Financial technologies : Blockchain mania likely to grip Mauritius

Mauritius will not spared by the Blockchain technology trend that is gripping the world. While local enterprises are, so far, more or less unaware of the advantages of Blockchain, foreign investors are already exploring its potential in Mauritius. However, the absence of appropriate legal framework is one major obstacle to its successful development here.

Consensys, one of the leaders in the development of Blockchain solutions, was in Mauritius last week, on an investment prospection visit. The Consensys delegation was led by Joseph Lubin, co-founder of Ethereum & Consensys, John Lilic, Director for Enterprise Business Technology Development, Strategy and Operations and   Jeremy Millar, Chief of Staff at Consensys. The main objective of the visit was to educate key local stakeholders with a view to positioning Mauritius as a blockchain hub. Consensys also explored the possibility to set up operations in Mauritius.   Indeed, the government is committed to promote Blockchain technology, as it is one of the key areas that will shape the future and create new opportunities and growth.

Blockchain technology has been a hot topic in Mauritius since last year. It is also in the news across the globe, though for many, the technology is unknown.  Yet, the concept is simple though it remains one of the most transformational and misunderstood technologies of our time.

Historically, when it comes to monetary and non-monetary transactions, people and businesses have always relied heavily on intermediaries like banks and governments to ensure trust and certainty. Middlemen perform a range of important tasks that help build trust into the transactional process like authentication and record keeping.

The need for intermediaries is especially acute when making a digital transaction. Because digital assets like money, stocks & intellectual property, are essentially files, they are incredibly easy to reproduce. This creates what is known as the double spending problem (the act of spending the same unit of value more than once) which, until now, has prevented the peer to peer transfer of digital assets. But what if there was a way of conducting digital transactions without a third party intermediary?

Blockchain Vs Bitcoin

Bitcoin first appeared in a 2008 white paper authored by a person, or persons using the pseudonym Satoshi Nakamoto. The white paper detailed an innovative peer to peer electronic cash system called Bitcoin that enabled online payments to be transferred directly, without an intermediary.  While the proposed bitcoin payment system was exciting and innovative, it was the mechanics of how it worked that was truly revolutionary. Shortly after the white paper’s release, it became evident that the main technical innovation was not the digital currency itself but the technology that lay behind it, known today as Blockchain.

Although commonly associated with Bitcoin, Blockchain technology has many other applications. Bitcoin is merely the first and most well-known uses. In fact, Bitcoin is only one of about seven hundred applications that use the Blockchain operating system today. One example of the evolution and broad application of Blockchain, beyond digital currency, is the development of the Ethereum public blockchain, which is providing a way to execute peer to peer contracts.

Blockchain’s decentralised, open & cryptographic nature allows people to trust each other and transact peer to peer, making the need for intermediaries obsolete. This also brings unprecedented security benefits. Hacking attacks that commonly impact large centralised intermediaries like banks would be virtually impossible to pull off on the blockchain. For example — if someone wanted to hack into a particular block in a blockchain, a hacker would not only need to hack into that specific block, but all of the proceeding blocks going back the entire history of that blockchain. And they would need to do it on every ledger in the network, which could be millions, simultaneously.

The applications

Blockchain has applications that go way beyond obvious things like digital currencies and money transfers. From electronic voting, smart contracts & digitally recorded property assets to patient health records management and proof of ownership for digital content.

Blockchain will profoundly disrupt hundreds of industries that rely on intermediaries, including banking, finance, academia, real estate, insurance, legal, health care and the public sector — amongst many others. This will result in job losses and the complete transformation of entire industries. But overall, the elimination of intermediaries brings mostly positive benefits. Banks and governments, for example, often impede the free flow of business because of the time it takes to process transactions and regulatory requirements. The Blockchain will enable an increased amount of people and businesses to trade much more frequently and efficiently, significantly boosting local and international trade. Blockchain technology would also eliminate expensive intermediary fees that have become a burden on individuals and businesses, especially in the remittances space.

Perhaps most profoundly, Blockchain promises to democratise and expand the global financial system. Giving people who have limited exposure to the global economy, better access to financial and payment systems and stronger protection against corruption and exploitation.