Most people by now have heard increasingly popular terms like Blockchain and digital currencies at least in their lives, but that doesn’t necessarily mean that they grasp the full potential of this extensive technology and its applications in the FinTech industry.
In its fourth podcast, FinTech Egypt Dialogue tackled the mysterious and controversial topic of Blockchain technology and how the world is slowly but surely understanding its impact across finance and beyond. Information Technology expert and moderator Dr. Mohamed El Gendy led the conversation as he dissected the various aspects of Blockchain in the company of his three guests: the Head of International Cooperation at the Egyptian Money Laundering & Terrorist Financing Combating Unit (EMLCU) Dr Amr Rashed, the Secretary General at Egypt Post Mr. Ahmed Mansour, and the Head of Business Development at Flare Networks Mr. Mohamed Taysir.
The webinar kicked off in excitement as the moderator introduced his guests to the audience and mentioned that they’re addressing FinTech and Blockchain specifically today. Mr. Ahmed Mansour inaugurated the talk when asked about the history of Blockchain and his general perspective of it to better break down the complicated subject for the audience. The first point he made was that Blockchain technology research was already being done since 1991, when it was better known as Distributed Ledger Technology (DLT) which could be seen in the form of torrents or various applications of cloud technology at the time. Mr. Mansour mentioned that a few years after Bitcoin emerged, Blockchain technology started gaining traction in the commercial world and the term was increasingly used in a variety of use cases by employing its infrastructure in different sectors, such as finance, medical, and even elections.
When asked by Dr.Mohamed El Gendy about the origin of the term ‘Blockchain’ and how it came to be the revolutionary technology it is becoming today, Mr. Mansour elaborated that it’s basically the same concept of DLT which evolved over time; the concept of a shared database between several nodes that relies on heavy encryption and tight digital security. He said there are more than one types of Blockchain, like private Permissioned Blockchain which relies on permission-based access which adds an access control layer to allow specific actions to only be performed by clearly identifiable participants, and Public (Permission-less) Blockchain which is more widely used for cryptocurrencies like Bitcoin and is based on distribution by consent of the involved parties and without any presiding authority.
He gave a great analogy of how it works by comparing the Blockchain concept to the ongoing FinTech Egypt Dialogue podcast, in that the audience members were listening in on the conversation and taking down notes and sharing information, which implies that all answers and information told on the podcast are now made available to anyone listening, and that this information has become automatically distributed among any and all participants in the FinTech Egypt Dialogue podcast, very similar to the idea of Blockchain as a decentralized network that verifies and validates the shared information in a way that defies any manipulation of that information.
Dr. Mohamed El Gendy then moved on to ask Mr. Mohamed Taysir to chip in and explain how Blockchain can enable the existence of startups and what role it plays at his company Flare Networks. He started off by explaining that Flare Networks is currently one of the most publicly supported Blockchain projects that connects Blockchain ecosystems together, and that his company uses smart contract functionality, therefore running smart contracts as a scalable e-network that uses modern types of architecture. At this point, Mohamed El Gendy pitched in to ask about what smart contracts mean exactly, and what their relevance and relationship to Blockchain is. Mohamed Taysir explained that smart contracts are automated processes that are programmable to execute any set of orders and that they are non-changeable when published on Blockchain technology, emphasizing that this notion is the key element of all decentralized applications as it means that smart contracts will always remain locked and execute the orders for which they were programmed initially, and that no one has the power to alter any aspect of it when deployed on any Blockchain, and any future change shall be through a new connected block with new consensus
Dr. Amr Rashed pitched in to elaborate on the nature of Blockchain and its relation to cryptocurrencies, starting off with a brief introduction on a specific problem that Bitcoin inventor Satoshi Nakamoto faced when he (or they) created the world-famous cryptocurrency. Double-spending had been an issue that threatened Bitcoin at the time because there was a need for verification that any amount of Bitcoin was spent and that it cannot be duplicated, an issue which was eventually solved by stamping, meaning that every single Bitcoin now had a timestamp or signature that was published when that specific coin was spent, creating a decentralized public record containing the time, location and more details of how that coin was spent for everyone to see and validate through the shared database that is Blockchain.
Dr. Rashed mentioned that, as they spoke on the podcast, there were about 9,109 cryptocurrencies in existence and circulating around the world at that very moment. He also said that, although most cryptocurrencies depend on Blockchain as their infrastructure, there are a few of them that operate independently of Blockchain technology, such as IOTA. When asked about the different types of cryptocurrencies, Dr. Rashed explained that every currency has its promise and defined purpose. When Bitcoin started out, he said, it aimed to become an encrypted digital coin that would be traded between individuals, whereas Ethereum is based on smart contracts and the execution of specifically programmed instructions. Some currencies are focused on the individual privacy of its owners such as Zcash as opposed to currencies like Bitcoin that are considered ‘pseudo-anonymous’, which means there is a possibility to determine who their owners are. Dr. Rashed clearly mentioned that Central Bank of Egypt has banned the use and trading of all cryptocurrencies in Egypt, through a press note issued in Jan 2018.
The conversation then shifted to the relevance and importance of Blockchain in FinTech, and Mr. Ahmed Mansour started off with talking about how Blockchain started to transform the financial sector in 2016. He said that although the potential of Blockchain’s use in the infrastructure of financial technology applications has been evident for some time now, there have been challenges along the way and some of those challenges still persist today, such as the lack of technical knowledge in the financial workforce to actually develop and build on Blockchain technology. Another challenge he mentioned is the lack of regulatory processes concerned not with Blockchain itself, but with the building of use cases on the Blockchain.
As the guests continued to dive deeper into the specifics of applying Blockchain technology to new and existing FinTech products & services, the big picture started to become clearer and more answers to pending questions came to light. As the financial experts engaged with each other and shed more light on what the future of Blockchain holds, the conversation encompassed everything from regulation and law to on-ground applications and futuristic scenarios, all in hopes of harnessing the power of Blockchain at some point and using it to empower an already-thriving and very promising FinTech ecosystem.Check out the full episode and familiarize yourself with the world of Blockchain, cryptocurrencies and beyond:
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