How Blockchain Can Transform Saudi Arabia’s Economy :
How Blockchain Can Transform Saudi Arabia’s Economy
Blockchain technology is certainly one of the many remarkable innovations of the past few decades. Since its advent, blockchain has greatly impacted several sectors, from finance to art. There is, however, so much more that one can do with technology. As expected, many countries have taken the cue and are poised to invest in blockchain. One such country is Saudi Arabia.
In this article, we will consider the increasing relevance of blockchain technology in Saudi Arabia. We will also analyse the potential impact of blockchain on the country’s economy.
Blockchain in Saudi Arabia
As mentioned earlier, Saudi Arabia is set to invest heavily in blockchain technology and its applications. This notion is evident in the country’s ‘Saudi Vision 2030’ initiative. This initiative enlists plans for investment in cutting-edge technologies such as blockchain.
The Saudi government’s positive stance on blockchain is already reflected in some of its policies. For instance, the Saudi central bank was one of the first few central banks in the MENA region to experiment with blockchain technology. In June 2020, the central bank deployed a $13.3 billion liquidity package into the banking sector using blockchain.
This favourable government outlook has positively impacted the country’s blockchain market. As a result, the country’s blockchain market is expected to grow by 41% between 2021 and 2025. Similarly, current surveys also reveal a high level of blockchain penetration and adoption.
However, in all of this, one critical question remains. How exactly would blockchain technology affect Saudi Arabia’s economy?
Potential Impact of Blockchain on the Saudi Economy
Primarily, blockchain technology offers Saudi Arabia the opportunity to diversify its economy. As articulated in the country’s Vision 2030, its increased investment in technologies like blockchain is targeted at accelerating digital transformation. This digital transformation would improve the country’s digital economy. A direct effect of this is the reduction in reliance on oil and gas. Naturally, this would provide a buffer between the Saudi economy and the global fluctuation of oil prices, making for a stable economy.
Blockchain could also affect the Saudi economy by bringing about economic efficiency. This is because blockchain typically removes the need for excess intermediaries. Alongside economy-wide efficiency, this feature of blockchain also contributes to seamless cross-border transactions. It also improves supply chain management and increases financial inclusion.
Finally, a recent study has found that blockchain might be of immense benefit to Saudi SMEs. This is in terms of ensuring easier access to funds. Blockchain also constitutes an alternative to often difficult-to-obtain bank credit facilities. This way, more SMEs are likely to survive, making for a resilient Saudi economy.
The positive economic impact of blockchain is not limited to Saudi Arabia. For instance, a World Economic Forum (WEF) survey reveals that most ICT sector experts expect blockchain platforms to store at least 10% of the global GDP by 2025. Similarly, according to PwC, blockchain could boost the global economy by $1.76 trillion in 2030. Clearly, blockchain technology has massive economic value to offer the world.
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