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Transforming Digital Infrastructure in Developing Nations: A Case for Blockchain Technology

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John Smith

The rapid advancement of the digital economy is creating new opportunities for developing countries. It has the potential to boost productivity, expand financial inclusion, and foster sustainable development. Among these opportunities, blockchain technology is emerging as one of the most revolutionary elements. Similar to the prior shift from wired internet to mobile, this technology can act as a springboard for technological and economic leaps in developing nations.

Over the past few years, blockchain technology has been applied in various sectors, from fintech to supply chain management. However, developing countries have yet to fully harness the potential of blockchain due to unique challenges they face. One primary hurdle is the inadequate digital infrastructure in many of these countries, which limits the use of conventional blockchain that requires stable internet connectivity and sophisticated digital technology. While cloud-based blockchain may offer a solution, it still requires further customization to address the specific challenges faced by developing nations.

Considering the immense economic potential of these countries – the World Bank data from 2020 suggests a combined population surpassing 6 billion, accounting for about 80% of the global population – it’s important to tailor solutions to their unique needs. A blockchain Layer 1 dedicated to developing countries could address their specific needs and challenges, such as inadequate digital infrastructure, unclear regulations, and lack of digital technology know-how. This kind of customized solution could significantly help these nations harness the benefits of the digital economy.

In the blockchain technology realm, ‘Layer 1’ refers to the foundational blockchain or network where the original protocols and transactions occur. Think of it like the base of a house or a building. All main activities, such as transaction validation and data recording, occur at this level. Further layers (Layer 2, Layer 3, etc.) are enhancements built on this foundation, similar to floors in a building.

Developing a Layer 1 blockchain tailored to the unique needs of developing countries can help tackle some of their most significant challenges. It can enhance financial inclusion, ensure transparency and accountability in governance and business systems, and increase efficiency and traceability in supply chains. Essentially, it could become a powerful tool to drive economic growth and sustainable development.

But achieving this goal requires extensive research and innovation. The focus should not only be on the core product but also on its ease of use. Given that developing countries are dominated by middle and lower classes with lower literacy and technological capabilities, developers must ensure their solutions are user-friendly and accessible to the average user. This point is often overlooked by developers from developed countries, where most blockchain innovations currently begin.

This is where Indonesia can step in. With its large population and rapidly growing digital economy, Indonesia has the potential to become an innovation hub for developing a Layer 1 blockchain dedicated to developing countries. The country has access to competent technology talents and a large market, two key factors in driving innovation. Furthermore, the Indonesian government has shown a strong commitment to digital economy development, evident in various policies and initiatives like digital infrastructure development and digital technology training programs.

However, leveraging this potential requires collaboration among the government, industry, and research institutions. The government needs to provide a legal framework that supports blockchain research and development, along with funding and incentives for innovation. The industry needs to invest in research and development and build partnerships with research institutions and universities. Meanwhile, research institutions need to focus on applied research to address real challenges faced by developing countries.

Taking such an approach will allow Indonesia to transition from a mere consumer of technology to a producer. By leading innovation in developing a Layer 1 blockchain dedicated to developing countries, Indonesia can make a significant contribution to global development, while strengthening its position as a digital force in Southeast Asia.

Concrete steps to realize this vision include improving investment in digital infrastructure to ensure widespread and high-quality internet access. The government needs to ensure not only widespread access but also affordability of internet connections for all social classes.

In addition, education and training programs are needed to increase public understanding of digital technology and blockchain. Establishing a blockchain research center can be a strategic move to produce professionals who understand blockchain’s contextual application for Indonesia and other developing countries.

This research center can serve as a regulatory sandbox where the government can monitor innovations produced by the community and innovators, integrating them on one platform. In this role, the government can also act as an enabler, promoting these innovations to other developing countries through international forums and government-to-government initiatives.

Another crucial factor is the establishment of a supportive legal framework for blockchain research and development, including laws on data and privacy. At present, existing regulations in the blockchain realm are primarily related to cryptocurrencies. The Indonesian government needs to create clear regulations regarding the use of blockchain beyond cryptocurrencies and the financial industry. This task will be easier if there’s synergy among the government, industry, and research institutions in blockchain research and development.

Ultimately, creating a Layer 1 blockchain for developing countries is not just about technology. It’s about how this technology can foster a more inclusive and sustainable society and economy. By focusing on the specific challenges and needs of developing countries, we can ensure that the benefits of the digital economy can be enjoyed by all, not just a select few.

By investing in innovation and research, we can also ensure that countries like Indonesia are not mere spectators in the digital revolution but become key players. This involves taking on various roles – leading innovation, driving policy changes, or becoming models for successful blockchain implementation – to truly make a difference in the global digital landscape.