Applications for Blockchain Technology from an Egyptian Perspective

Blockchain technology, often labeled as the “fourth revolution,” is set to change our lives. Developing countries, such as Egypt, could be the biggest winners of this revolution. It offers us – the people, the government, and businesses – an unprecedented opportunity to improve the quality of our lives.

All of us have dealt at one point or another with log files, accounting software, or even just keeping record of our spending on paper. All of these are different representations of the same thing: a ledger. A ledger is a record of all transactions performed in a specific time frame. Transactions here does not necessarily mean only financial ones.

To simplify, we will use an example that is not technically correct, yet will make the idea clear:

A family records all transactions on a piece of paper – the family ledger. Imagine that each family member has a copy of this ledger. Each new transaction is added and a new copy is distributed to every family member. The ledger’s distributed nature makes it very difficult for anyone in the family to cheat. Simply, all family members have equal oversight of the ledger and know its final status.

Blockchain technology is a ledger that is distributed (in exactly the same manner as in the family example above). Every node on the network (every family member) has a copy of all past transactions. Once a transaction is written, it cannot be changed. Thus, extreme security is inherent in blockchain technology. If a hacker wants to manipulate a record, s/he must change it in all the copies stored on each node in the network at exactly the same time. This is next to impossible. Each new transaction is verified (how verification is done is outside the scope of this post), secured by encryption, and added in a block. The new block is then chained to the preexisting blocks (hence the name, blockchain). The new status of the chain is then stored on all nodes in the network. Each transaction is very small in terms of storage space required and the network is very efficient. Blockchain technology does face a few challenges, but we will not discuss them here.

As described above, everyone on the network trusts that the records are correct. If records show that person (A) owns apartment (X), then we all know for a fact that (A) owns (X). When (A) sells this apartment to person (B), the records will show this transaction, and we all know that (A) no longer owns apartment (X). Thus, (A) will not be able to sell it again to person (C). As such, the issue of double selling cannot happen once the transaction is recorded. This means we no longer need to go to the notary, nor do we need to check the authenticity of ownership deeds. In other words, I do not need to trust person (A). We all can easily check his/her ownership or lack thereof. Blockchain technology provides us with an incredibly secure, trusted, and fast framework. Property ownership and registration is one example of a blockchain application. We will continue with this example for a little while to explain how such a solution can be implemented and its potential impact on developing countries.

If a government decides to capitalize on the tremendous opportunity offered by blockchain technology, what is needed? First, a government body must issue an encrypted universal unique ID for every citizen. Think of the national ID or social security number as an example. This encrypted key/ID will be used for all transactions related to each citizen. The issuing government body will be the only institution capable of linking a specific key to the actual citizen. Any other entity requesting access to this information must justify his/her reason before gaining access (this is something that must be regulated by law).

Second step: the government issues a universal unique key for every organization and entity in the country. This means every government body, every company, every bank, every hospital, every store, etc. And certainly any subsidiary of the above entities will also get a key. Once more, the linking between the keys and the actual entity is restricted and regulated by law.

Now a decision must be made as to which sectors will be the first to adopt blockchain technology. The areas of healthcare, asset registry, taxation, traffic tickets, financial government dealings, all the way down to voting will benefit significantly from blockchain technology. For the sake of simplicity, we will focus on the above example, namely asset registry:

1. Each and every single asset in the country will be issued an encrypted unique universal key. In this context, an asset represents land, apartment, house, vehicle, etc.
2. At day zero (the start date for applying the system), the government will take the existing ownership register and associate every property’s key with the owner’s key. From this point forward, there no longer a need to keep the notary for registering properties.
3. The government must maintain the old records for a period of time. This is for the sake of conflict resolution and ownership disputes.

Benefits

1. Traceability of asset ownership becomes absolute. If I claim to own some property, I only need to show the record that I own it.
2. Only owners of the property or authorities can access the record to show who owns what.
3. If the owner wants to sell, all s/he needs to do is authorize the transfer of the property key from his/her list of keys to the buyers.
4. The possibility of double selling or fraud becomes zero.
5. The authorities can trace every single transaction and thus can almost completely eliminate money laundering through the purchase of assets.
6. Authorities will also have greater visibility to detect tax fraud.
7. The real power of blockchain technology is that it enables all of the above while maintaining the privacy of citizens. Authorities do not need the link between a key and the real identity of a citizen until there is a clear case of illegal activity. Other than that, all the checking and control is done anonymously. Remember, only the key issuing authority knows the real owner of the key.

Read the Arabic version on the CIPE Arabia website.

Mohamed Abdel-Mottaleb is a member of the Egypt Tomorrow Economic Forum (ETEF), a group of young reform-oriented business leaders convened by CIPE in 2012. He is the founder and CEO of the social media analytics company Trendak. In 2008, he founded the Center for Nanotechnology at Cairo University, where he directed the MSc program in nanotechnology until 2014. Abdel-Mottaleb received both this Master’s in Chemistry and his Ph.D. in Nanotechnology from Katholieke Universiteit te Leuven (KU Leuven) in Belgium.