nCa Report
Blockchain technology is an important part of the digital future.
Blockchain is a method of recording information that makes it impossible or difficult for the system to be changed, hacked, or manipulated. A blockchain is a distributed ledger that duplicates and distributes transactions across the network of computers participating in the blockchain.
Blockchain technology is a structure that stores transactional records, also known as the block, of the public in several databases, known as the “chain,” in a network connected through peer-to-peer nodes. Typically, this storage is referred to as a ‘digital ledger.’
Every transaction in this ledger is authorized by the digital signature of the owner, which authenticates the transaction and safeguards it from tampering. Hence, the information the digital ledger contains is highly secure.
In simpler words, the digital ledger is like a Google spreadsheet shared among numerous computers in a network, in which, the transactional records are stored based on actual purchases. The fascinating angle is that anybody can see the data, but they can’t corrupt it.
Tajikistan is moving swiftly toward the digital age, preparing the population for a future that would be quite unlike today.
Asia Plus, the prime news service of Tajikistan, has published a report on the possible uses of the blockchain technology in Tajikistan.
Here is a slightly abridged version of the report:
Healthcare
Blockchain can securely store patient records, enable seamless information exchange between healthcare providers, and ensure data integrity.
This could lead to improved patient care and more efficient health services in Tajikistan.
Financial services: Blockchain can streamline banking processes, reduce transaction costs, and improve security.
For a developing economy like Tajikistan, introducing blockchain into the financial sector can improve financial inclusion and provide more efficient banking services in remote areas.
Supply chain management: Blockchain transparency can revolutionize supply chains by providing real-time tracking of goods, reducing fraud, and ensuring the authenticity of products.
This could be particularly beneficial for Tajikistan’s agricultural and textile industries, ensuring export integrity and enhancing international confidence.
Hydropower and Cryptocurrency Mining
Cryptocurrency mining is the process of verifying and recording transactions on the blockchain, which requires significant computing power and energy.
Tajikistan’s hydropower potential is enormous: approximately 98% of the country’s electricity comes from hydroelectric power plants. The country has the Nurek hydroelectric power plant, which has an installed capacity of 3,000 MW, and the Rogun hydroelectric power plant, which is expected to generate up to 3,600 MW when completed.
Tajikistan’s hydropower resources represent a unique advantage in the blockchain industry, especially in cryptocurrency mining, which requires significant energy inputs.
Hydropower, a renewable and relatively inexpensive source of energy, could make Tajikistan an attractive location for blockchain-based energy-intensive operations.
As of June 2024, Bitcoin miners generate an estimated revenue of $12.4 billion per year. Attracting these companies will therefore result in tax revenue for the country’s budget.
Using Kazakhstan as an example, we see that in a short period of time – from the beginning of 2020 to October 2021 – the country attracted a huge number of miners, which led to an increase in its share in global Bitcoin mining from 5% to almost 20%. This led to the creation of jobs, an influx of foreign investment and taxes.
Crypto wallets are like bank accounts
Electricity costs are a critical factor in the profitability of cryptocurrency mining. On average, electricity costs in Tajikistan range from $0.02 to $0.03 per kilowatt-hour (kWh), which is significantly lower than in many other countries where rates can exceed $0.10 per kWh.
This cost advantage could make Tajikistan an attractive location for mining companies looking to minimize operating costs and maximize profitability.
Less direct but huge economic benefits will be the additional jobs created in the country. Foreign investment will lead to the creation of more developed financial markets, which will therefore be able to create a liquid and dynamic financial environment and give impetus to the expansion of the industry.
Moreover, as the case of El Salvador shows, the adoption of Bitcoin as legal tender has made it easier for the population to use crypto wallets , which are essentially bank accounts on the blockchain.
Crypto wallets are much cheaper to open and maintain than traditional bank accounts and require virtually no paperwork. This has helped El Salvador get nearly 80% of its population to use blockchain and bitcoin for everyday and international transactions.
And companies like BlackRock and Fidelity , which are the world’s largest asset managers, are starting to offer crypto products to their clients . Their Bitcoin ETF currently holds $30 billion worth of Bitcoin, bringing in about $75 million to $100 million a year.
Tajikistan could take advantage of this by offering the first Bitcoin ETF in the region and potentially becoming a leader in the industry.
Using hydropower for blockchain operations is in line with global sustainable development goals as it produces minimal greenhouse gas emissions compared to fossil fuels.
This environmental benefit could make Tajikistan a leader in sustainable technologies.
What steps need to be taken
Regulatory framework. Creating a clear and supportive regulatory environment is crucial to stimulating blockchain innovation. Tajikistan can look to countries like Estonia, El Salvador, and Singapore, which have successfully implemented blockchain-friendly regulations, to create a favorable ecosystem for blockchain businesses.
Public-private partnerships. Encouraging collaboration between government and the private sector can help drive blockchain adoption. Initiatives could include pilot projects in supply chain management, digital identity systems, and financial services.
Education and training: Investing in education and training programs to develop local expertise in blockchain technology is vital.
Partnerships with international universities and technology companies can help create a skilled workforce capable of implementing blockchain innovations.
Infrastructure development: Digital infrastructure, including high-speed Internet and data centers, needs to be strengthened.
The use of international aid and investment can accelerate these changes.
Tajikistan is on the threshold of a digital revolution, provided that natural resources, especially hydropower, are properly utilized and a favorable regulatory and educational environment is created. And blockchain technology opens the way to economic diversification and technological progress. /// nCa, 1 October 2024