The digital cryptocurrency Bitcoin, that hogged limelight last year for its unprecedented rise, has now almost died down. While it was rising many made fortune whereas many others who waited or missed the opportunity are still in confusion about its future prospects.
The ebb and flow in the value of the cryptocurrency has raised many questions. Is it a bubble? Why does it have limited supply? Will it rise or burst? Can it be means of payment and a facilitator of exchange? Will it be a good store of value?
Even though there is confusion about cryptocurrency, there seems to be an air of certainty about the usefulness of technology behind cryptocurrency, Blockchain.
It is a technology that allows information to be stored and exchanged by a network of computers without any central authority. It is collectively maintained by a network of computers called nodes. The system is considered safe as no data in it can be changed by anyone without everyone else who maintains the records giving nod to it.
Experts in the tech industry even said the recent Facebook and PNB incidents could have been avoided with the use of blockchain technology. Currently, transaction reconciliation systems do not result in an immediate notification. Whereas within the blockchain system all parties involved get immediate notifications.
The technology can provide a basis for the trust banks have in each other, thereby curbing frauds. For example, if we see Nirav Modi case, Axis Bank in Hong Kong gave him loans on trust that was coming from PNB Mumbai. Blockchain could have checked the information, whether it is correct or not.
Globally, many banks and state-owned banks in countries like Russia, Saudi Arabia and the UAE have been working on blockchain-powered financial solutions.
The Indian government, which has warned against investment on cryptocurrency, is positive about blockchain technology. Indian banks like SBI, understanding the blockchain’s utility, has implemented the use of it in its reconciliation systems.
According to RBI’s working group report, blockchain potentially has far-reaching implications for the financial sector, and this is prompting more and more banks, insurers and other financial institutions to invest in research of the potential applications of this technology.
In February this year, while presenting the Union budget Finance Minister Arun Jaitley said that the government will explore the use of the cryptography technology proactively for ushering in a digital economy.
NITI Aayog, the think-tank of the government of India, is also working on building the country’s largest blockchain network – IndiaChain – with a view to reduce frauds, speed up enforcement of contracts, increase transparency of transactions, and boost the agriculture economy of the country.
It plans to kick off IndiaChain, with digital certification of educational degrees in coming months.
IndiaChain will be linked to IndiaStack and other government digital identification databases. IndiaStack, a set of code developed around India’s unique identity project Aadhaar, helps developers build products and services riding on the country’s digital infrastructure.
Blockchain-based solutions, once implemented across sectors, will be a huge boost in bringing transparency in governance and reducing frauds. This will make India the largest scale of blockchain implementation in governance anywhere in the world.
At present, Estonia is considered as the leader in blockchain adoption. The country’s eHealth Foundation is using the system to process and store patient health records.
The government is working on the blockchain-enabled project in the states of Telangana and Andhra Pradesh. More than $1 billion investments went into blockchain-based companies in 2016.
All this adds to the need of developing the blockchain ecosystem and make it more robust while bitcoin still remains a bubble.