The blockchain is the invisible technology that is radically transforming the future of the world economy and gaining traction in the capital markets industries. Big corporations are racing to build blockchain platforms. The technology will disrupt the future of digital transformation across industries and businesses. The blockchain is a digitized, distributed, decentralized, and incorruptible public ledger of all digital assets and economic transactions that are recorded in chronological order within a worldwide network called peer-to-peer (P2P) of distributed 'nodes' or computers.
In a nutshell, the key advantages of a blockchain are authentication, transparency, and auditing which eliminates the existence of the intermediaries. Major financial institutions and tech giants are carrying out blockchain technology driven innovations. It has been adopted by several industries, including the banking industry and financial firms. That's because blockchain has the ability to allow multiple parties to transfer and store sensitive data in an environment that is anonymous, secure, permanent, and easily accessible. This system simplifies the expensive, paper-heavy and logistically complicated financial operations such as cross-border transfer, remittances, shareholder management, securities trading, and ownership exchange.
In India, the state of Andhra Pradesh is the flag bearer of blockchain technology. Andhra Pradesh aims to be seen as the global hub for innovations in fintech. Vizag, which is fast emerging as the fintech capital of India, has attracted $900 million in investments, creating 5,500 jobs. In 2016, the AP government launched its ambitious 'Fintech Valley Vizag' initiative with the aim of building a world-class fintech ecosystem. The project brought together the government, academia, entrepreneurs, and investors to host emerging technologies like blockchain, data analytics, artificial intelligence, machine learning, cyber security, and cloud computing.
In fact, Andhra Pradesh has become the first Indian state to adopt blockchain for governance. It has signed a MoU with Covalent Fund to create 'Velugu Core,' pioneering India focused blockchain stack under the 'Fintech Valley Vizag.' The Velugu Core will make the government data digitally and freely available through open Application Programming Interfaces (APIs) which can be used by developers for building apps. This will transform the way the state's economy functions in the future.
AP Government has set-up a Blockchain University with an initial investment of up to $10 million for the pilot program and is focussed on creating world-class sustainable blockchain ecosystem with "the largest, open and cryptographically secure ledger of information on a blockchain protocol designed in compliance with the Indian regulatory framework." AP also uses blockchain to manage land records, protect the state's digital transactions to prevent fraud, and streamline vehicle registrations.
The launch of the Banking Financial Services and Insurance (BFSI) Use Case Repository Program and Fintech Valley accelerator program has set the tone for a high-potential fintech ecosystem in Vizag. The BFSI use case repository has already collated more than 100 use cases in collaboration with leading banks, NBFCs, insurance firms and capital market companies around the problem areas in the industry. Indian Prime Minister Narendra Modi has personally advocated the blockchain technology and has emphasized the need for its 'rapid adaption.'
Vizag's success in blockchain and fintech will act as a benchmark and serve as a template for other cities in India to replicate. However, in my opinion, I believe that the blockchain technology would work wonders if it was regulated. There should be industry standards. The government and the financial services industry should develop its industry-specific blockchain which is authorized and approved by the industry bodies nationally. Well-defined FSI and government-related standards, policies, legal and regulatory frameworks are required. Only then will a secured and trusted industry specific shared blockchain network develop. This industry-specific blockchain technology solution will stop many companies and consortium from developing their independent blockchain platforms.
Rajashree Rao is an Industry Thought Leader on Next-Gen Transformation Technologies