Blockchain technology, Its uses, functions & Strategic Importance for India and rest of world.

What is blockchain technology?

Blocked Chain is a decentralized public platform primarily used for financial transactions eliminating 3rd party/intermediary agencies.  The blocked chain works on SHA256 cryptography to securely transfer data for every transaction.

In simple terms it is a type of distributed ledger, promises to reshape industries by enabling trust, providing transparency and reducing friction across business ecosystems potentially lowering costs, reducing transaction settlement times and improving cash flow. 

Today, trust is placed in banks, clearinghouses, governments, & many other institutions as central authorities with the “single version of the truth” maintained securely in their databases. The centralized trust model adds delays and friction costs (commissions, fees and the time value of money) to transactions. Blockchain provides an alternative trust mode and removes the need for central authorities in arbitrating transactions.

Bitcoin is an Example of Blockchain technology:

 

Why blockchain technology was introduced?

The primary intention of blocked chain technology was to resolve banking problems,

But now the application of blockchain has diversified into very big industries.

For example:  Refer below Networking & IoT of IBM is based on the blockchain.

Some of Trending Areas in block chains are:

·  Largest pig supplier in Singapore explores  Block Chain  Technology

·  Online sports betting company planning to  implement block  technology

·  Toyota Explores blockchain technology

·  Walmart to use block  technology for drone  delivery

· Chile’s stock  exchange to  partner with IBM  to implement  block Chain  Technology

·  Online sports  betting company  planning to  implement block  technology

·  Toyota Explores  blockchain  technology

·  Wipro to develop  block technology  solution  partnering with  EEA

How blockchain Technology Works?

1.    Distributed Processing

a) In blockchain technology every node checking the work of another node

b)They confirm the transaction by solving the small maths problems with random numbers (it is also called crypto puzzle) from multiple parties works simultaneously

c)Transactions are confirmed by a kind of digital majority vote.

d)The result is that collusion to approve fraudulent transactions is difficult.

2.    Synchronized Records

a) Every participant in the network keeps a copy of all the transactions

b) Transactions are secured by encryption to prevent tampering

c) Change your transaction history, and your hash numbers will be out of sync with all others, exposing tampering. That makes your transaction invalid

d) By this process, it will ensure the highest security of the transaction.

3.    Smart Information

a) Transactions can be sent with rules attached - small programs that govern when and how money is delivered.

b) It ensures the genuineness of transactions.

Many blockchain initiatives today do not implement all of the attributes of blockchain — for example, a highly distributed database.

These blockchain-inspired solutions are positioned as a means to achieve operational efficiency by automating business processes, or by digitizing records.

They have the potential to enhance the sharing of information among known entities, as well as improving opportunities for tracking and tracing physical and digital assets.

However, these approaches miss the value of true blockchain disruption and may increase vendor lock-in.

Organizations choosing this option should understand the limitations and be prepared to move to complete blockchain solutions over time and that the same outcomes may be achieved with more efficient and tuned use of existing non-blockchain technologies.

Importance of Blockchain in India

Advantages for India:

The blockchain is now the fastest-growing skill set demanded on job sites, with job growth rates at 2,000-6,000% and salaries for blockchain developers 50-100% higher than regular developer jobs. The decentralized nature of projects with distributed teams can translate into lakhs of high-paying jobs from all over the world being available to Indian developers.

Blockchain-based initial coin offerings (ICOs), when done correctly, open up a whole new channel for startup funding and tap into more than $20 billion raised through the ICO route. With its strong IT ecosystem, India can become a leading blockchain development hub and a major net beneficiary of global capital inflows.

Solving Indian current problems:

Decentralized applications on public block chains 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.

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. That is the space where the next Googles and Amazons of the world will get created. The blockchain is a foundational data/transaction layer and missing out on it will hurt India’s overall tech competitiveness.

Regulation in India:

The current debate in India has, unfortunately, focused too heavily on trading and speculation, looking at cryptocurrencies as an investment tool, rather than understanding the potential of core blockchain technology and the basic role of cryptocurrencies as an incentive mechanism to secure decentralized transactions.

As core developers/shapers of this technology in India, we are fully cognizant and sympathetic to government concerns of money laundering, tax evasion, investor protection, and capital flight. 

However, the blockchain sector is especially sensitive to regulation. 

Any regulatory action on cryptocurrencies that misses the nuance of separating speculative activity from core software development inadvertently shuts down core development as well. There are sufficient global examples of countries that have taken nuanced and cautious steps in regulating technology and are focusing on stopping illegal activity without hurting innovation.

In the current regulatory environment, Indian developers do not have to ability to develop open blockchain solutions at scale. Serious blockchain professionals are migrating rapidly to countries with more friendly regulations. As a result, India’s ability to benefit from jobs, capital, local innovation, and positioning is all curtailed without the talent ecosystem in place.

The government has legitimate concerns around money laundering, tax evasion and capital flight using cryptocurrencies. However, regulating the space is not too difficult with a light touch and intelligent policies.

  

Some examples about current use of blockchain technology in India

Bank Chain, India’s first Blockchain based banking platform has started to function.

1.  Bank Chain is the product which is built by the consortium of Banks including State Bank of India, ICICI Bank, and DCB Bank.

2.   Wipro to develop block technology solution partnering with EEA.

On the basis above statements, we can draw a conclusion that:

·         The future of finance could be dominated by blockchain technologies.

·         A traceable global currency complete with an efficient infrastructure will not only result in massive cost reduction for all market participants, but it will also change global banking.

·         Blockchain technology could reduce the UBS's infrastructure costs in cross-border payments, securities trading and regulatory compliance by as much as $20 billion a year by 2022.

·         The future of finance in many nations could be dominated by Bitcoin and cryptocurrencies.

·         Blockchain technology could be used to distribute social welfare in developing nations.

·         Elections are currently expensive and arduous. Thanks to blockchain tech they will soon be instantaneous.

·         Rise in technology leads to the demand for skilled labour to develop (which result in more job creation) and maintain the block Chain infrastructure.

I would like to add that the Current blockchain technologies and concepts are immature, poorly understood and unproven in mission-critical, at-scale business operations. This is particularly so with the complex elements that support more sophisticated scenarios, Despite the challenges, the significant potential for disruption means CIOs and IT leaders should begin evaluating blockchain, even if they don’t aggressively adopt the technologies in the next few years.