Why blockchain can be a game changer – when applied in the right way
DISRUPTIONHUB interviews Michelle Chivunga Nsanzumuco of the British Blockchain Association
If you’ve been questioning the true value of blockchain recently, you’re not alone. In spite of mounting hype this year around cryptocurrencies and the use of blockchain in business, a recent survey showed that only one per cent of CIOs have adopted the technology in their organisation. Add to this lack of concrete use cases a volatile cryptocurrency market and confusion around the terms and technicalities of blockchain more generally, and it’s no wonder that many business leaders have become sceptical about this technology.
One woman looking to set the record straight on blockchain is Michelle Chivunga Nsanzumuco, Chair and Advisor to the International Committee at the British Blockchain Association, Women economic empowerment champion and Executive Education lead at the University of Surrey Business School. A renowned believer about the power of blockchain to both transform lives in emerging nations and benefit business, Nsanzumuco is a staunch advocate for this technology – with a welcome caveat. Blockchain should only be used when it’s the right tool for the job.
A mechanism for trust
Nsanzumuco’s journey to blockchain began when her background in policy, banking and finance found her working in the banking sector after the financial crash of 2008. Her role at the British Banker’s Association (now UK Finance) centred around rebuilding trust in these institutions whilst at the same time improving their own systems and processes.
“Post the crisis,” she says, “there were a lot of problems with the banks and the image that they had, so we were very much working at rebuilding that trust within the community. I also represented the UK at the European level with other banking associations across Europe and across the world. We were looking at the financial market as a whole, trying to amend processes, systems and policy frameworks to improve the finance industry in the UK and globally.”
It was during her time in the banking sector that Nsanzumuco first came across Bitcoin, and decided to look further into the underlying technology of blockchain. Whilst blockchain technology was not then widely known, Nsanzumuco quickly realised that it coincided well with the challenges faced by the finance markets. Of particular interest to her was also the potential it posed as a catalyst to enable financial inclusion, sustainable development and economic empowerment – particularly for women and marginalised groups in the developing world.
“I’ve been quite heavily involved in women’s economic development programmes,” she states. “It’s a very big topic and something that I have been looking at for some time with different groups. Tying together the technology and the empowerment agenda, and then my own background around financing, one of the key focus areas for me has been looking at alternative sources of finance to support women. You’re talking about things like crowdfunding, and very much looking into the blockchain space now as well.”
Financial engagement through the blockchain
It can be a extremely difficult for marginalised groups in developing countries to engage with traditional financial systems. This poses a challenge not only to the individuals within those groups looking to do business, but also to governments who want to track economic activity. Nsanzumuco uses a supply chain example to illustrate how blockchain can aid economic development in such situations.
“In developing countries,” she says, “a lot of businesses are SMEs or one man bands who are trading and interacting with each other. There are a lot of informal sectors where you don’t necessarily capture GDP contributions, it’s hard to manage. So, for example, you can use the blockchain for greater transparency through the supply chain.”
“Imagine there’s a woman in a village in Ethiopia selling vegetables in a market. She sells her vegetables to a big distributor or retailer, but she doesn’t really have the opportunity to understand where her vegetables are travelling to, or how much we are eventually paying for those vegetables in the supermarket.”
“With the blockchain, you can place an encryption on that box of vegetables and follow its journey, so you have greater transparency. The woman in the market could interact with the process via a mobile phone – she can track where her product is going and she can understand cost savings. This gives her greater empowerment in terms of what she’s doing, but it also helps her to understand her pricing. She might find that she can increase her prices and get more value from the product herself.”
At the same time, Nsanzumuco notes, securely tracking the provenance of goods can also benefit the customer. A thorough knowledge of the supply chain makes it easier to certify products as being Fair Trade or ethically sourced, increasing the confidence of the consumer. What’s more, governments are also able to monitor trading in this way. This allows them to measure the contribution to GDP, and to better support such business activity by individuals and SMEs.
Identity and inclusivity
Along with facilitating greater transparency and engagement in business, blockchain can also play an important role at a basic societal level. The digital identity functionality offered by the blockchain is a way for displaced communities to integrate back into society, and for people to prove ownership of their assets.
“A lot of vulnerable people – people who’ve been in conflicts – they lose their identity, they lose their status, they go to other countries and nobody knows who they are,” says Nsanzumuco. “If you are able to provide ID to these communities, for example through the blockchain, then you are empowering them to get back into society. With ID they can access financial systems, they can access bank accounts, they can start going back into the system.”
“I’ll also give you a business example. There are so many women across emerging markets who are doing business, but who can’t necessarily access a bank account. They have no title deeds, there’s no collateral that they can use, they’ve got no credit history. They cannot open an account. So for them, having an identity through blockchain gives them the opportunity to say who they are. If they own land or property then it can be put on the blockchain and it’s there, recorded, attached to them and to their ID, giving them that collateral and an opportunity to own and manage digital assets. They can then start creating their own credit history as they go along. Furthermore, the protection of their personal information can be enabled on the blockchain.”
The opening up of markets through the blockchain is also seen in the way it enables people to do business on a global scale, through trustless peer to peer transactions.
“Blockchain allows people who haven’t been able to participate in global value chains to do business cross border without necessarily being in the countries that they’re operating in,” Nsanzumuco adds. “You and I don’t even have to know each other, but we can interact, we can make secure transactions. This opens up doors and presents an opportunity for greater competitiveness.”
The British Blockchain Association
With growing interest in blockchain has come greater confusion around the technology. For a start, as Nsanzumuco notes, many people still wrongly equate bitcoin with blockchain technology in general.
“A lot of people have heard a lot about bitcoin – there’s been a lot of hype around bitcoin and cryptocurrency – but there’s been less of an understanding or knowledge of the blockchain space and what the potential of that technology is to support different groups,” she states. “When I say different groups I mean different categories – yes we’ve talked about women’s empowerment and other vulnerable groups but you can also target businesses and governments.”
Educating, creating a community around blockchain and promoting good practice are some of the aims of the British Blockchain Association. Crucially, for Nsanzumuco, this centres around applying blockchain in appropriate use cases.
“A lot of what I’ve been doing around blockchain is trying to educate. I think there is still a lack of understanding of the underlying technology around blockchain itself, and how it can be used. It is applicable in certain scenarios but it’s actually not an answer to everybody’s problems and challenges.”
“Distributed ledger technology can be quite powerful for businesses in the sense that it helps them to improve processes, it allows them to better value add activity through improved efficiencies and real time interactions, and also removes clunky legacy systems and heavy paperwork. What’s more, it enables businesses to communicate with different groups all across the world. It is a technology that can enable connectivity as there are no barriers.”
Putting the ‘but’ in blockchain
“Certain businesses think that they need blockchain,” says Nsanzumuco, “and I always tell them that this is not necessarily the case. They might just need a better database or a change in a system that may not need a DLT driven solution. It depends on what it is that you’re actually trying to achieve.”
“It is key that businesses also approach blockchain with caution as the technology is still in its early stages. As such there are challenges around interoperability, scalability, regulation and privacy which the community is still busy trying to resolve.”
So, while she champions the potential of blockchain to open up markets, drive economic empowerment and improve business processes, Nsanzumuco is equally quick to condemn inappropriate applications of the technology and the use of blockchain for its own sake. In the highly dynamic world of disruptive technology it is clear that this is just the kind of balanced voice we need if we are to navigate the future of blockchain for the long term good.
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