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How Blockchain Will Help India Take a Digital Leap

How Blockchain Will Help India Take a Digital Leap

The emergence of blockchain technology is expected to boost innovation in many aspects of our lives through decentralisation and removal of intermediaries, providing India a unique opportunity to take a digital leap.

Chain Reaction Chain Reaction

The music industry is no stranger to licensing disputes. There have been many instances when companies faced lawsuits because of improper media attribution or failure to pay songwriters. For example, Spotify, the world’s largest music streaming service provider, settled a licensing dispute in the past with the National Music Publishers Association (NMPA) in the US over unpaid royalties. Later, to solve the attribution problems, Spotify acquired blockchain start-up Mediachain Labs, which has helped the company develop solutions via a decentralised database to better connect artists and licensing agreements with the tracks on Spotify’s service.

Another example is Walmart where the blockchain technology has been efficiently leveraged to establish a system for food traceability. Here, each node of the blockchain showcases the entity that has handled the food before it reached the store. The whole supply process technology becomes easy and transparent, especially when there is a need to locate an infected batch back to a specific store.

Blockchain’s first and most widely known use case was the cryptocurrency Bitcoin, but today it has spread its utility across a plethora of domains and sectors. “Blockchain has the potential to be a solution provider for any business, especially in securing and decentralising their data and automating contracts between parties via smart contracts,” says Arjun Kalsy, VP Growth at Polygon, which is a protocol and framework that enables developers to build and connect Ethereum-based blockchain networks. “We are already working with multiple state governments including Maharashtra for a blockchain solution to provide Covid-19 certificates, while the Telangana government is working towards creating NFTs of folk artists, and Chhattisgarh and Assam governments are working on various use cases like land registration, court case registry, etc.”

There are essentially two types of blockchains: public and private. Public blockchains are 100 per cent permission-less, which means that anyone can participate within the blockchain and can join the network. Experts say that the large-scale adoption of public blockchain can drive greater financial inclusion, data ownership and frictionless processes at the inter- and intra-organisational levels.

Moreover, blockchain can create opportunities on the socio-economic front, as it can create jobs on a large scale and usher in a new era of technology-led economic growth. “With blockchain, forward-looking companies (even those based out of Tier II, Tier III towns) will be able to build apps and platforms that seamlessly cater to a global user base, thereby boosting the ‘Make in India, Make for the World’ concept,” says Om Malviya, Founder and President, Tezos India, which enables the use of Tezos Blockchain.

Neeraj Khandelwal, Co-founder of CoinDCX agrees. “Blockchain will have the same profound impact emails had to the workplace when it was first introduced. From logistics to supply chains, to finance and insurance, we are already starting to witness disruption at a scale never seen before, rapidly blurring the lines between legacy systems and new-age technologies. In the coming 7-10 years, blockchain technology will become the centrepiece of economies around the world, transcending the domains of e-commerce, healthcare, and public sectors,” he says.

Framing the Future

Experts say blockchain has immense potential, as the technology is decentralised and is designed to be immutable. The records stored in a blockchain cannot be altered, and it can be of huge benefit for any organisation to permanently store asset transactions of property, land, stocks, etc. Despite numerous advantages, blockchain is still not a mainstream technology. However, the coming years are going to be defining, as several industries have begun to apply the technology for their product and services. Going forward, here are some of the most important use cases of blockchains:

Cross-border Money Transfer: Currently, international money transfer is done through SWIFT, or Society for Worldwide Interbank Financial Telecommunication, a Brussels-based organisation. Through the SWIFT channel the message instruction is sent from the issuing bank to the remitting bank. But there are usually multiple banks engaged in the process based on the underlying network, and each bank charges a cost, making international money transfer a costly as well as lengthy affair.

However, blockchain technology offers a solution by real-time verification of transactions without the need for intermediaries, increasing transparency and speed at much lower costs. “Blockchain technology is already seeing a lot of innovations in the financial sector, providing financial inclusion to millions of people in Africa and Asia and allowing easier remittances for immigrants,” says Kalsy. Realising the benefits, the Reserve Bank of India has also recently selected—under its regulatory sandbox framework—Bengaluru-based Open Financial Technologies to build a blockchain-based cross-border payment system.

Central Bank Digital Currency (CBDC): India also plans to launch its own digital currency with the listing of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in Parliament. It will work similar to how digital wallets currently work but on blockchain, which means all transactions can be tracked on the ledger with no ability to modify the past. “As we move towards a more digital and decentralised future, crypto and CBDCs will dramatically shape India’s economy to be more open and efficient. Through simplifying transactions and streamlining remittances, crypto and CBDCs do offer a unique opportunity not just for India but globally, to supercharge development and accelerate the pace of economic growth. Crypto has the potential to multiply the global internet economy. This will offer greater choice to consumers, who will be able to make cheaper and quicker transactions across the globe,” says Khandelwal.

Vikram Subburaj, Co-founder and CEO of Giottus Crytocurrency Exchange, agrees: “CBDCs will have the ability to do micro transactions (even sub-Rs 1) at scale (depending on the blockchain it is based on), thus taking some load off traditional banking networks. Banks will have to adapt to serving their customers via this new route in addition to the existing channels.”

