Over the last few weeks I’ve taken online classes to try to understand the concept of Blockchain and how it can be used by organisations to create new business models and applications. My interest was peaked by the whole NFT craze within the NBA world (“Top Shots”) and how scarcity and authenticity were managed through a blockchain application.
I have to say I was one of those who scratched my head to understand not just what blockchain technology was, but what the value was for organisations to create business models and applications using the blockchain. The course, delivered by the University of California, Berkeley, helped me fill in some of the blanks I had in my knowledge as well as giving me an understanding as to why organisations are looking at ways to implement blockchain-based solutions to help increase their protection, and ultimately, their customers, protection against fraud and cyber security issues.
It was quite coincidental that during the final parts of my studies there was an interesting new use case in the technology press that ticked a lot of the boxes about brand and risk protection, two usage cases of interest for me.
The United Arab Emirates has launched a new blockchain-based platform called UAE Trade Connect, that at its heart will prevent a number of fraud-based activities in the financial world, including money laundering, bribery and the effects/impact of Business Email Continuity scams (BECs).
The blockchain platform has been developed by Etisalat, the biggest name in the telecoms world in the United Arab Emirates along with a number of major banks and at its heart will ensure that all transactions between the banks are stored in a secure, audited and verified way on the distributed ledger-based blockchain. The advantage of using blockchain technology for the network is that it provides that unequivocal, independent verification of each transaction whilst retaining the sensitive information of each party.
Zulqarnain Javaid, CEO, UAE Trade Connect said, “The announcement is a milestone moment in the financial sector in UAE. Technological advancements are presenting innovative solutions to historic problems and enabling the sector to power forward. The solution is aligned with the UAE government’s vision to bring futuristic technologies like blockchain and will be yet another enabler for economic growth.”
In terms of how it works, each of the seven banks has their own blockchain node within the Etisalat cloud. The banks share a transaction (invoices, funds transfers or settlements) using a fingerprint (called a hash lock) of the data – which means they can’t see the client or the transaction details from another bank.
From a point of view of ensuring complete transparency and auditability, the blockchain solution ticks all the boxes. There are some limitations with blockchain technology within the finance world, such as transaction speed. Due to blockchain being a distributed system, its transaction processing power depends on the computational power of the machines on the network. In comparison to Visa’s 1,700 transactions per second, blockchain can process around 4.6 transactions per second on average. Not too much of an issue if the transactions are settlement payments but if they are for financial market transactions where milliseconds matter, it could be a concern.
In a few years time I am sure blockchain-based solutions will be all around us and they will be considered an integral part of how the technically interact with each other, organisations and the digital world around us. But today, solutions like UAE Trade Connect are relatively unique in terms of brand and risk protection but certainly one that other industries will be looking at closely.