IT News Africa recently spoke to Leishen Pillay, partner at Hogan Lovells law firm, in an interview which unpacks just why Africa needs blockchain technology.
Leishen Pillay is a partner at Hogan Lovells and focuses on technology, media, telecommunications law, complex transactions, regulatory compliance, privacy, and data privacy and protection. Pillay has acted for various national and international clients in both the public and private sector, including the SA Post Office, City of Johannesburg, National Credit Regulator and Telkom. He has been interviewed on television and radio on a variety of topics including blockchain and the Protection of Personal Information Act (POPI).
Hogan Lovells is one of the world’s top 10 legal practices with over 2 500 lawyers across more than 45 offices in Africa, Asia, Australia, Europe, Latin America, the Middle East and North America. Its South African office in Johannesburg has a total staff complement of around 250, with more than 130 legal professionals who are regarded as high-calibre sector practitioners, acting both within the country and across the continent.
1) How does Blockchain work?
Blockchain encrypts data so that it cannot be altered through incrementally layering datasets on top of each other. The best way to explain how blockchain works is to think of the Lego blocks you may have played with as a child. Blockchain uses an algorithm to stack data sets on top of each other just like you would use different layers of Lego blocks to build a wall. The higher you build a wall of Lego, the more difficult it becomes to remove any of the Lego blocks inside it – especially the ones lower down. In the same way, each layer of new data encrypted in a blockchain increases the integrity of the layers below it, so no single data set can be deleted or manipulated in any way.
2) What can be securely stored using Blockchain technology?
Blockchain technology provides a means of securely storing any data captured or generated on digital devices – whether it be a computer, cell phone, GPS tracker or smart device. This means that the possibilities of how it can be applied are almost endless. The most obvious application is to provide a secure and verifiable system for storing records such as hospital records, vehicle registration numbers, tax returns or financial transactions.
However, with the rise of the internet of things, the amount of data which can be generated and therefore needs to be recorded and stored is exploding. The internet of things allows a wide range of smart devices to continuously record data – whether it is a smartwatch measuring your heart rate, a GPS tracking a delivery vehicle, a smart tractor measuring the nutrients in soil on a farm or smart house measuring ambient temperature in its rooms. All of this represents data and all of it can be encrypted and stored on a blockchain.
3) What attributes make Blockchain technology ideal for keeping records which need to be protected from fraud and corruption?
Blockchain is ideal for keeping records which need to be protected from fraud and corruption because it provides away securely storing records so that they cannot be altered or deleted in any way. As records stored on a blockchain cannot be altered, blockchain technology also provides a way to verify the authenticity of each record. For example, if vehicle registration numbers are stored on a blockchain, the authenticity of any vehicle registration can be verified against this blockchain.
Blockchain is also ideal for protecting records because it simultaneously stores data in more than one place. For example, instead of a financial transaction only being written down in one ledger or saved on one computer, blockchain allows it to be stored on millions of computers around the world in what is called a distributed ledger. This means that all of these computers now hold the data that represents that transaction so that it cannot ever be deleted and is virtually unhackable.
4) What are the possible applications for Blockchain technology in Africa?
One of the greatest advantages blockchain poses for use in Africa, is that it can be utilised on the continent even if the infrastructure needed to support it is not situated there. The system supporting blockchain can be housed anywhere in the world and still be accessible from Africa via a computer or even mobile phone.
Blockchain’s ability to allow for the verification and secure storage of records to combat corruption is one of the most powerful applications it may have in Africa. Imagine we could place public finances on a blockchain accounting system where each transaction is recorded and can be traced. This can greatly improve transparency through ensuring there is an inalienable record of every governmental transaction which can be used to verify that funds are spent appropriately.
But the possible applications for blockchain in Africa go far beyond the administrative sphere. For example, a combination of blockchain and the internet of things could be used to continuously monitor the temperature of vaccines in a cold chain. A connected smart device can monitor the temperature of the vaccine and create a tamper-proof record if the cold chain is broken at any time, removing any uncertainty around whether the vaccine can be administered safely.
Another possible African application is the idea of combatting the sale of counterfeit goods through storing the serials numbers of the goods on a blockchain so they cannot be altered in any way. A store owner would then be able to scan the serial number on each delivery of goods he receives to confirm it against the blockchain and verify if it is a legal delivery from the manufacturer.