.

Ranjan from IDC says when planning to implement blockchain technology, it is vital to go slow as the market is still nascent. In most of the cases, it is advised to select a blockchain technology partner which brings in the technology expertise, offers required domain or vertical exposure and provides a much-needed prototype or sandbox environment to the organisations to do the initial testing and trials at less investment.

“Learn from the global success stories and blockchain methodologies and start with sandboxing and testing of those solutions that seem relevant to your business. Hire skills and resources that are needed to ensure better results, but with minimal upfront investment as this will help to minimise losses in the case of failure,” he says.