The buzzword promising to shake markets, currencies and the global order today is blockchain technology. First emerging in 2008, the technology aimed at getting rid of cash money by creating electronic money – an objective that also resulted in removing third parties, or so-called intermediators, from online monetary transactions.
In simpler terms, if person X wants to transfer money to person Y, a third party is usually there to guarantee the process and pay for the infrastructure and security needed for the transaction to be completed. Blockchain technology, through also but not only incorporating bitcoin and other cryptocurrencies into the system, aims to remove the intermediator, which is usually an electronic bank. Where is the security in that, you ask? All records of transactions and persons X and Y are guaranteed by being recorded in several public registers, resulting in a peer-to-peer transaction system.
Business Forward sits down with CEO of 10-month-old blockchain startup Lamarkaz Nour Haridy and the entity’s frontend developer Fady Samir to get to the bottom of blockchain technology, where the world stands from using it and how Lamarkaz is setting foot into the market.
Blockchain technology aimed at getting rid of cash money by creating electronic money
The problem of a definition
Haridy tells Business Forward that there is no standard definition to explain what blockchain technology is, as people often disagree on what makes a blockchain what it is.
“Today, blockchain technology is partly about money; originally, it was mostly only about money,” Haridy says. Every transaction made is registered as part of a block, which means that it gets a timestamp and includes the transaction data. Think of it as a page in a record book. The edge is that the network is decentralized, meaning that there is no administrator, no single point of failure and that the information in each block cannot be altered or modified.
Why eliminate the role of the intermediator?
Intermediators primarily want to cover the cost of the infrastructure, employees, service, network security, which is why they take a percentage of each transaction in the form of fees.
Let’s take ride-hailing apps as an example. The customer orders a ride and at the end of the trip, pays LE100. For the sake of simplification and visualization, let’s assume that the app itself charges LE25 from the total amount. So instead of paying what the trip is actually worth (LE75), the customer pays LE100. Here, the third party or intermediator – namely the app – takes its service fees right from the customer’s pocket.
The problem is that even after all the fees that are being deducted by intermediators, system vulnerabilities are still present, according to Haridy and Samir.
“Even through blockchain technology, there can be attacks and shortcomings, but the probability is much lower,” Samir says. In April 2018, one of the more prominent ride-hailing apps in the MENA region announced to its users that it had fallen victim to a data breach, which consequently put user data at risk. Since the app is considered an intermediator, eliminating its position in the transaction process would make it less likely for users’ information to be compromised, but at the same time,“personal wallets are always subject to attacks,” Samir adds.
People often disagree on what makes a blockchain what it is
On governments using blockchain technology
In April, the Central Bank of Egypt’s (CBE) middleware integration manager Ahmed Mansour told Business Forward that the CBE is working on integrating blockchain technology into its system.
Opinions on whether government entities should be involved in blockchain technology differ. “I do not think blockchain technology should be applied on a governmental level,” Haridy says, assuming that the best practice for governments is to just let it happen and sandbox the technology. The term “sandbox” refers to allowing new software and its testing phases to happen freely, securely and in an unregulated manner.
“[The government] should allow corporates and startups to explore and compete. The sandboxing should stay in place until we have success stories and then [we can move] on to [regulating],” Haridy adds.
How can startups tap into blockchain technology?
Everyone knows that when third parties or intermediators exist, it becomes easier to manage disputes between person X and person Y – but with no centralization, how do blockchain users ensure that their rights are secured? Worst of all, if person X promises person Y a certain amount of money and does not hold up their end of the bargain, where does person Y go to complain?
This is where Lamarkaz comes in. In September 2017, Haridy launched Lamarkaz along with his team, offering a wide range of blockchain-based products and services. One of the key services that Lamarkaz is developing is a dispute arbitration platform under the name Dcourt.
Dcourt is a court system based on blockchain technology, meant for other blockchain applications to delegate their disputes to. This court is able to resolve disputes without delegating them to a central help center.
“Pretty much anyone can be part of the jury in this court and it is in their favor to vote fairly,” Haridy explains, adding that the system is secured by economic incentives – if a person votes fairly, they can make money and vice versa.
“We cannot affect this court, we cannot control it, we cannot stop it, we cannot do anything about it after it is launched. That is why it is fair because we cannot be bribed to change things in this court,” Haridy adds. Lamarkaz plans to launch Dcourt either by end-2018 or beginning 2019.