Bitcoin and Blockchain
Blockchain is a shared, distributed ledger that records transactions in a network. It uses cryptography which engenders trust by ensuring facts are reported consistently to every participant in the network.
For many people, Bitcoin and Blockchain are the same things. However, Blockchain is the underlying technology behind Bitcoin. Bitcoin is one of the many applications of Blockchain.
Bitcoin is a payment mechanism that was introduced through the whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System” by Satoshi Nakamoto in 2008. Bitcoin uses Blockchain to log the transactions.
Blockchain: The India Imperative
India has adopted a unique strategy wherein the Government takes the lead in creating public digital infrastructure and allows the private sector innovation to leverage it for further development. Over the past decade, India has successfully fabricated elementary digital infrastructure such as Aadhaar, UPI, e-Sign, and Digilocker along with digitally enabled tax governance systems like GSTN or digitally enabled health coverage schemes such as Pradhan Mantri Jan Arogya Yojana(PM-JAY).
From the aspect of Indian use cases, blockchain is both aptly suited for addressing several challenges and will also benefit from the existing infrastructure. The benefits would include:
- better contract management and procurement,
- greater accountability,
- quality control across supply chains, and
- decentralisation of authority in decision making
For example, blockchain can essentially transform the agricultural sector in India by creating an audit trail of all farmers produce and removing the intermediaries imparting trust and transparency amongst the participants in the entire supply chain.
From an implementation viewpoint, a blockchain-based solution would require integration with an identity platform and perhaps an incentive mechanism. The corroborated success of Aadhaar and UPI gives India an innate advantage in pursuing commercial-scale blockchain solutions, while other countries are still struggling to find a good proxy for identity and need to establish the sanctity of crypto assets.
Blockchain in Indian Public Sector
At the World Economic Forum Annual Meeting in 2019, held in Davos, Blockchain was one of the hot topics under discussion. According to NASSCOM’s Blockchain Report 2019, the Public sector in India is fast emerging as a large consumer for Blockchain technology. Currently, 40+ Blockchain initiatives are being executed by the public sector in India with approximately 8% projects in the production phase. The government is playing a vital role not only as a regulator but also as a consumer of Blockchain solutions in India.
About 50% of the states in India are involved in Blockchain-related initiatives, driving the public sector blockchain adoption in the country.
|Prevalent Use Cases in India’s Public Sector|
|Land Title Registry||Identity Management||Agriculture supply chain|
|Health Record Management||Power Distribution||e-Governance|
|Digital Certificates||Vehicle Lifecycle Management||Cybersecurity|
|Eliminating Counterfeit Drugs||Organ Tracking for Transplant||Digital Voting|
|Microfinance for Self-Help Groups (SHG)||Farm Insurance||Benefit Distribution|
Blockchain Initiatives in India
The BFSI sector is leading the blockchain adoption in India followed by the Public sector and Healthcare.
- According to the NASSCOM Avasant blockchain report, Telangana and Andra Pradesh are two of the leading states in terms of blockchain adoption in the country. The Telangana government has implemented blockchain technology in various projects such as land registry, chit funds operations, micro-finance for self-help groups (SHGs), and digital education certificates among others.
- Indian Banks realized the potential of blockchain in improving the efficiency of various banking operations like KYC. SBI was the first bank to use blockchain, followed by Axis, HDFC, and ICICI. Blockchain also aids in improving checks for Anti-Money Laundering.
- Bharti AXA has partnered with Ledgertech to develop a blockchain-based solution powered by R3’s Corda Enterprise to process motor damage claims far faster, at a dramatically lower cost, and with much greater transparency for all parties.
- Like any new technology, blockchain also faces skepticism on whether it is a bubble or can deliver path-breaking innovations and solutions.
- The regulatory authorities need to come up with a proper framework of protocols regarding blockchain technology.
- RBI is not in favor of cryptocurrencies and ICOs due to undefined tax regulations.
- There is a lack of awareness and trust issues with many market players.
Although blockchain is in its nascent stage, India is taking steps for its adoption and inclusion. The government and the industries need to combine their efforts in designing and implementing policies around Blockchain. Regulatory sandboxes should be created to encourage awareness and adoption of Blockchain.
Despite the challenges in its adoption, Blockchain definitely has the potential to be a game-changer. We wish that the coming years allow blockchain to unleash the real potential of India.
Author: Anant Avinashi (Snapper future tech)