Bitcoin developing countries
He did so under the pseudonym of Satoshi Nakamoto, the creator of Bitcoin. Although many people bet from the beginning on this technological advance, the flip side of the coin was the central banks, which spoke out against Bitcoin. However, while these institutions were responsible for highlighting their risks, cryptocurrencies were, on the other hand, becoming a real alternative to a society without access to financial services. Latin American countries, such as Colombia or the Dominican Republic, found freedom in a decentralized economy where they could make transfers from anywhere without the control or approval of financial institutions.
Frontiers | Taming the Beast: Harnessing Blockchains in Developing Country Governments | Blockchain
The furor of cryptocurrencies sparked the interest of more and more people, creating new cryptocurrencies until having the more than 2, that currently exist. The rise of its use among an ever-widening public is forcing the world's governments to turn their attention to the issue. The first Latin American country to establish a legal framework for the use of virtual currencies was Mexico, something that was achieved through Fintech. Two-way transactions with countries on the other side of the Atlantic are already a reality.
In the case of Venezuela, the course of cryptocurrencies has suffered some ups and downs, although the population has come to them as a reserve of value. Other developing countries have shown their progress in regulating cryptocurrencies, as it is the case of Argentina. Buenos Aires is already known as 'the capital of Bitcoin in Latin America'.
This is one of the advances of the fourth industrial revolution. Cryptocurrencies are assets that are not linked to the economy or policy of any country and guarantee the security of all operations. Including these technological advances in banking implies a financial service free of intermediaries. Latin America lives also this reality, although its entry process has been slower than in European or North American countries. However, its regions have the full potential to use them in instant money transfer, and even for their development.
It reflects a decentralized economy that is gradually developing to contribute to the development of the population and reduce their poverty. In general, the growth of cryptocurrencies in Colombia is justified by the high banking costs imposed on international transfers and the search for profitability. In Venezuela, the justification for this growth lies in controlling the exchange of its currency, the economic crisis, the low saving capacity, the difficulties in exchanging foreign money, etc.
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In Mexico, however, they have aroused great enthusiasm and curiosity, a great part of the population has decided to experiment with virtual currencies. Estonia gained its independence in and rapidly gained a legitimate reputation of a country able to harness ICTs to promote overall human development. E-governance became its main staple. Nowadays, the country provides assistance in this area to many others almost on a global scale.
The cyber-attacks on Estonia's overall infostructure opened the door for further innovation in the area of security. That same year a company called Guardtime was launched, offering government a solution called KSI Keyless Service Infrastructure , which allowed for the decentralized verification of public records, data, and access points without having to use a digital signature.
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Instead, KSI uses one-way hashing and a decentralized ledger. Deployed in , KSI does resemble blockchain technology sans one of its core components: consensus algorithms. Being that as it may, the key point of the Estonia example is the role KSI played in supporting existing e-governance platforms and services.
It furnished a new solution to a major digital challenge that could perhaps not be solved otherwise. While the company claims it beat Nakamoto by a couple of years 16 , KSI is not in the same ballpark as Bitcoin or Ethereum Technological replication of the Estonia case using a different platform might thus be more complex than expected.
While not a country, Dubai is certainly larger in population than Estonia and hosts over nationalities.
The Dubai Emirate also operates almost like a city-state and has its own policies and institutions in addition to federal ones. Back in , the Prime Minister of the Emirate announced the launching of a blockchain strategy planned to be fully implemented by Gulf News, Spearheaded by Smart Dubai, a local entity that oversees the strategic deployment of new technologies and innovation in close collaboration with the private sector, the strategy set three core goals: foster government efficiency; create new business opportunities and startups; and assume a leadership position on blockchain technologies Bishr, In terms of efficiency, two key priorities have been identified: a paperless government and a blockchain-based payments system Jones, Note that both themes were already part of the overall policy agenda of Smart Dubai, which also happens to host the Smart Dubai Government initiative The second theme focusing on startups is also part of the Smart Dubai agenda.
More recently, Smart Dubai launched a decentralized open data initiative, yet another local priority previously identified, in partnership with a blockchain company Andrikopoulos, While getting updated information on the evolution of these projects is cumbersome, the core lesson from Dubai is similar to that of Estonia: blockchains are brought in to support existing digital government issues and priorities and are effectively deployed to address related challenges.
