Blockchain technology can act as a kick-starter for the UAE’s startup ecosystem, by speeding up transactions and better connecting the business community.
That is the view of a new report released by tech consulting firm Booz Allen Hamilton, Tuesday.
The public database of Bitcoin transactions, Blockchain, can cut the costs of opening and running a business in the UAE—by opening up the business community with information sharing networks accessible to government bodies.
“The technology can enable individuals to make their data accessible to a number of pre-approved entities involved in the network, such as business registration, patenting, and funding authorities, while also allowing data to be updated in real time,” the report says.
This can help simplify processes such as registering a business, securing funding, and patenting ideas, by streamlining application and registration processes, the report states.
Blockchain can also speed up and secure business transactions, MENA analyst at Booz Allen Hamilton Lutfi Zakhour told Inc Arabia.
“Parties are able to make an exchange without the oversight or intermediation of a third party, strongly reducing counterparty risk…Blockchain transactions can be processed 24/7 in near real-time.”
Financial Sector Revolution
The National Bank of Abu Dhabi, (NBAD) recently became the latest lender and first bank in the Middle East and North Africa to introduce real time, cross-border payments through blockchain.
“In the banking sector specifically, several banks have managed to develop Blockchain-based platforms to help optimize internal processes, gain access to digital records, reduce manual processes, increase the speed to process transactions and reduce overall risk and fraud due to traceability and transparency of all transactions,” Zakhour explains.
“Financial institutions can benefit from reduced costs and fees due to the lack of required intermediary and associated overhead costs.
Blockchain is also more resilient to cyber attacks as it does not have a central point of failure, he adds.
UAE Pilot Projects
The UAE set up the Global Blockchain Council to explore how blockchain can drive finance and business in the country.
According to Zakhour the Council “has spearheaded several Blockchain-related initiatives and launched pilot projects across several sectors such as healthcare, diamond trade, title transfer and business registration in order to test the cost-saving and time-reducing effects of the technology.
Dubai-based startup BitOasis is also helping to build the infrastructure of a new digital payment system using bitcoin and blockchain applications.
Following their 2016 launch, BitOasis CEO Ola Boudin said they are building “the largest digital currency exchange and payments infrastructure platform in the Middle East and North Africa.”
As the UAE readies itself to bring in VAT, Blockchain can also be used to develop ledger technologies to help regulate tax collection and calculate shortfalls.
Another way Blockchain technology can be used in the region is to set up new payment models in the finance and social affairs ministries, restructuring current tax, social welfare, and zakat programs to help government agencies provide a more efficient assessment, collection, nd distribution of tax and zakat funds.
As the UAE seeks to become a prominent international financial hub, blockchain offers the transparency, flexibility and trust needed to enable an efficient regulatory framework, legal jurisdiction, and business-friendly environment, the report says.
Efforts to integrate the new technology into public business in the UAE are also in line with those of financial centres across the world including those in New York, London, Hong Kong, Tokyo, and Singapore.