Source:

https://www.livemint.com/Opinion/wNYS0WfLeUIDPcFddJL84K/The-importance-of-blockchain-for-India.html

 

Introduction:

• Blockchain, mostly known as the backbone technology behind Bitcoin, is one of the emerging technologies currently in the market attracting lot of attentions from enterprises, start-ups and media.
• “A Blockchain is a digital, immutable, distributed ledger that chronologically records transactions in near real time. The prerequisite for each subsequent transaction to be added to the ledger is the respective consensus of the network participants (called nodes), thereby creating a continuous mechanism of control regarding manipulation, errors, and data quality.”
• Simply put, Blockchain is a protocol for exchanging value over the internet without an intermediary.

Advantages of Blockchain technology:

• It will allow smart devices to speak to each other better and faster.
• Blockchain mechanism brings everyone to the highest degree of accountability. Therefore, solves the problem of manipulation.
• The data that belongs to us we can own it that is online identity and reputation will be decentralised.
• Cryptocurrencies will take the power from the government to control the value of currencies and hand it to people.
• It will allow middleman-free way to exchange asset.
• It will allow the removal of intermediaries that are involved in record keeping and transfer of assets.
• It provides durability, reliability, and longevity with decentralised network.
• The data that are entered in blockchain based systems are immutable which prevent against fraud through manipulating transactions and the history of data. Therefore, all the transactions can be investigated and audited easily.

India’s global positioning as a technology powerhouse:

• Different emerging technologies, such as blockchain, artificial intelligence, and the internet of things will not work in silos but will converge. Blockchain is a foundational data/transaction layer and missing out on it will hurt India’s overall tech competitiveness.

Blockchain applications explored by Indian players:

• A lot of Indian players have tested usage of Blockchain in the areas of Trade Finance, Cross-border Payments, Bill Discounting, Supply chain financing, Loyalty and Digital Identity areas.
• Some of the Indian banks, business conglomerates, and one stock exchange are among the pioneers for exploring Blockchain in India.
• With its strong IT ecosystem, India can become a leading blockchain development hub and a major net beneficiary of global capital inflows.
• Decentralized applications on public blockchains can solve myriad Indian problems, such as eliminating middlemen, providing data security, reducing corruption and tampering of financial ledgers, and improving the speed of service delivery by governments and corporations.
• Blockchain could play a crucial part in health insurance claims management by reducing the risk of insurance claim frauds.
• The technology can also be used to prevent the sale of spurious drugs in the country by tracking every step of the supply chain network.

Initiatives in India:

• NITI Aayog is reportedly building a platform called ‘IndiaChain’ — a shared, India-specific Blockchain infrastructure to leverage the trinity of Jan-Dhan-Yojana, Aadhaar and the mobile.
• Andhra Pradesh has become the first state in India to adopt blockchain for governance. It has piloted two key projects: managing land records and streamlining vehicle registrations.
• Recently, Telangana announced initiatives to leverage blockchain to mitigate the pervasive corruption and fraudulent activity embedded in the government sector.

Challenges for Blockchain in India:

The research conducted by blockchain community, Incrypt, pointed issues affecting core development activity and blockchain entrepreneurship in India. 

1. The survey has found that delay in putting together a framework for blockchain is causing India to lose out on jobs, drag in capital infusion, lack of innovation for local problems, talent flight, and setback in global positioning.
2. The government’s lack of initiative has already forced many blockchain developers and startups shift their domicile to nations like Singapore, Dubai, Estonia and Switzerland that offer tax incentives and e-residency for startups
3. On the capital front, the report stated that India is trailing behind in terms of VC funding for blockchain startups, with a minuscule $5.3 million raised in the last two years, as opposed to over $2 billion invested in blockchain equity deals globally.
4. The Reserve Bank of India (RBI) on April 6 notified banks to stop offering services to exchanges and crypto-related businesses in India. This has taken a toll on blockchain entrepreneurs, developers, and exchanges in India.
5. There are still millions of people who are alien to the concept of the internet and digitization, and under such circumstances, making Blockchain a part of mainstream life is a daunting task.
6. In today’s techno-savvy environment the world is becoming more and more digitally sophisticated and so are the crimes. India’s cyber laws are lackingin this respect.

Way forward:

• As core developers/shapers of this technology in India, all citizens should fully cognizant and sympathetic to government concerns of money laundering, tax evasion, investor protection and capital flight.
• There should be an independent cyber security auditing structure
• There needs to be a minimum set of universally accepted and recognized data protection and data privacy norms.
• In case of failure to comply, there should be a heavy penalty and punishment otherwise who will ensure the safety of citizens in cyberspace.
• Blockchain, with all its possibilities, needs a serious look at its vulnerabilities and commerciality.
• Before introducing blockchain into the public sector data-handling system, we need a robust and informative data repository
• Proper regulations for the use of blockchain technology in the country are needed.
• Identifying and resolving key issues and challenges in implementing this technology, the prime amongst those being data privacy.
• India should effectively channel its technical human capital surplus to position itself as one of the pioneers during this upcoming wave of innovation.

Conclusion:

• Well, if Blockchain becomes a success and is implemented in India, it will be a revolutionary change. It will not only pave the way for new set of job opportunities but will make the nation stand proudly on the global front.