A blockchain is a Distributed ledger technology (DLT) that can be used to store permanent and tamper-proof records of digital data. The store has immutability and irreversibility of ledger state having data persistence and provenance, accountability and transparency, etc. The process allows keeping data in consecutive blocks like a chain. The recorded data is permanent and unchangeable.
Blockchain technology has brought changes in financing, banking, supply system, e-governance and business across the world. It is a key digital technique for ensuring the transparency, speed and immutability of different transactions. Blockchain provides a secure, transparent, and tamper-proof system for recording transactions and managing data, making it a powerful tool for various applications.
This technology is promoting the Fourth Industrial Revolution, with innovative business processes and models ushering in a new business paradigm all over the world, for finance, banking, supply chain, e-governance, Customer Relationship Management (CRM), and other applications.
Each "block" on the blockchain is made up of digital pieces of information. There are three parts of information in each block: (1) information about transactions such as date, time and amount of the financial transaction),(2) information about identities of participants in the transactions and their digital signature and (3) in case of a public blockchain, information that makes a block unique from other previous blocks. A digitally signed transaction must be submitted by a participant. The transaction submitted must be verified by other participants on the network. The verified transaction must be stored in a block and finally, the block must be added into the blockchain following a strict set of rules, unique for each blockchain and a consensus algorithm.
It is consecutive 'blocks' of digital data chained together following a strict set of rules. The ledger is distributed and stored by the computersof a peer-to-peer (P2P) network. Each block of data is periodically added to the ledger in a decentralised fashion.
There aretwo major types of blockchain: private and public. A public blockchain allows anyone to create and validate blocks as well as participate in the network. Nobody here has control over the network. A private blockchain can be restrictive in nature in the sense that it allows only authorised and trusted entities to participate in the activities within the system.
This technology is fundamentally a decentralized, distributed ledger system that records transactions across a network of computers. Each transaction is grouped into a block, and these blocks are linked together in a chronological order, forming a chain. This ensures that the ledger is immutable and transparent, as every participant in the network has access to the entire ledger.
Realising its potential, many developed as well as developing countries around the world have started exploring how blockchain technology can prepare them for future challenges and benefit them to solve many existing complex problems. Bangladesh government also recognises the need to explore blockchain technology to advance its technical capacity, increase efficiency in e-Governances and foster innovations.
In mostcountries, central banks and other financial institutions are either experimenting with it or have introduced it on a pilot basis. Blockchain technology is slowly advancing in Bangladesh over the past few years. Bangladesh Bank reportedly has launched a blockchain-based platform for international remittance to help expatriates send money home faster and at a lower cost.
Country's first blockchain-based remittance service, which is the "bKash" service. bKash has been widely adopted across the country, and it has made remittance transactions much faster, secure, and cost-effective using blockchain technology. It is the significant progresses made by Bangladesh in the field of blockchain technology.
To date, a few financial institutions in Bangladesh have already started to adopt blockchain technology, such as Standard Chartered Bank, Prime Bank, HSBC Bank etc. Meanwhile, the Bangladesh-based banks executed a number ofletters of credit (LC) transactions through blockchain in the last two years.
The property records are most unreliable and cause of major civil and criminal disputes in Bangladesh. Blockchain can be used to create secure and transparent records of property ownership and transactions. This can help prevent property disputes and make it easier for buyers and sellers to verify property ownership and transfer ownership securely and efficiently.
BKash has introduced blockchain in 2020 to facilitate inbound remittance from Malaysia. Bkash partnered with Mobile Money with a Malaysian mobile wallet company and Ripple (a blockchain-based global payment solution provider) to allow wallet-to-wallet payments to create this remittance corridor between the two countries.
In the private sector, a few agro-tech startups have adopted the technology.The RMG industry is the main export sector of Bangladesh. The calculation of local value addition is a critical criterion of tariffs in the destination countries. Reliabletransaction data of local and foreign Letter of credit are very essential to calculate the value addition and cost etc. If these transactions can be moved into a paperless blockchain, major efficiencies can be achieved with a guaranteed reliability. There is a huge scope to scale up transactions over blockchain if all parties of the RMG supply chain of home and abroad can be added to this network.
At present, Bangladesh's earning from software and hardware exports is less than $1 billion dollar. The international market size of blockchain is $300 billion which will cross trillion dollars in future.Bangladesh may enter blockchain market to provide service to other countries.
Bangladeshi one crore expatriate remitting about US$30billion. An estimate said that if this workforce is trained properly, Bangladesh can earn more than $100 billion in remittance every year.
Blockchain is a cutting-edge high-level creative technology that can revolutionise many areas of modern life by improving transparency, accountability and efficiency in service delivery, governance, finance sector, industries, trade and other areas.Bangladesh faces infrastructural challenges that impact the deployment of advanced technologies. Issues such as inconsistent internet connectivity, limited technological resources, and inadequate digital infrastructure can impede the effective implementation of blockchain solutions.However, there are also challenges that need to be addressed, such as regulatory framework, lack of skilled workforce, and limited infrastructure.
The scalability of blockchain technology is a challenge, particularly in a country like Bangladesh with limited technological infrastructure. There is a lack of awareness and understanding of blockchain technology among individuals, businesses, and policymakers in Bangladesh. There is a need for a regulatory framework for blockchain technology to ensure its safe and secure use.
With proper mitigation strategies, these challenges can be overcome and blockchain technology can play a significant role in the country's economic growth and development.
The regulatory environment for blockchain in Bangladesh is currently unclear. There is a lack of formal regulations and guidelines.Technology helps achieve zero-cost financial transaction, low-cost database service and ensure secured bookkeeping procedure.The implementation of blockchain technology can help address issues of corruption, data tampering, and fraud, which are pervasive in many sectors in Bangladesh.
The writer is a CEO, Bangla Chemical
