Blockchain: the digital turning point

Experts take stock of the progress, challenges ahead and the promise for telcos
Arabian Chain Technology, Automation, Blockchain and roaming, Blockchain and telcos, Blockchain technology, Business strategy, Decentralised, Dimension Data, DU, EITC, Finance, Gemalto, Secure transactions, Security, Use cases of blockchain, VIMANA
Farid Faraidooni:"We believe blockchain solutions could reach their full potential in the next 5 years."
Farid Faraidooni:"We believe blockchain solutions could reach their full potential in the next 5 years."
Sebastien Pavie:"Blockchain provides a secure and tamper-proof information distribution."
Sebastien Pavie:"Blockchain provides a secure and tamper-proof information distribution."
Mohammed Alsehli:"ArabianChain is focused on bringing together young talent to revolutionise the blockchain industry."
Mohammed Alsehli:"ArabianChain is focused on bringing together young talent to revolutionise the blockchain industry."
Mechelle Buys Du Plessis:"Blockchain enables both quick transactions as well as a well secured path."
Mechelle Buys Du Plessis:"Blockchain enables both quick transactions as well as a well secured path."
Kirill Nikolaev:"Since blockchain will be integrated in different sectors, each industrys regulatory apparatus will need to be involved."
Kirill Nikolaev:"Since blockchain will be integrated in different sectors, each industrys regulatory apparatus will need to be involved."

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The ability of blockchain to create secure digital transactions brings with it a wave of opportunities for organisations. Experts take stock of the progress so far, challenges ahead and the promise for telcos.

EXPERTS:

Kirill Nikolaev, board member, VIMANA

Mohammed Alsehli, CEO, ArabianChain Technology

Sebastien Pavie, enterprise and cybersecurity director for META, Gemalto

Farid Faraidooni, deputy CEO, Emirates Integrated Telecommunications Company (EITC)

Mechelle Buys Du Plessis, managing director - UAE, Dimension Data

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CommsMEA: What can be the various use cases for blockchain in the telecommunications industry?

Farid Faraidooni: Telcos can approach and implement blockchain technology for two main reasons- to improve operational excellence (by saving time, cutting cost, and reducing risk), and to enable new digital services (IoT, M2M, Smart Cities).

An example of blockchain use case for telcos is in roaming, where phones could be authenticated and roam on different networks, with autonomous brokering of roaming prices, implemented by smart contracts.

In terms of commerce and digital asset transactions, blockchain could enable remittances, micro-transactions and payment based business models especially for digital assets (i.e. music).

In IoT space, blockchain can enable autonomous connectivity, micro-payments for data exchange, or providing transparency for every step of any product through its journey to the consumer.

Sebastien Pavie: Some of the use cases are cryptocurrency, smart contracts and IoT. A cryptocurrency is a digital form of currency that can transferred between two parties, using cryptography to ensure the transaction is secure. There are over 700 cryptocurrency companies in the world including Bitcoin, Ethereum, Ripple, and Monero, all with their own customised blockchain technologies.

Smart contracts are becoming one of the main use cases of blockchain technology. Smart contracts allow two anonymous parties to conduct business without the need or cost for a middleman, however many enterprise applications require the parties to be known and authenticated.

The combination of blockchain and IoT will enable machines to order stock, operate during the most economical times, pay for the delivery of new items, and solicit bids from distributors, to name a few.

Mohammed Alsehli:  Blockchain adoption could help the telecom industry resolve pressing issues in a creative manner, such as, optimise identity management, secure peer-to-peer connectivity for IoT-enabled devices and significantly detect and prevent fraud, develop smart contracts and distributed ledgers.

CommsMEA: Do you think blockchain has the potential to disrupt telecom industry? Why?

Faraidooni: Today, the digital world has more interactions than the physical world, bringing many new implications not only to the way we do business but also to the way we interact with each other on the daily bases. With the rise of new technologies such as cloud computing, big data and machine learning there is a need for a simpler and more efficient way to perform transactions.

Blockchain is to be considered one of the most disruptive technologies simply because somehow it takes us “back to the basics” of any transaction where: there is no central authority, all parties can maintain a copy making it impossible to manipulate, and it allows you to know “who did what and when” at all time, setting a new landscape on how telcos could operate in the future.

Kirill Nikolaev: This is a yes and no answer! Yes, if you are talking about the “back end” part of data architecture as this will be disrupted for sure, because of low cost and risk of decentralisation. No, if you are talking about the “front end” as clients will still use devices which are hard to disrupt.

Alsehli: Irrespective of the industry, blockchain technology has the potential to be for ‘value’ as the internet has been for ‘information’. There are several applications of the blockchain technology within the current portfolio of operations undertaken by the telecom industry. As well as, organisations in the telecom industry can leverage this technology to capitalise on future trends and create opportunities for cost effectiveness through operational efficiency and prompt revenue growth through new value.

