By Danial Daychopan, CEO and Founder, Plutus
Brexit is widely believed to be a source of financial instability. Sterling has slumped in the face of financial fears and a possible departure from the single market will have serious implications for international trade. However, even as Britain looks to sever ties with the European Union, border-agnostic blockchain technologies such as cryptocurrencies are building irreversible bridges across the continent.
These tools have a wealth of advantages: in its essence a blockchain is a fast, secure and transparent system where information is stored across many computers worldwide using cutting edge digital encryption. The information on the system is validated in real time as any transaction is made. Any computer in the network can check the authenticity and parties involved in a transaction.
British businesses, banks and the government itself now have the opportunity to reap the rewards of blockchain powered tools as they reach maturity and in the process bypass the worst of the looming financial storm, be it through international payments in cryptocurrencies, transparent trade, smart contracts, or the heightened efficiency and security that blockchain offers.
So what are the applications when it comes to Brexit? In the face of Britain leaving the EU, cryptocurrencies offer an entirely new paradigm of making international payments. Transfers can be made quickly and securely across borders with blockchain. Also, as financial instability grows, investors and business alike are turning to digital assets such as cryptocurrencies as an alternative store of value because, unlike assets like gold, crypto provides an immutable method of exchange.
Trade is a major source of worry for businesses: in the aftermath of Britain leaving the EU new structures will likely need to be put in place to reflect the new relationships agreed upon in trade deals. When applied in this scenario, blockchain could enable the UK customs union and tax authorities to have total transparency of trading and tracking both imports and exports. Both the UK government and businesses would benefit from blockchain’s superior efficiency and transparency, something that would go some way to offset the instability introduced by new trading relationships – especially in the instance of a no-deal Brexit, where these deals will have to be rebuilt from Scratch.
Blockchain can also help modernise bank’s systems. Brexit will put a great deal of pressure on British banking institutions, which will need to work overtime to adapt to regulatory changes, make new cross border transactions, and serve EU clients. Cryptocurrencies such as Bitcoin allow anyone to send money instantly with relatively low fees and banks like Barclays are already working on adopting blockchain technology to make their business operations faster, more efficient and secure.
Smart contracts will likewise prove to be an essential tool for businesses. These documents, enabled by public blockchains, see networks validate transactions when certain conditions are met. Companies can effectively automate processes that would often have required a third party. This will be particularly useful when it comes to navigating the complex legal frameworks that take shape post-Brexit. If a contract is breached this can be identified and the necessary measures can be executed without a drawn out back and forth.
The British government stands to gain a huge benefit from blockchain. Government systems are often relatively slow, opaque, and in some instances prone to corruption. Implementing blockchain-based systems can significantly reduce bureaucracy and increase security, efficiency, and transparency of government operations. Dubai (UAE), for example, is aiming to put all its government documents on the blockchain by 2020. The political process itself can also be streamlined: in a world where voting systems are increasingly scrutinised, blockchain could negate any risk of foul play all the way from voting registration to the final tally. Any future referendums or elections can be safeguarded by this decentralised approach to handling information and no one will be able to second guess their outcomes.
So as we enter what is certain to be a period of instability, blockchain can play a key role in streamlining processes. It can provide solutions for cross border payments, customs tracking,and help governments and businesses introduce simplified frameworks. Businesses that recognise the potential of this technology will reap the rewards even as others struggle to adapt to new legislative and legal frameworks and the UK government can work to become more efficient and to build trust with an electorate that feels increasingly disenfranchised. Blockchain could be our way out of the Brexit rut.