

  • Georgia and the city of Zug in Switzerland are examples of successful early adopters
  • Resistance to blockchain may be unfairly tied to scepticism about cryptocurrencies




IT IS difficult to understand countries that are not using blockchain technology to forward their economic development, according to Onat Kibaroğlu (pic), the chief global strategist for digital platform Richtopia. "It's like not using the Internet in the 90s."

Speaking at the Global Entrepreneurship Community Summit 2017 in Kuala Lumpur, he cites the example of Indonesia seemingly not wanting to use blockchain or cryptocurrencies to implement their financial inclusion agenda.

"They have this goal of increasing the amount of people that have bank accounts and creating a more transparent system where they know where the money is coming in and going from to protect the country."

Indonesia's National Strategy for Financial Inclusion published in 2012 aims to enhance the prospects of the poor to engage in Indonesia's financial system, including access to credit, savings accounts, insurance, leasing and payment services.

However, Indonesia's recent decision to ban Bitcoin transactions is a puzzling development to Kibraroglu. "Until now, they have not released any official position on blockchain, and there are no plans to use it or cryptocurrency to improve financial inclusion in the country."

This is despite the growing popularity of cryptocurrencies. Oscar Darmawan, the CEO of Bitcoin Indonesia, recently announced that there has been "exponential growth" in the users of Bitcoin Indonesia's marketplace platform, with a reported growth from 50,000 members in 2015 to 500,000 in 2017, with a daily transaction value of more than US$10 million a day.

Cryptocurrencies are uncertain and volatile, but blockchain is reliably maturing

It is undeniable that cryptocurrencies are currently in a hype cycle, but Kibaroğlu says although the value of cryptocurrencies may be volatile, blockchain as an underlying technology is reliably maturing.

"It's about having - if implemented correctly - faster, much more easier and hence cheaper transactions. If it's about storage, it's about open, transparent, irreversible information storage."

Kibaroğlu is convinced that blockchain is the way of the future and says that corporations that don't adopt this will fade out. However, he does understand why governments are reluctant to jump on the boat.

"We're in a sweet spot when it comes to governments," he says. "We have some forward-looking ones implementing it because they want to prove that they are open and others are sceptical."

As examples of more forward-looking ones, Kibaroğlu highlights Georgia which is using blockchain in their land registries, and removing paperwork they previously depended upon. "As a former communist Soviet country, it was very rife with corruption. So, they're very interested in proving, especially to the EU, that they're an open and non-corrupt government."

A more advanced area is the town of Zug in Switzerland that has earned the moniker "Crypto Alley". "All the voting systems are based on blockchain," says Kibaroğlu, adding that a lot of companies pay salaries in cryptocurrencies, and you can pay for train tickets and utility bills through blockchain systems.

"They're very friendly when it comes to regulations," he concluded. "They've advanced almost 10-15 years beyond anywhere else."

Resistance to cryptocurrencies affecting attitude to blockchain

Kirbaroğlu believes that the resistance some governments have against blockchain stems from negativity in the media about cryptocurrencies.

"There are a lot of governments like Indonesia and China, who are very sceptical about cryptocurrencies because they simply cannot control it," Kirbaroğlu observed.

He also admits that the fundamental nature of blockchain concerns governments. "If they implement blockchain, it will be open and decentralised and that takes control away from them."

Regardless of these perceived shortcomings, Kirbaroğlu believes that Indonesia would be better off using blockchain and cryptocurrencies to push through their financial inclusion agenda.

"I am sceptical how they are going to achieve all that without using this technology."


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