BLOCKCHAIN DISRUPTORS SET SIGHTS ON AFRICA: Despite blockchain's association with wild speculation and cryptocurrencies, the new technology is being talked up as a solution to African governance and economic problems.

Author:Thomas, David
Position:Cover story

From funding atrocities in Sierra Leone to fuelling civil conflict in the Central African Republic, few of Africa's valuable resources are as closely tied to violence and war as the diamond.

Unveiled in a flurry of publicity and goodwill in 2003, the Kimberley Process was designed to bring an end to the excesses of the bloodstained trade, bringing key actors together to hammer out an international certification process for the rare stones.

With NGOs and over 80 countries signed up, the high-profile venture appeared to offer a fresh start for the shamed industry, promising "to ensure that diamond purchases were not financing violence by rebel movements and their allies seeking to undermine legitimate governments."

Just 15 years later, that optimism has disappeared. In December, Canadian NGO Impact--previously nominated for a Nobel Peace Prize for its work on conflict diamonds--became the latest international observer to abandon the Kimberley Process, arguing that buyers had been given "false confidence" that their diamonds were conflict free.

While observers appear to have lost all confidence that the industry will clean up its act, a revolutionary new technology could offer a path forward. In January, De Beers, the multinational diamond producer substantially active in Southern Africa, announced that it was developing the industry's first blockchain initiative spanning the diamond value chain, offering "a single, tamper-proof and permanent digital record for every diamond registered on the platform." A pilot project is working towards the ultimate goal of "ensuring that all registered diamonds are conflict-free and natural" while boosting sector efficiencies.

For the uninitiated, the idea of using blockchain--a digital technology best known as the basis for volatile crypto-currencies like Bitcoin--to bolster confidence and security in the diamond market appears bizarre. Yet despite its association with wild speculation and the rollercoaster price movements of crypto-currencies, the technology is increasingly talked up as a transparent solution to African governance and economic problems, from crooked elections to faulty land registers and inefficient transaction systems.

Defined by Marco Iansiti and Karim Lakhani in the Harvard Business Review as "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way," blockchain allows contracts to be embedded in code and "stored in transparent, shared databases, where they are protected from deletion, tampering, and revision."

For African governments and businesses struggling under the weight of outdated administration techniques, overbearing bureaucracies, and competing asset ownership claims, the attractions of blockchain are obvious.


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