The term ‘blockchain’ has emerged as a potentially transformative force in India for a variety of aspects of government and private sector operations. Its potential has been recognized globally, with a number of international organizations and technology companies emphasizing the benefits of its application in lowering operational and compliance costs while also improving efficiencies.
While the technical underpinnings of the technology can be intimidating to many policymakers and decision-makers, blockchain can enable ease of collaboration for businesses and ease of living for the citizens of India by bringing transparency across government and the private sectors.
What is Blockchain?
Blockchains are a new type of network infrastructure (a way to organize how information and value move around the internet) that introduces distributed verifiability, auditing, and consensus to networks, thereby creating ‘trust’.
Blockchains foster trust by acting as a shared database distributed across vast peer-to-peer networks with no single point of failure and no single source of truth, implying that no single entity can own a blockchain network and no single entity can unilaterally modify the data stored on it without the consensus of its peers.
In contrast to current networks, which rely on trusted intermediaries for security and trust, blockchains generate trust organically through the underlying technology of distributed networks.
They enable users to exchange digitized assets in an incorruptible (data cannot be changed once added) and transparent manner (all transactions are logged onto the timestamped ledger, with the identity of the person who committed the transaction).
Potential of Blockchain in India
Blockchain Ecosystem 2021 has the potential to transform interactions between governments, businesses, and citizens in ways that were unimaginable just a decade ago. Though it is frequently associated with technologies such as artificial intelligence (AI) or the Internet of Things (IoT), the technology is distinct in its fundamental nature.
Unlike other technologies, which have the potential to provide entirely new services to citizens and other stakeholders, blockchain has the potential to revamp existing processes in order to unlock new sources of efficiency and value.
India and Blockchain
Given the scale, diversity, and complexity of processes involved in the delivery of various public services, governance in India faces unique challenges. Blockchain presents novel opportunities for addressing issues related to better governance.
By allowing ‘self-regulation,’ India can significantly improve the ‘Ease of Doing Business by allowing entities to interact through a trusted medium with less reliance on cumbersome regulatory oversight and compliance.
Blockchain would aid in the improvement of living conditions by empowering citizens through features such as transparency, decentralization, and accountability.
Decentralized and Peer-to-peer transactions
The current conversation about peer-to-peer exchange systems has been dominated by the use case of Bitcoin, a cryptocurrency, and other altcoins, as well as their potential use by Indians.
An absolute analysis of systems that allow peer-to-peer exchange, on the other hand, demonstrates the utility of decentralized systems and how they have been used by governments.
The most basic form of currency transaction is the use of cash – a peer-to-peer, albeit non-electronic, exchange system. Every sale of goods and services at a mom-and-pop shop is essentially a peer-to-peer value exchange.
Indian Business and Blockchain
Blockchain has been positioned as a game-changing new technology, a much-needed silver bullet capable of addressing all business and governance processes. While the promise and potential of blockchain are undeniably transformative, the massive hype and irrational exuberance promulgated by a slew of ‘Blockchain Evangelists’ hasn’t helped this technology, which is still in its early stages of development.
According to survey results, “more than 80% of business executives say their organizations are actively involved with blockchain.” Blockchain’s characteristics make it advantageous in processes requiring decentralized access, auditing, security, disintermediation, and programmability.
While alternatives such as distributed databases or centralized databases with distributed API access may solve specific issues in processes at a lower cost, blockchain has the potential to solve these problems at the same time. Several frameworks have recently been proposed to evaluate the applicability of blockchain-based solutions.
Potential business features of blockchain solutions
Improving profitability and quality
- Smart contracts and algorithms are being used to automate tasks.
- Traceability of all historical transactions Increased transaction speed and efficiency by eliminating intermediaries
- Enhanced security through data encryption at the point of dissemination
- Prevents tampering because any tampering may leave a trail.
- “Distributed ledger” refers to a type of ledger
- Provides a complete picture: all stakeholders see the same information and have access to it.
- Multiple copies of the shared data are available.
Reinventing products and processes
- Transparent and predefined rules that facilitate the development of new products and processes via a decentralized model
- Tokenization / Digital Assets are physical objects with a distinct digital representation that allows for digital ownership, management, and transfer.
Future of Indian Blockchain Ecosystem
Blockchain is a cutting-edge technology that is still evolving. To ensure that India stays ahead of the learning curve, it is critical to understand the opportunities it presents, steps to fully realize its potential, and other necessary steps to help develop the necessary ecosystem.
Furthermore, it is critical to recognize the economic value that this phenomenon can generate, as well as the potential for new business models to emerge. India can hope to be well-positioned to take global leadership in this space by creating an enabling ecosystem for the research, development, and skilling of talent for the industry.