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But in the case of Dubai, the Emirate has developed a strategy and created an international multi-stakeholder board to oversee its implementation Berryhill et al. Kenya seems to be following these same steps. Early last year the government announced the creation of a blockchain task force under the leadership of the Ministry of ICT. The task force prepared a report which was submitted to the Minister last November. While the report is apparently not publicly, press reports suggest that its contents are fully aligned with Kenya's development priorities Kenyan Wallstreet, ; Tanui, Perhaps coincidentally, the government announced a program to provide affordable housing a month before Alexandre, Countries such as Georgia and Peru have taken a more sectoral approach.
Georgia is one of the leaders in the use of blockchains for land title registration which has already been the subject of critical academic research Lemieux, ; Thomas, Recently, Peru announced a new government procurement system based on blockchain technology in partnership with a local blockchain startup and the Inter American Development Bank IADB.
Public procurement is one of the main sources of corruption and a traditional priority of e-government initiatives. In any event, neither of these two countries have an overall blockchain strategy. In principle then, the results and outcomes of ongoing sectoral initiatives can provide fertile ground for such development. A counterexample for the developed world can also offer additional insights. Illinois became the first US state to embrace blockchain technology.
These are the countries where cryptocurrency use is most common
Launched at the end of , the initiative was part of the broader Smarter State initiative sponsored by the Department of Innovation and Technology. The blockchain project has three overall targets: increase government efficiency by integrating services; develop a local ecosystem; and modernize governance to handle a distributed economy Illinois Blockchain Initiative, Pilots on land titles and self-sovereign identity were launched a few months later.
However, by the beginning of , the project seems to have fizzled. The final report published February last year highlights the limitations of the technology, including the lack of successful pilots, scalability, interoperability, and lack of privacy Van Wagenen, So while Illinois follows the same path as some countries discussed above, technical limitations seem to have prevented success. In addition, the fact that the project was requesting specific legislative changes at the state level might have also ruffled some feathers. The intersections between development, ICTs and developing country governments provide the fodder for the conceptual framework developed in this paper.
Figure 2 below depicts such interconnections. Governments play various roles when it comes to sustainable development and ICTs, and are not limited to the digital government sphere per se. But governments should lead to promote digital government within a sustainable development context. On the flip side, the traditional approach to e-government centers on the relation between the public sector and technology while assuming development outcomes are either the natural and automatic. For example, the standard e-government transactional approach that emphasizes G2B, G2C, and G2G interactions—depicted in Figure 2 by the intersection between government and ICTs, has limited scope for targeting specific development gaps as the onus is on interactions among key sectors and stakeholders.
Having governments as part and parcel of the overall equation also demands serious consideration of the relationship between state capacity and both development and digital technologies. The dynamics between these three can be complex, bearing in mind that sustainable development itself encompasses four pillars governance included while digital government comprises three, as discussed in section Conceptual Framework above.
Nevertheless, the essential point is that state capacity is both a means to promote digital government and sustainable development and a goal in itself, as clearly established by the UN SDG agenda. For starters, and like most digital technologies, blockchains are exogenous to the national ecosystems of developing countries. Governments thus continuously play catch-up with such technologies. A core issue here is the lack of local capacity to effectively harness the new entrant, even if the platform is Open Source and thus has no per-user licensing costs.
Such capacity is not merely technical but also scientific and managerial as governments and partners should fully comprehend the inner workings of the technology to, for example, launch public bidding processes calling for the adoption of blockchains to support specific digital government priorities or gaps.
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In this regard, blockchains are not at all different from previous digital technologies migrating into developing nations. While the complexity of blockchains might add additional entry barriers, governments are probably better off focusing on both the three underlying technologies that support it and the different types of blockchains, DLTs included, that are available.
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Regarding the former, many countries in the Global South lack adequate cryptographic expertise, have weak public key infrastructures PKIs in place, and are not very familiar with consensus algorithms. Furthermore, while peer-to-peer networking is readily available, limited Internet access will surely pose constraints to widespread utilization.
As described in section Characterizing Blockchain Technology for the Public Sector above, developing country governments can choose among different types of blockchains and DLTs. However, the first question they need to ask is if blockchain technology is the most optimal solution for the issue at stake.
Taming the Beast: Harnessing Blockchains in Developing Country Governments
Several models for making such a decision have already been developed Rustum, and should be further refined to fit developing country contexts. Selecting the adequate platform will mostly depend on the type of digital government priority under the radar screen. It is however possible to conclude that, in general, governments should opt for private or closed blockchains Atzori, , hybrids included.