Mechelle Buys Du Plessis: Blockchain is an enabler that underpins business strategy.  Many projects can be launched by utilising blockchain but it is all about prioritising and deploying the right initiatives at the right time to ensure that we deliver against the business strategy.  Blockchain enables both quick transactions as well as a well secured path and therefore the security benefits offered will enhance business transactions and automation.

Blockchain allows a digital ledger of transactions to be created and shared among participants via a distributed network of computers. The system is highly accessible and transparent to all participants - all transactions are publicly visible. This means it is possible for businesses to make blockchain ‘corporately visible’ within their organisation so that they can see every transaction that takes place between one individual and another, one piece of data and another, or one machine and another. This enables companies to build up a comprehensive history of every transaction that occurs. We believe this has significant potential to allow organisations to boost their defences in the areas of user authentication and identity and access management.

CommsMEA: What are the primary roadblocks you see on the path to widespread adoption of blockchain technology?

Faraidooni: The lack of an established legal framework around the technology is perhaps the biggest concern, and one that needs to be addressed right away. The absence of a common agreement on key standards among the main stakeholders and the lack of collaboration across the entire ecosystem are just few of the biggest barriers to overcome.

Pavie: The challenge now is to test and validate the various blockchain networks that have been built, and then to find a way to standardise and consolidate protocols so these networks can work together. Still, among the various blockchain networks in development, none have been rigorously vetted from a security standpoint.

In 2017, we saw more blockchain networks going through extensive security testing. We will also see continued efforts to standardise how these networks communicate with one another. There are a number of companies, including Gemalto, currently working together to try to make this happen. A consortium of them recently met in Berkeley and have launched a collaborative effort to create a shared blockchain-based IoT protocol.

Nikolaev: I believe the biggest challenge right now is the shortage of visionary talent. What I mean by that is, right now, it is hard to find open minded individuals with needed expertise to sit on the board of directors or to head up a company and mandate implementation of blockchain technology as part of company strategy.

The other challenge I foresee is regulation. Similar to most other digital technologies, blockchain will not be regulated by only one law enforcement agency or government department. Since it will be integrated in different sectors, each industry’s regulatory apparatus will need to be involved.

Alsehli:  The two main barriers in my opinion are regulation and awareness. We can see governments in the region have started on putting a framework that regulates working with blockchain. When it comes to awareness, I believe that companies and organisations should continue to educate the masses on the benefits of blockchain help making this technology more mainstream.

From an infrastructure point of view, blockchain will not require a huge difference in the current infrastructure, it’s just the mentality. With blockchain being at its early stages of adoption, we of course lack the technical skills, it will surely take time to build up that knowledge and this will happen when we experiment with the technology.

CommsMEA: Have you made any breakthrough into the usage of blockchain? Kindly elaborate.

Faraidooni: The Dubai Government has been a pioneer in the exploration of blockchain technology, leading the way with the definition of “Dubai Blockchain Strategy”. The establishment of the Global Blockchain Council comes also in line with this strategy. The Global Blockchain Council is a 46-member initiative designed to test and accelerate blockchain technology in the UAE. The initiative established by Sheikh Mohammed bin Rashid, Vice President and Prime Minister of the UAE, is one of the most ambitious private-public sector collaborations.

As a founding member, du has been very active pushing on the implementation of blockchain technology testing its application on a number of industries and sectors to improve the everyday life of the citizens of Dubai.

Nikolaev: Absolutely! At VIMANA, we are not only building a unique autonomous aerial vehicle, but we are also building a novel blockchain-based and blockchain-regulated Airspace Ecosystem. The Ecosystem intends to provide urban air mobility programmes in smart cities like Dubai, Singapore and Tokyo with daily network aerial commuting based on fly-by-wire operating Vertical Take-Off and Landing Autonomous Aerial Vehicles (VTOL AAVs).

Alsehli: As the first public and decentralised blockchain in the Arab world, ArabianChain is focused on bringing together young talent to revolutionise the blockchain industry.  We understand the government’s visions and needs of the ever changing market and work towards providing advanced technological tools in order to achieve results like DBIX, Thuraya, Arabianchain APIs and Smart builder.

DBIX is the first crypto currency in the region. DBIX will allow for a secure, agile and an economical way of payments and money transfer while shifting everyday monetary activities into the future. Thuraya will be the first smart contracts programming language in Arabic. Arabianchain Smart builder is an easy to use platform that will enable experimentations with smart contracts for both developers and non-developers.

CommsMEA: What’s your take on the security aspect of blockchain technology?

Faraidooni: The security concerns on blockchain only refers to the application side that sits on top of it, while the actual blockchain network itself hasn’t have any reported issues or security concerns whatsoever.

