Beyond Bitcoin: How blockchain technology will revolutionise India's future
From banking to polls to Aadhaar, it will impact everything.
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For a good part of 2017, Bitcoin remained the talk of the town. With the value of Bitcoin soaring and briefly threatening to breach the $20,000 (approximately Rs 13,00,000) mark, it caught not just the fancy of cryptocurrency enthusiasts, but even economists who were stumped by the virtual coin's stupendous growth.
However, the first two weeks of 2018 have brought with them multiple rounds of correction, which have seen the value of Bitcoin almost cut by half – the coin is currently (January 17) trading at just over the $10,000-mark.
With this major correction in value, questions have also been raised over the role of Bitcoin as "currency 2.0". But regardless of Bitcoin's role in the economies of the future, what cannot be ignored is its role in bringing to the mainstream the very technology – blockchain – that has facilitated the rise of not just the Bitcoin, but other altcoins too – Ripple, Etherium, and Litecoin to name a few.
What is blockchain
Blockchains have grown in popularity in 2017, but are set to take centrestage in the coming year. They are the decentralised digital ledgers that serve as the backbone of all cryptocurrency. Working as a distributed public ledger, blockchains provide a decentralised and transparent method for transactions, while maintaining a high level of security.
Experts predict their real value will be seen in more than just digital currency going forward. Recent reports peg blockchain’s influence to expand to the ever-connected world of the Internet of Things (IoT), thus transforming it forever.
How does it help
To begin with, the two meeting will greatly reduce the risk of hacking as data will be stored across a “chain” of thousands, possibly millions of computers.
This is down to a key characteristic of the blockchain – its decentralised nature. Unlike current generation technologies used by banks, healthcare providers and government agencies for maintaining records, blockchains do not require an intermediary for making alterations to the ledgers.
Owing to it being a decentralised technology, every user within a blockchain is a custodian of their own personal block and when a change is made to that block successfully, the ledger is automatically updated. However, if the operation turns out to be fraudulent, and the information provided by a certain block does not match, the decentralised ledger without the need of third party intervention declines the update.
This very characteristic of the technology that makes it extremely safe and fast primes it for use in multiple facets of our daily lives. According to Jay Samit of Fortune magazine, "Combining IoT with blockchain... ushers in a whole host of new services and businesses. For example, it can be used to track shipments of pharmaceuticals and to create smart cities in which connected heating systems better control energy use and connected traffic lights better manage rush hour."
Despite blockchain being at a nascent stage, and the world still preparing for its eventual advent into the mainstream, its approaching footsteps can already be heard. Apart from cryptocurrencies, many mature industries have already started to use or test the usage of blockchain technology in some form or the other.
The banking sector is at the front of the queue. Going into 2018, more and more banks are seeking to use blockchain in 2018 to transform parts of their business, especially in terms of reducing fraud. Banks are also testing blockchain-based cryptocurrencies to significantly reduce the time it takes to transfer money from point A to point B. Case in point: US-based money transfer giant MoneyGram's partnership with Ripple.
With the use of a blockchain-based technology like Ripple, the time taken to make cross-border payments can be brought down to merely 2-3 seconds as opposed to 2-3 days by using current generation banking methods. And all this at a fraction of the cost.
Apart from banking, other sectors have also started employing blockchain technology to cut down on costs and save time. The world’s largest container shipping firm AP Moller-Maersk has revealed plans of teaming up with IBM to create an industry-wide trading platform, reports Reuters.
This platform, it claims, can speed up trade and save billions of dollars.
How can blockchain help India
As we've mentioned above, blockchain technology because of its decentralised nature is primed for use in multiple facets of our daily lives. It's fast, secure and cost-effective, thus making it the ideal choice for government authorities in countries like ours where the lack of basic infrastructure to support the growing digital footprint has been badly exposed.
While we have moved on from paper-based records, initiatives like Aadhaar have shown why India is ripe for modernisation via blockchain technology. A string of data breach and leaks has highlighted the need for decentralising records, thus ensuring that they do not fall into the wrong hands.
And thankfully, the first steps in this direction have already been taken.
According to a report published in Business Line: "The Karnataka government has decided to use the blockchain technology and is planning to bring out a white paper on ‘Blockchain Use in Governance’ as a prelude to a separate policy."
Another area where blockchain technology can be used to revolutionise the country is voting. By employing this technology, the world's biggest voting event – Lok Sabha polls – which, in 2014, came at a cost of Rs 3,424 crore, could be completed at a lower cost, and arguably in a more secure manner.
Application of blockchain technology would eliminate the scope for voter fraud, providing a clear record of the votes cast, and preventing any chance of a rigged election.
Not to mention by going digital, votes can be cast using a mobile platform, allowing individuals the opportunity to cast their vote without going to a polling station.