Blockchain, a simple concept yet so complex and diverse in its use-cases. Still, in a nascent stage, numerous countries have come to realize the immense potential of blockchain and are tapping into the unexplored areas of this disruptive technology. It has potential similar to that of the internet, to bring about a radical transformation in the daily lives of individuals.
Why some countries are adopting blockchain but banning cryptocurrencies? A popular saying about blockchain and cryptocurrencies trending among many nations in the world is ‘blockchain is good while cryptos are bad’.
Cryptocurrency transactions are encrypted, meaning only the parties involved can track transactions, therefore, the prying eyes of regulators are unable to keep track of the money and transactions. While cryptocurrencies provide solutions for smooth cross-border transactions, they also are vulnerable to being prey to illegal activities or crime, and they are a source for tax evasion.
Countries such as India and China have banned cryptocurrencies, while a few countries such as Japan and Korea are regulating them, so as to implement blockchain technology in government applications. Many believe that blockchain is all about cryptocurrencies as it is the underlying technology for operating cryptocurrencies. However, blockchain is much more than just a support system for cryptocurrency operations.
The epiphany of Vitalik Buterin led to the advent of Ethereum Blockchain that supports numerous decentralized applications and is more robust than the Bitcoin blockchain in terms of functionality. This functionality is what appeals to the governments of countries across the globe. The governments are in favor of adopting blockchain due to the innovations and technological advancements it offers.
India too has decided to join the race and has plans to adopt the technology in various sectors.
Blockchain In India
According to Blockchain Report 2019 by NASSCOM, the adoption of blockchain technology in India is experiencing rapid growth and investments in blockchain-based projects have touched over $20 billion across various industries. The report further states that many Indian state governments such as those of Telangana, Kerala, Karnataka, Andhra Pradesh, and Maharashtra are supporting blockchain startups and projects and organizing conferences and hackathons on the topic.
As per data from the World Intellectual Property Organization, India stands sixth on the list of patents and trends in the blockchain space, with a total of 67 patents approval in 2018. A wave of digital payments has swept in ever since demonetization impacted the Indian citizens in 2016. There has been a huge shift from transacting in physical currency to digital payments through platforms such as Paytm, GooglePay, PhonePe, etc.
Indians are gradually realizing the importance of digital money and leveraging seamless transactions and a cashless approach that digital money offers. With the large scale successful adoption of digital payments, India is now keen on moving towards adopting blockchain. Blockchain technology is emerging as one of the key innovations that will define the future of digital transactions in India and transform the FinTech landscape.
Industries Blockchain Is Transforming In India
With various industries adopting the technology in India, Banking and Finance sector tops the list followed by industries such as healthcare, retail, logistics, et al. Blockchain has found its way into the Indian Fintech ecosystem and is making its presence felt in profound ways.
- Banks in India were quick to realize the opportunities of blockchain for efficient banking operations and are efficiently using the KYC procedures offered by the technology. SBI leads as the first bank to use KYC and facilitate remittances based on blockchain, followed by banks like Axis, HDFC, ICICI that are implementing blockchain for its KYC and trade finance procedures. Apart from this, the DLT also enables AML, the validation of land records and asset inventory audits.
- Inherent inefficiencies in the claim management system of the Insurance Industry lead to losses of about Rs. 10,000 crores per year. Implementing blockchain for claim management is the ultimate solution to mitigate these issues. For the same, Cognizant has partnered with insurance providers such as ICICI Prudential Life Insurance, SBI Life Insurance, HDFC Life, Kotak Life and more to develop a secure data-sharing solution built on Corda blockchain platform.
- Tata Consultancy Services (TCS), headquartered in Mumbai has collaborated with Microsoft and R3 (an enterprise blockchain software firm), to advocate the adoption of blockchain across industries. It is further building five Blockchain platforms that include track and trace, digital identity, asset monetization, assets in common, and tokenization.
- A project built for the public, IndiaChain, will transform the functionality of public administration using blockchain for efficient and transparent distribution of government subsidies, streamlined record-keeping, systematic tax monitoring, and regulated supply chain management. The project also has plans to step into the education sector to curb fraudulent degrees and certifications, and seamlessly manage massive amounts of data in the pharmaceuticals and healthcare industry.
- The Indian Real Estate Industry faces challenges in maintaining, searching and verifying title deeds making ownership susceptible to fraud, time- consuming process in transferring property and an over-reliance on brokers, banks, registration officers, etc. Blockchain solves these issues by digitizing land titles, therefore, each land would have a digital address stored on the blockchain with details of occupancy, ownership records, finance, specifications of the property and associated legal disputes, if any. Further, the decentralized nature of the technology eliminates the dependency of middlemen and instant transfer of property, while the blockchain-based smart contracts solve the issue of repetitive transactions or contracts.
Potential Roadblocks In Its Adoption
Is a journey without bumps even worth remembering? Everything has its ups and downs and although blockchain technology is very promising with immense potential and scope for its adoption, it still faces a few challenges in India.
- The picture of regulations and compliance on the blockchain is still vague. The Indian government is yet to implement clearly defined regulations on blockchain technology. The adoption would accelerate when the regulations are well-defined by the government.
- RBI and tax authorities in India are not in favor of cryptocurrencies and ICOs due to the issues related to tax evasion and also lack of control of the regulators over the digital currencies. Startups and projects based on blockchain technologies are skeptical about going forward due to the battle between Indian authorities and cryptocurrencies.
- Many supply chain vendors are not keen on adopting the technology due to the lack of awareness and trust issues in technology. Therefore, accelerated adoption of blockchain requires more digitization and awareness.
- Presently, testing or adoption of blockchain applications is still limited to cryptocurrencies. A successful large scale execution of PoC (Proof of Concept) requires the banks to hire blockchain experts or data scientists which is a costly affair as compared to hiring software developers, making its adoption difficult. Conclusion Change is inevitable but often resisted by all, especially when it is transformational.
Although blockchain is in its infancy, India is pacing towards its adoption and inclusion. Implementing this technology across all spheres of business will certainly prove to be a game-changer despite the roadblocks in its adoption. Combined efforts of the government and diverse industries will aid the policymakers in designing and implementing policies that will shape the future of the disruptive technology in India.