‘Government must leverage blockchain technology to curb financial recklessness in the public sector’’
Chimezie Chuta is a Tech innovation professional, an Author, a Drupal Web Application Developer, and a Blockchain & Cryptocurrency Educator. He is the founder Blockchain Nigeria User Group, and, StartupBits.fund, among several other entrepreneurial initiatives in the Blockchain Tech industry. In this interview with SODIQ OMOLAOYE, he argued that Cryptocurrencies powered by the Blockchain Technology and Artificial Intelligence (AI) would provoke disruptive innovative thinking in the traditional banking system and ensure transparency in the administration of public funds.
Can you give an insight into Blockchain Technology?
Blockchain technology is an addition on top of the existing internet. The evolution of the Internet brought about sharing of information and ideas simultaneously. However, there is a challenge with that system and that challenge was the fact that we could not transact value safely over the internet.
The presence of middlemen in the Internet transaction like the banks, clearing houses and interbank agencies come with a lot of transaction fees. The world had watched that industry in pain until someone came out and figured a way of sharing value without a third party. That is what is called peer-to-peer cash (P2P) and Bitcoin is one of them.
The technology that made this possible is blockchain because it has to do with each person participating in the network hosting a node of the network.
It can also be used for identity management and record keeping without a third party.
The technology also ensures transparency that is non-existent in the current system.
A system like blockchain makes transactions public and verifiable. This means when we have this kind of technology, we would be able to monitor government transaction.
How secure and reliable is the system?
Cryptocurrency has been on since 2011 and it is a blockchain network. There has not been any successful hack on the network.
It is more secure than the traditional system. Where you usually have challenges is on the user side – the carelessness of people who are involved.
For instance, being careless with one password. There are sensitive information about one’s account that nobody should know.
The fact that someone lost money shouldn’t be the reason we will all run away from the system.
The Central Bank had cautioned Nigerians to be wary of investments in Cryptocurrencies. Do you think it was a good decision?
I actually understand the reason why the Central Bank of Nigeria made such statement. The apex bank is there to protect people and their resources.
CBN concern is that digital currencies and assets that are currently finding inroad into the populace are not regulated, unlike the traditional investment instruments that are issued and regulated by the government.
I appreciate that standpoint, but I believe that if government acquires robust knowledge on how the technology works, they will have a different opinion.
Most government agencies do not have proper understanding of the technology and it may be difficult to regulate what you don’t understand.
People who are already used to a certain way of life would have it difficult getting involved in new things especially when it has to do with money.
Everybody wants to be sure that he is not the one causing panic in the financial industry or economy by permitting what he does not understand.
Most developed countries have also shown scepticism in recognising digital currencies as legal tender or means of exchange. What do you think went wrong?
Every government in the world is looking at this technology and they are all trying to understand it.
As a first response to the emerging technology, what they tell citizens is to be wary of the technology because they don’t know who is issuing it and they cannot control it.
That is what most governments do first. But they are good news coming from different parts of the world where they began to define and regulate the technology.
There is no hurry because when you hurry you may make mistake. That is the reason the Nigerian government is taking its time to study the new technology.
Last year, CBN did a lot of brainstorming on the industry of which our group also participated and made presentation.
Also, I think government agencies are also looking at how other countries are dealing with the issue.
In a country like Malta, they have legalized the technology and digital assets including cryptocurrency.
South Africa has also defined the technology as a commodity. In different part of the world, they have different definitions of cryptocurrency.
It may be called- Security, Commodity, Property or Currency.
In Nigeria, when you name it a ‘currency’, it will come under the supervision of CBN because constitutionally they are the one that possesses the exclusive right to control currency in the country.
Considering the fear the government already created in the environment, what measures can be taken to restore investors’ confidence in Cryptocurrency?
Primarily, most Nigerians got to know about cryptocurrency such as Bitcoin through the infamous MMM pyramid scheme.
It never occurred to Nigerians that MMM scheme only took advantage of an existing system to run itself.
What we have been trying to do is to convince Nigerians that MMM is different from Bitcoin trading, but a lot of people because of the pain of the losses, they find it difficult to take in such new information.
However, my group and other blockchain technology groups are working to restore public confidence in the system. We report scams and also give out information on how people can avoid being scammed.
There are big players in the traditional banking system that are afraid of the emerging digital currencies, what do you think could be their fears?
Well, the truth is the entire system of finance all over the world is controlled by people.
Governments came into it at some point. In today’s world, the government issues monies and it is back up by trust people have in the government.
Now, when you talk about cutting away the middlemen which is what the technology does, you are talking about cutting away the source of income of these big players.
However, because this is a revolution of the people, you cannot stop it because the Internet is already present.
Cryptocurrency is not something anyone can destroy or stop people from participating in because it is decentralised. Everybody knows the pain of centralisation.
The blockchain technology does not only solve the problem of capital control, but it also solves the problem of single point of failure that comes with centralisation.
If you have multiple databases distributed across the world, one failing does not mean that the entire system has failed.
You are looking at “Blockchain and AI (Artificial Intelligence) as focus for your upcoming conference, what informed this topic and what should be expected thereafter?
Previously, we have been having conferences around blockchain and cryptocurrency, but this time around we decided to do something different because there is a lot Artificial Intelligence has to offer in economic development.
There is a need for government and its agencies to have reliable data. Data is a major instrument for growth and development.
Most of the data the country has don’t have integrity. They are prone to manipulation.
Lack of reliable data is an issue and that is one of the issues blockchain is going to solve because data can be gathered through Artificial intelligence easily and reliably and it can be stored and secured using the blockchain technology.
So this conference is about exploring the opportunities and intersection of these two technologies. Aside the roundtable talks, we will have a lot of speakers coming from different parts of the world.
The essence is to discuss the issues with the regulatory agencies and we can make these agencies to make the environment more favourable for the players in it.
Also, we want to look at how entrepreneurs can take advantage of the low hanging fruits of these two technologies.
We believe that after the brainstorming, there would be clear-cut policies from government and its agencies that would help players in the industry to actually articulate and do things the way they should with the confidence that is required.
How do you think the government can support the industry?
We are aware that government is doing it best. But we want them to do is that they should speed up the process of creating the right environment for the blockchain industry to thrive.
We don’t have eternity for them to understand how the industry works. They need to graduate from studying to defining what cryptocurrency means to them.
The government also needs to set up the framework to allow the blockchain technology take of fully.
We must not allow foreign companies come into our ecosystem because that may lead to capital flight.
Government agencies also have to embrace this technology for transparency purpose. This would further allow citizens monitor how public office holders spend public funds.