The impact of blockchain on mining industry in Africa - Miners are you ready for the future? (II)
This is the second and final part of the series.
In the previous edition, we gave a general background of blockchain, its current uses and the potential use in the mining industry.
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In this concluding piece, we will talk about the benefits of blockchain and some blockchain stories from Africa
Benefits of blockchain
Described below are a few of the benefits of adopting blockchain.
Paperless transactions
Trade in minerals and metals involve a lot of paper.
Paper bills of lading at the port, paper maintained by multiple intermediaries in shipping, letters of credit required for trade finance and surveying certificates issued by laboratories certifying the grade of a commodity are only a few.
Blockchain can be used to automate the whole process to eliminate the need for paper documentation.
All stakeholders connected to the broader value chain, from financial institutions and ship operators to surveying laboratories, warehouses and many others would benefit from the efficiencies provided by blockchain.
Faster transactions
The distributed ledger of blockchain will notify network participants of trade developments at the same time.
This will result in faster consensus on additional trade terms or shipment schedules.
Additionally, smart contracts would reduce the likelihood of disputes and make their resolution more straightforward, if they occur.
Social responsibility
Social issues such as child labour and conflict diamonds are still prominent in mining.
Socially responsible and technology-savvy consumers are already scrutinising the circumstances connected to the goods and services they purchase, such as cobalt found in cars and smartphones.
Blockchain can be leveraged to address compliance, transparency and accountability.
One day, consumers may be able to verify the source of materials used in products that they purchase.
Cybersecurity
Cybersecurity is a growing problem in the mining industry, with major cyber-attacks at 22 mining companies since 20101.
Motivations for the attacks include derailing an M&A transaction, stealing intellectual property and personal information and gaining competitive advantage.
Blockchain allows individuals to sign contracts automatically and electronically, without having to rely on intermediaries to verify the contract’s validity. This will reduce the exposure of data to hackers.
The encryption of information in the form of data blocks also makes it less susceptible to hacking.
Stories of blockchain from Africa, Kenya
The government set up a blockchain taskforce to investigate potential applications of blockchain to government services with the primary goal of reducing corruption.
According to a June 2018 Bloomberg article, blockchain was currently being used to open up Kenya’s US$20 billion informal economy.
South Africa
South Africa is home to a number of blockchain projects, including one of Africa’s biggest annual blockchain conventions, the Blockchain Africa Conference.
Another is the Blockchain Academy in Cape Town that provides specialised training on crypto and blockchain to local entrepreneurs and companies.
South African-founded diamond company, De Beers, announced a pilot programme using blockchain to ensure its diamonds were authentic, conflict-free and natural.
Ghana
The country is home to Bitland, a blockchain project with the main goal of managing the challenge of land disputes, as well as reducing illegal displacement.
Land is a key component in any mining activity. Proving ownership of land and property is a well-documented problem in developing countries.
Blockchain technology should help deal with these challenges.
Nigeria
Nigeria has launched various blockchain start-ups and projects, including the Cryptography Development Initiative of Nigeria that focuses on informing and educating Nigerians about the potential benefits of blockchain and cryptocurrencies.
The National Identity Management Commission has proposed a blockchain-based identity system that would allow African citizens to travel across the continent with a single identity on the network.
The country has also hosted a blockchain conference organised by the Blockchain Education Network and Blockchain Nigeria User Group.
InterPort, a citizen-focused platform developed by Interpol and VoguePay is a blockchain-based information portal for crime control in Nigeria.