DeFi: DeFi is a peer-to-peer financial service that works on a blockchain platform. The concept has come into prominence with the use of cryptos, as it enables you to take a loan against a crypto you hold without any intermediary. Here the lender and borrower meet on a DeFi lending platform where the borrower gives crypto as collateral to the lender to borrow money and in turn the lender earns interest income. In India, DeFi is at a nascent stage but going forward the business is expected to grow at a fast pace. “The future of blockchain looks bright in India. As we move forward, we can see more innovative projects in the near future, especially in the finance sector,” says Avinash Shekhar, Co-CEO of ZebPay. Adds Malviya: “DeFi or decentralised finance is fast-emerging as one of the most frictionless ways to get access to financial products and services.”

Non-Fungible Tokens or NFTs: NFTs are becoming the rage in arts, entertainment and gaming industries. It is becoming popular because a collectible item is made unique by giving it a unique code by putting it on a blockchain. The code makes the person the owner of that digital asset, which cannot be replicated. “NFT would prove to be a game changer for artists around the world. The artists can directly reach out to fans and even be guaranteed a part of any future sale of their work,” says Kalsy.

Consider this: according to Cointelegraph Research, the number of NFT transactions on Ethereum involving art and collectibles totalled around 800,000 from January to August 2021, with a total volume of $2.93 billion. Therefore, the NFT art and collectibles market makes for an equivalent of 23.6 per cent of the online global art and collectibles market value, but only 2.5 per cent of transactions.

Similarly, gaming is expected to have huge potential. According to Cointelegraph Research, game-based NFTs have totalled $1.93 billion across multiple blockchains in 2021 so far, making up 1.5 per cent of the equivalent total free-to-play gaming revenue in 2020. The gaming market has continued to grow in 2021, fuelled by the Covid-19 pandemic and is forecast to reach $258 billion by 2025.

Smart Contracts: It is emerging as one of the biggest use cases of blockchain. These contracts are embedded in real-time on a blockchain, eliminating the need for middlemen. “In insurance, smart contracts can revolutionise claims. Similarly, governments can leverage distributed ledger technology in the areas of identity management, registration of land titles et al. From a customer’s point of view, a comprehensive view of his/her history can reduce the probability of fraud. The list is endless—the right use case, with adoption at scale, is the key to success,” says K.V. Dipu, Head - Operations & Customer Service at Bajaj Allianz General Insurance.

Authentic Documents: Another important use case that is growing of late is in the personal identity space, says Malviya, that wherein social security certificates, birth dates and other personal information documents can be kept on a decentralised blockchain ledger, which in turns enables one to have a kind of a ‘global identity proof’ that is akin to the present-day Aadhaar in India. “Governments have also leveraged distributed ledger technology in the area of digital identity, resulting in a dip in identity theft cases. Firms and customers have also leveraged smart contracts to get alerts if there is an unauthorised attempt to access personal data. Insurers have explored the use of blockchain for catastrophe-driven claim payments,” says Dipu.

Real Estate: Blockchain can provide greater liquidity through automated property management and unforgeable land records and property rights. “The records stored in a blockchain cannot be altered, and it can be of huge benefit to the government to permanently store asset transactions of property, land, stocks and everything else,” says Prashant Surana, Member of Blockchain and Crypto Assets Council (BACC) and Co-founder of Snapper Future Tech.

Web 3: Decentralised Internet of the Future

The internet and World Wide Web as we know it today is mostly based on a lot of centralised servers—collectively known as Web2. On the other hand, Web3 is all about decentralisation powered by the integration of public blockchains. “By leveraging the marvels of Web3, individuals and organisations can build future-ready platforms or tools that are not centralised, and at the same time, provide more ownership of one’s account, data, and digital assets. Additionally, Web3—while still a developing concept—is believed to improve manifold the aspects of user data security and scaleability,” says Malviya.

Some of the biggest projects in the Web3 world also operate on home-grown company Polygon, such as the world’s biggest NFT marketplace, OpenSea, and the most popular metaverse, Decentraland. “This year we also saw some of the biggest global brands such as Macy’s, Dolce & Gabbana, and MG Motor release their NFT collections on Polygon,” says Kalsy.

For the common man, Web3 means having access to the highest levels of decentralisation, autonomy and ownership. “When one is browsing the Web3-era internet, regulators will not be able to store, control or leak their data, and additionally, users would no longer be denied access to a webpage or a service. To put it in layman terms, Web3 will enable the ownership of data to shift from the big corporations to the users, thanks to its revolutionary focus on blockchain-led decentralisation,” says Malviya.

Having said that, often people use metaverse and Web 3.0 interchangeably, as both point towards a vision of a better future. If directed right, they can help envision an internet of positive possibilities. “Metaverse can be understood as a shared digital space with digital human recognition as avatars that will constantly be changing and evolving, whereas Web 3.0 is the third generation of internet services giving humans the power to be in charge of their identity, power and monetisation. These technologies will help shape the future by creating a more intelligent, connective and open existence,” says Surana.

Clearly, blockchain technology has immense potential and there are many more sectors and use cases where the potential of blockchain can be explored.


Published on: Feb 07, 2022, 3:26 PM IST
Posted by: Vivek Dubey, Feb 07, 2022, 11:40 AM IST