Blockchain technology is a tamper-proof database that maintains a history of all events in digital society. The database is updated based on mutual agreement by all participants. As there is no central authority, all participants can maintain a copy of the same, making it impossible to manipulate its history.

Pavie: There is certainly added complexity in managing the security of the many distributed nodes needed to create a blockchain network, but that does not mean it is less secure than traditional centralised security solutions. The security of the centralised solutions is based on putting all of the sensitive data in one place and investing effort into securing that one place. It is similar to the phrase – putting all your eggs in one basket. However, blockchain distributes the trust model, meaning each node helps decide what is trustworthy. So with blockchain, every node stores a small amount of sensitive information – and all of the “eggs” are distributed in many baskets.

Put simply, the techniques used to protect the single central basket, and all of the different baskets used by blockchain are exactly the same – such as strong authentication, and careful management of encryption keys. However, the techniques need to be applied many times over for blockchain, once for each node. This does not make it less secure, just harder to implement.

Gemalto secures blockchain in three areas: providing strong identities and authentication to gain access to the blockchain; securing core blockchain technologies; and securing communications across the blockchain network. Based on the core principles of security, there is a strong benefit to using blockchain over other tools.

Nikolaev: In terms of security, there are a myriad of challenges and furthermore, they differ depending on whether we are talking public or private blockchain and also the blockchain architecture that an organisation chooses to deploy. Some will look to integrate existing IT infrastructure and technology with blockchain while others might go for a 100% blockchain driven architecture. As blockchain matures, and we continue to learn the risks associated with it, organisations are going to have to consider the security implications that this will have on their business.

Two points I do want to make though. For one, in general, it’s impossible to release a new technology with no bugs or security holes. We don’t blame Apple for IOS 11.0.1 bug fixes just a couple of days after IOS 11 release, as this is part and parcel of the rollout of any new technology. I think we will have a similar learning curve with blockchain – the law of unintended consequences will rear its ugly head!

The other is human error – take a look at any technology and one of the weakest links is always the users. It will be interesting to see how blockchain developers deal with this challenge.

Alsehli: Blockchain is very secure as it has security in built in its design, it is a distributed and decentralised system where its data is encrypted using public and private keys. Any chain command is sent to the ledger, will require consensus. All the parties participating in writing, maintaining this ledger has to agree before they add anything to it. The way blockchain is designed and built makes it very secure, unlike other internet based technologies where you can find loopholes and eventually hack them.

CommsMEA: Which industries do you think are going to be most benefited by blockchain?

Faraidooni: Whether you work in the financial world, real estate or any other sector, most likely you already heard about blockchain and how this new technology is expected to disrupt most industries in the upcoming years, in some cases having been compared to the early years of the internet.

Although most of the initial use cases have been focused on the financial sector, we expect most industries to start looking at it as the benefits are substantial, whether you look at cost and risk reduction, immutability of data, or adding transparency to transactions.

Buys Du Plessis:  The UAE is an innovative country that drives and nurtures early adoption. The Dubai Government is leading the charge with a well-defined blockchain strategy.  We are already seeing progress towards paperless processes, which will lead up to the utilisation of blockchain.

Furthermore, we have also seen the finance sector taking to blockchain and digitisation initiatives.  There is no denial that blockchain will become more prevalent in the region in 2018.

Blockchain is an enabler for the region to deliver secure, digitised services across all verticals.  The benefits in adopting Blockchain will not only allow for economic growth, but will reduce hours of time and tedious paperwork, whilst offering a platform that spirals digitisation forward.  The opportunities are endless.

We have seen interest from several verticals, including healthcare, finance, telecoms and logistics.  Many are grappling with the concept of Blockchain and are in early stages of adoption.  Blockchain has become a real topic that is discussed around most boardroom tables.  The discussion is not an IT discussion, but a digitisation and business model discussion.

Nikolaev: Government and enterprises in the Middle East, and particularly the UAE, are really on the forefront when it comes to harnessing the potential of the latest technologies. Between the continued push towards smart cities, initiatives like the Dubai Future Accelerators and investment in autonomous vehicles (reference the recent RTA recent autonomous flying-taxi trial), in my personal opinion, I believe that in the next three to four years, blockchain will be a mainstream technology in enterprises across the region, particularly in the government and transportation sectors.

Given the Middle East’s focus on smart governments and cities, I think a key sector that can really benefit from blockchain is government relations with citizens.

In the commercial sector, blockchain is the underlying technology when it comes to autonomous vehicles and with all the R&D investment we are already seeing in this sector, be it self-driving cars or flying-taxis, I believe that the aerospace, automotive and logistics sectors are three verticals that will really harness the potential of blockchain over the next few years.

