In this article we will be discussing Blockchain Technology, its scope, and how do Indian Companies are doing with this technology.
What is Blockchain?
In simple language, Blockchain is a distributed ledger technology. If we take the example of the Traditional Banking System in the country, we can see that if we do a transaction of sending money to an individual, here the bank of the sender will record the transaction and will debit his/her account, simultaneously, the receivers bank account will also record the transaction, but here it will be credited in his/her account. In the traditional system, the sender or receiver will be able to see their part of transactions only. But in Blockchain technology, every transaction is being validated by various people.
In the case of the Banking system, transactions are validated by the respective Banks, but the same is not the case with Blockchain technology. The transactions validated by various peoples will know the transactions, but their identity will remain private. Also, in Blockchain technology, any single entity will not hold the power, since it is a decentralized network. This recording of the transaction is being done with the help of Cryptography, which is a highly secured technique.
Process of Blockchain Transaction:
- A new transaction is entered
- Then, this transaction is then transmitted to a network of peer-to-peer computers scattered across the world.
- Further, the above network solves the equation to confirm the validity of transactions. And, the transaction is complete.
- Moving ahead, these blocks are then chained together creating a long history of all permanent transactions.
- Once confirmed to be legitimate transactions, they are clustered together into blocks.
What are the advantages and disadvantages of Blockchain Technology:
- Trust: Enables trust between participants who don’t know each other
- Decentralized Structure
- Improved security and privacy: an end to end encryption
- Reduced costs: creates efficiencies by reducing manual tasks like aggregating and amending data and by easing reporting and auditing.
- Speed: eliminates intermediaries
- Visibility and traceability: tracks the origin 7. Immutability: transactions can’t be changed or deleted
- Individual control of data: gives the ability to decide with whom and for how long data to be shared, with limits enforced by smart contracts
- Tokenization: converts value of an asset into digital token recorded and shared via blockchain
- Data is immutable: Blockchain cant go back- data privacy
- Not completely secure: if an entity can control 51% or more of the network nodes, then it can result in control of the network.
- Consume too much power for some applications
- Lack of uniform regulations
- Almost impossible to edit old contracts
- Interoperability: still in its infancy
What Indian Companies are doing with Blockchain Technology?
- Many Indian Companies especially Information Technology (IT) Companies have started using Blockchain Technology. For instance, TCS had developed the framework of Blockchain named ‘Quartz’, which is working with various Indian Companies.
- Similarly, Infosys is also working with different companies across the world on the Blockchain framework.
- Also, the Multi Exchange Commodity of India (MCX) is building a new trading platform based on blockchain technology. TCS wins this deal.
- The top 15 banks of India including ICICI Bank, HDFC Bank, etc. have formed Indian Banks’ Blockchain Infrastructure Company Private Limited to manage Letter of Credits (LoC).
- Bajaj Electricals and Yes Bank have implemented a blockchain-based vendor financing solution for real-time settlement.
- Tata Power unveils blockchain-enabled solar trading for Delhi Customers.
Various Government Initiatives in Blockchain Technology:
- Telangana and Tamil Nadu have released the policy documents towards adopting Blockchain technology.
- In 2017, Andhra Pradesh became the first state in the country to pilot blockchain technology. The state also created the largest repository of used cases for global start-ups to test their solutions. It deployed blockchain technology to address cybersecurity issues.
- Blockchain for CBDC: Reserve Bank of India (RBI) is exploring the use case of blockchain as the underlying technology for proposed Central Bank Digital Currency (CBDC).
- Maharashtra government to partner with LegitDoc, an Indian blockchain start-up to help the government issue tamper-proof diploma certificates (Sep-21). Legit Doc will use a proprietary algorithm that is built using Ethereum to issue and verify documents.
- Maharashtra government onboarded Blockchain Startup Print2Block For Issuing Covid-19 Test Certificates (May-21).
- The government of India released the National framework for blockchain technology in Dec-21.
- The Telecom Regulatory Authority of India’s (TRAI) ambitious plan to deploy the world’s largest blockchain use case in the telecom sector to curb the menace of spam messages and calls.
What Lies Ahead:
Blockchain Technology is an interesting space, and these developments in Indian Companies and Government Departments/Activities show that this technology possesses a great scope in the coming years ahead.