Quo Vadis Blockchain Implementation in Indonesia

It's no exaggeration to call 2020 a heyday for bitcoin. Cryptocurrencyworld's most popular break through US$20.000 or almost IDR 280 million for one piece. The value of Bitcoin has increased dramatically from the beginning of the year which was still only at US $ 9.545 or grew one-fold.

But what we will discuss here is not bitcoin but blockchain. As a technology that allows existence cryptocurrency like bitcoin, it can be said that blockchain is not very well known to the ears of the general public. But as many in the tech community say, blockchain is an innovation enablers which will change many things as the internet has done since the 1990s until today.

How's blockchain

The name blockchain also rose when the price of bitcoin became popular. Since then, a number of parties, both business and government, have looked at and adopted this digital recording technology to solve their problems.

We spoke with Oham Dunggio and Pandu Sastrowardoyo from the Indonesian Blockchain Association (ABI) to find out the latest developments in blockchain implementation in Indonesia.

Oham, who currently holds the position of Chairman of ABI, said that quite a number of institutions have used blockchain. However most of its application is still limited to experiments. According to Oham, the financial industry, in particular banking, so the most passionate about experimenting with this blockchain.

"They are under the hood already experimenting with blockchain to simplify the process customers," said Oham.

One of the products of this industry that is close to the community and has been using blockchain is the Indonesian Standard QR Code (QRIS). Oham said that the government is developing QRIS with blockchain in the long term until 2025. "So the initial time it can be used can be scan one QR Code only," he added.

Apart from finance, logistics sector are also quite familiar with the implementation of blockchain. Oham said this time there are already several logistics companies adopting blockchain to improve the smooth delivery of goods.

A good example is shown by the Indonesian Directorate General of Customs and Excise. The Directorate General of Customs and Excise cooperates with IBM Indonesia and AP Moller - Maersk in applying TradeLens, a blockchain platform, to their work system. As a country with logistics costs that are still high compared to other countries, the Directorate General of Customs and Excise realizes the enormous efficiency that can be achieved from the implementation of blockchain which can ultimately cut logistics costs in the country.

"In Indonesia, logistics costs are high so that competitivenessis low. With this, it will definitely cut logistics costs," said Director of Customs and Excise Information Agus Sudarmadi as quoted by Antara. Between in February 2020.

It is common knowledge that the logistics costs in the country are quite large. Currently logistics costs reach 23,5% of GDP. Indonesia targets to reduce that number up to 17% in the next few years.

Another potential that can't be ignored

Pandu, who currently holds the position of VP of Consulting at Blocksphere, looks to two sectors far from commercial business as the future of blockchain in Indonesia: elections and social media.

The main value of blockchain is decentralization, transparency and immutability. In the election, Pandu believes that the results of the vote count can be recorded into blockchain nodes. Thus, fraud and disputes over voting data can be avoided.

"But it's better if the use of blockchain is only for tabulation, digital voting is actually more insecure," explained Pandu while giving the example of Estonia and Japan as countries that have applied blockchain in their elections.

From the social media perspective, Pandu sees the use of blockchain as an alternative to circumvent censorship and political bias for each social media platform. Mastodon, Teem, Hive.org are few examples of social media that have adopted blockchain. The main value they offer is decentralization, that there is no one party who has higher power which is allowed to be displayed to the public and which is not.

It appears too soon

Oham Dunggio estimates the use of blockchain will increase mainstream in 2025 later. According to him, the implementation of blockchain is still in the first stage, referring to the limited number of blockchain-based products and experimental projects.

Among them there are several blockchain projects that actually appear faster than they should. Oham calls blockchain products from Hara For example. Hara, which has been operating since 2015, is considered to have a good concept and implementation. It's just that Oham feels Hara's emergence is too fast for the domestic agricultural sector which is still far from using digital technology.

"The example in the field that they want to solve is farmer funding that is transparent and more targeted, but in reality in the field farmers still prefer to deal with middlemen. And these middlemen have positive and negative impacts," explained Oham.

Skip the cycle hyping

If referring to Gartner Hype Cycle for Emerging Technologies, blockchain is an innovation that has passed the peak of its expectations since 2018. Pandu feels cyclical overhyped completed in Indonesia.

As a person who takes care of blockchain on a daily basis, Pandu admits that he often sees a handful of blockchain-based solutions that he doesn't see business values. Besides, he feels that there are more and more solutions enterprise rely on blockchain. Factor enterprise According to him, this is also what causes many people not to know much about the development of blockchain innovation in Indonesia.

"There are even some solutions that are Back-end already using blockchain, but front-end still the same. Consumers will only feel the service is faster. The hype will finish once everybody have the right solution," concluded Pandu, believing blockchain will soon become a technology mainstream in the country.

Meanwhile, Oham Dunggio sees the right regulation as a determinant of when blockchain solutions can immediately flood Indonesia. Oham said that ABI is currently helping the Ministry of Communication and Information to formulate appropriate regulations for blockchain-based products.

There are at least two things that make Oham sure that blockchain regulations will soon be released in Indonesia. First is implementation digital currency by JPMorgan. Second is open trading market cryptocurrency by DBS in Singapore.

"I can mention that there are four big banks that have started experimenting. I think it's just a matter of waiting for regulations. If there is already gas, they're left with gas," concluded Oham.