Alsehli: We’ve seen heavy adoption of this technology across the governmental sector, Dubai has announced the Dubai Blockchain Strategy which is set to achieve a high degree of efficiency in government departments and aims for the government to become paperless by shifting all transactions to blockchain. Blockchain can also be utilised across other sectors. We’ve seen very heavy adoption in the financial sector; Bitcoin for instance has become widely used and dealt with across the world. Blockchain is also being used across other prominent sectors such as hospitality, healthcare and education.

CommsMEA: Do you think by a certain period in the future, blockchain will become the rage and take over as the primary mode of transactions?

Faraidooni: Looking to the future of blockchain, although the concept has already expanded beyond its use by cryptocurrencies and its benefits are starting to be clear, it is still early to speculate and fully understand the implications of this technology.

Pavie: With blockchain technology, a world of possibilities has opened up to both businesses and consumers. Blockchain, both public and private, provide an accessible peer-to-peer platform that enables economic empowerment, greater efficiency, and secure and tamper-proof information distribution. What’s clear is that the blockchain is the start of a digital turning point, and a crucial step in the way value and opportunity are created and distributed.

It’s clear that the applications of blockchain far surpass the financial industry, and it is time for businesses to embrace the technology in order to stay ahead of their competition. Blockchain is more than a buzzword. It is the future of distributed security.

Nikolaev: Decentralisation is good reason to think about blockchain, because with blockchain, you decentralise risk of black out. It seems to me that for smaller projects, it would be suitable use current solutions and for bigger ones, blockchain based solutions. The higher the number of devices being used as nodes, the more stable and more decentralised the network is.

Alsehli: Firstly, I wouldn’t say it’s will evolve into a rage, basically because trends might indicate a lot of talk but not any action. We can see that the benefits of blockchain already being recognised by organisations in the Middle East. A lot of other governments are following the same approach and being an advisor on the blockchain strategy in the Kingdom, I know for a fact that Saudi Arabia has a similar vision.

We definitely expect blockchain to take over as a primary mode of transaction, because it saves time, money and efforts; speeding up day to day transactions eventually reducing costs up to 90 %.

CommsMEA: Can you share with us any successful case study around the usage of blockchain technology?

Faraidooni: As part of the Global Blockchain Council, du has partnered with NMC Hospitals in a commercial pilot called “Secure Electronic Health Record”.

The implementation of blockchain technology within the EHR will provide a number of benefits including data integrity, security and trust to the flow of the patient’s information between the health providers and the patients. It will also enable NMC to be 100% certain of the accuracy of all the retrieved records of the patients for seamless communication.

Moreover, EHR through blockchain technology will also help UAE Government to develop a big data analytical tool for the residents of UAE which can assist civil defence and health authorities to plan strategies to overcome any medical emergencies or epidemics.

Nikolaev: I can say that “coin” projects like Bitcoin, Etherium are examples of some well-known blockchain successes. But if you want to talk about some other, relatively less publicised successes, then Civic is a good example of digital identity challenge based on blockchain. Storj is a file storage cloud based project which uses millions of personal computers to store your personal files (encrypted of course with AES-256 algorithm). TenX is a good example of a debit card which you can connect with your digital wallet and use crypto coins to buy your coffee at Starbucks.

CommsMEA: Going ahead, how do you plan to work around blockchain technology?

Faraidooni: Based on the current rate of evolution, we believe blockchain solutions could reach their full potential in the next five years. Telcos should take the lead defining the required frameworks for this evolution.

It is clear for us that we’re at the start of a digital turning point, an evolutionary step in the way value and opportunity are created and distributed.

Our plan is to continue our path in order to become the leading telco for the implementation of blockchain technology. All this with one clear objective in mind “To improve the quality of services delivered to our customers while guarantying data integrity of all their information”.

Buys Du Plessis: Dimension Data is spending much time to craft solutions that drive suitable use-cases that can accelerate blockchain adoption in the region.

Use cases need to be demonstrated and customized by vertical.  Although the technology is being adopted globally, at different levels, and although the Middle East is innovative and early adopters, largely, blockchain is not likely to see its adoption in enterprise in the short term.

Blockchain has the potential to totally re-engineer cybersecurity, but the industry has yet to come to terms with it. In 2018, some interesting applications of Blockchain and IoT in the area of cybersecurity will emerge.

Alsehli: This year we partnered with Jibrel Networks to help government and bureaucratic processes adopt and leverage Arabian Chain’s innovative blockchain technology, with support from Jibrel’s technical advisory services. In addition, through our strategic collaboration with WaveX, we aim to enable startups across the region to leverage our open source tools and foster innovation in the blockchain domain.  Also, earlier this year, we raised AED 3 million in the latest round of funding and wish to drive innovation and adoption of this disruptive technology.

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