Sri Lankans should be cautious over cryptocurrencies such as bitcoin which underwent a massive volatile bout in price last year, but the island should, however, welcome the adoption of the more beneficial blockchain technologies, local ICT experts say.
According to them, blockchain technology is secure and can be used for a wide variety of applications, such as block chain-based payments in banks, international trade, land registrations and services that requires an agreement with multiple parties.
“In blockchain, data is stored in multiple locations and altering one location does not achieve a hacker’s objective. So security wise, blockchain is quite good,” an expert connected to the financial services industry, said.
Blockchain technology was popularised by the Bitcoin digital currency system in which financial transfers are stored cryptographically. However, a blockchain is a kind of database which can store any kind of data and run a computer code called ‘smart contracts’.
“Using blockchain as a technology, people have started building various solutions including blockchain-based payment, with cryptocurrencies being only one of them. But, if you look at the way we make payments, which is through a distributed trusted ledger, this can also be done through blockchain,” the expert who did not wish to be identified said.
He explained that in blockchain, when a transaction between two people is done, both records are updated real time while it takes place and therefore, there is no reconciliation required either between the two connected parties or by an intermediary.
“Technologies have evolved to a point of distributed trusted network essentially meaning that you can have sources of records of truths recorded among many computers and many servers. As a result, the security of blockchain is quite high,” the official pointed out.
He said that the cryptocurrency such as Bitcoin, for instance, is only one among many solutions that has been built on the blockchain technology. Since values of Bitcoins has artificially gone up and down, there have been loads of cryptocurrencies that have come up though not all are blockchain-based, he said.
It is learnt that the Central Bank of Sri Lanka (CBSL) appointed two research committees last year, to study the potential suitability and practicality of the application of Fintech and Blockchain technologies in the local context. The final reports of the committees is due be submitted in two months, informed sources said.
Meanwhile, an ICTA official also recommended the government explore the use of blockchain technology for securing data and storing personal records adding that these were already being used by a few Sri Lankan companies.
“Maybe the government should try it out it for secured data storage in verticals such as healthcare and for storing legal records since it ensures high data protection,” the official noted.
Going a step further, the official said that since cryptocurrency is fast gaining popularity in other countries, Sri Lanka should from now on study the subject seriously so that island could ready with its own framework when more countries begin to adopt it.
“We should not wait till a stage where countries such as Dubai and Singapore start adopting it in the future and cryptos become like a US Dollar in the long run, but be more proactive. If we do delay, then we will be changing regulations at that point and miss the bus,” the official further pointed out.