Blockchain technology is being used for a variety of objectives, such as enhancing security, lowering costs, and increasing transparency. As this technology continues to evolve, it is anticipated that more countries, especially developing nations will start adopting it.
On Wednesday, the Nigerian Government took a remarkable step by approving the National Blockchain Policy, a document that will spur the effective implementation of blockchain technology across various sectors of the Nigerian economy.
The policy is anticipated to offer a framework for the application of blockchain technology in a variety of industries, including finance, agriculture, health, and education.
Another significant step is the formation of a National Security Council to supervise the policy’s application.
The National Information Technology Development Agency (NITDA), which is in charge of the development and regulation of information technology in Nigeria, will be in charge of managing the Council, according to Professor Isa Pantami, Nigeria’s Minister of Communications and Digital Economy.
While the approval of the National Blockchain Policy by the Nigerian government has many potential benefits, some potential implications and demerits need to be considered.
As we expect the Nigerian government to start the implementation of this policy, blockchain technology is also highly expected to disrupt some activities in the economy.
Essentially, blockchain technology will make it possible to develop decentralized applications and new business models which will improve transactional transparency, supply chain security, and record-keeping efficiency, in all government agencies.
For instance, it can be used to improve transaction efficiency and eliminate fraud and corruption in the banking sector. According to reports, four Nigerian deposit money banks lost a total of N1. 77bn to fraudulent activities involving the banks’ employees and consumers in 2021.
This technology will also help Nigeria’s below-par healthcare sector. Blockchain can be used in this sector to ensure patient data security and privacy. It can also be used in the agriculture sector to track the quality of agricultural products.
Another possible outcome is a rise in the use of cryptocurrencies, which are typically associated with high levels of volatility and speculative activity. This could endanger consumers and investors, especially if the Bitcoin market is not sufficiently controlled.
It can upend existing value chains and eliminate middlemen, which might have a significant impact on the economy and society.
It is interesting to see ongoing partnerships across the different sectors on the new policy. Regardless, the implementation of this policy will continue to require close partnerships between stakeholders, government agencies, regulatory bodies, private sector organizations, and the general public.
Proper regulation from the authorities will safeguard consumers’ assets and foster innovation. To ensure that businesses and individuals utilizing blockchain technology are held accountable for their activities and that consumer rights are safeguarded, it is crucial to set clear norms for their use.
At the moment, from a digital currency perspective, trust is still a problem. It is one of the reasons why the Central Bank of Nigeria prohibited banks from carrying out transactions on cryptocurrencies. They still believe that the sector must be regulated to gain trust.
Concerns – Energy Consumption & Cybersecurity
Yes, the move to start incorporating blockchain technology is commendable, however, there are areas of concern as Nigeria positions itself as the blockchain hub of Africa.
The amount of energy consumption needed to run blockchain networks is one concern. The environmental effects of increased energy demand and the prices involved are sources of worry.
Nigeria, like many other nations, has problems with its infrastructure for power generation, transmission, and distribution. Power generation on the national grid has continued to hover around 4,000 megawatts since January this year. (2023)
However, the energy required to run a blockchain network in Nigeria would depend on the particular use cases and applications for which the technology is used.
For instance, a blockchain network used to track health records might require less energy than a network used to conduct financial transactions.
In the end, it will be important to carefully weigh the energy needs for operating a blockchain network with Nigeria’s energy status.
Moreso, the adoption of blockchain technology is also related to the danger of cyberattacks and security lapses.
The complexity and use of blockchain networks raise the risk of hacking and cybercrime, which might result in large financial losses and harm to the reputation of organizations that use blockchain technology.
Experts say while some blockchain algorithms might not fully prevent online attacks, they create a lot of hurdles and it’s almost impossible for hackers to carry out attacks.
In conclusion, the move by the Nigerian government to authorize the National Blockchain Policy is a good step that shows a dedication to utilizing technology and creativity to promote economic growth and improve security. The policy’s successful implementation could change several economic sectors and enhance Nigerians’ quality of life.