After the internet, e-commerce and social media, the world seems to be betting on the blockchain technology to revolutionise the human life. Since the first bitcoin transaction took place in early 2009, global Investment in blockchain has exceeded 2 billion dollars in 1000+ startups. The bitcoin is responsible for the realization, that the technology that operated bitcoin could be separated from the currency and used for all kinds of other inter-organizational cooperation, just like email was to internet.
Blockchain can be described as a decentralised world computer that works as a digital shared ledger in the form of network of databases across multiple entities that are kept in sync and all transactions are broadcasted to all users and are publicly viewable on the ledger. The data can’t be altered without some agreement from the other participants of the network while the participants hide behind their pseudo names i.e. addresses, that enables the technology to achieve transparency, maintain privacy and set up trust between participants at the same time.
The world renowned application of blockchain in India has been in Invoice Financing, where three Indian exchange marketplaces (to which small businesses bring invoices to obtain financing from large Indian banks and several foreign banks) and a technology company have come up with a solution that has addressed fraud in the form of double financing of the invoice: a supplier who is owed money from a buyer takes that same invoice to multiple venues. To prevent someone from taking multiple loans on a single invoice, their blockchain software assigns a unique fingerprint to every invoice tokenized and issued. Therefore the process of verification against double invoicing is automatized. If two invoices look very similar, the exchanges get a notification that they are attempting to factor an invoice that might have already been financed somewhere else (A blockchain is programmable, i.e. it can be governed by protocols and the programmer can tell it what to do in which scenario). Blockchain has allowed the banks to share data about invoices without sharing the customer details.
Andhra Pradesh state has now secured more than 100,000 land records through blockchain to bring more transparency to governance. Now many may argue that the land records are digitized already and what’s so special about storing it on blockchain? The answer to this question lies in the possibilities that blockchain offers. Making the system digital did not solve the problems of hackability and post date tampering by officials. The block structure of the blockchain, wherein all the blocks have digitally encrypted inimitable fingerprints and are connected using chains (that’s where the name comes from), makes it impossible to hack and to modify at a later stage. In terms of property registry files upon first registration a unique ID for the land and the owner is input, if another owner’s ID is input for the same property ID, a completely different output will be generated, which makes property fraud almost impossible. It’s irrefutability and immutability allows sellers to sell their property via a mobile phone app while the shared ledger system brings in transparency in the entire process and makes the same details about each and every property visible to the public and administration. The buyer can look for all the details about the property he/she is interested in and the seller can sell the property via a mobile app.
As is the global case, the banks are the front runners in adoption of the technology in India. SBI has announced full-fledged deployment of blockchain in its reconciliation, remittances and trade finance operations in FY19. Majority of Indians work in the informal economy, which relies more on interpersonal trust than formal contracts, leaving them vulnerable to fraud. The country well known for bribery and corruption, averages $2 billion a year for loan frauds. No wonder the Prime Minister Narendra Modi has hailed blockchain’s potential and emphasized the need for “rapid adaptation”.
Retail companies are using it to store warranty receipts and track history of ownership, healthcare companies for patient record management and Pharmaceutical giants to monitor the pharma supply chain as well as to collaborate with network stakeholder. Twenty years ago we could not define the internet but it rules our lives now, the same is with blockchain but trying to boil it down to simple terms and guessing all the possible applications is difficult. So far, the number of jobs created by the industry appears to exceed the number of available professionals qualified to fill them, but no guarantees that this trend will continue.
The interest around blockchain in India needs to be taken to the next level where we see more pilots and production ready applications. Government bodies, consultancy firms, technology giants, and start-ups have come together on multiple platforms. For the first time the world including the West is looking at India for taking a technology from nascent to a full fledged version, shall be interesting to see whether the country meets the expectations or even exceeds it!