BLOCKCHAIN IS ESSENTIAL FOR ECONOMY

With economist of the world still predicting 3rd global crisis to be haunting us in future. Blockchain as an institutional technology can be a real game changer given in mass economy like India we start adopting this trusted distributed ledger. But before we begin talking about our approach to solve the economy crisis and how governments around the world can play a vital role and building the blocks right lets first understand what Blockchain is especially for the people who are not IT Savvy or have heard Blockchain for the first time.

So what is Blockchain – In very simple word Blockchain represents a technology innovation that enables transparent interactions of parties on a more trusted and secure network which distributes access to data.The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

Although the technical components have been in existence from decades. It holds the potential to address the inefficiencies in our existing financial model, reduce cost, unlock capital, improve trust in societal fabric and open up new business models. This can open up accelerated growth opportunities for informal economy. If you are GenX and you remember early 1990s, and you knew what the internet was going to become … what kind of bets would you make? It took 20 years for all this to unfold. Similarly, Blockchain is still at stage of baby bump not sure what share it would take as it grows as there are still unconvinced acceptance by lawmaker for its application in public domain.But likewise any new technology it has its own dark side on how ethical adoption is taking place by users.

As revolutionary as it sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.”

How can you Government can capitalize on the disruption that block chain is introducing into the global ecosystem?

 A number of governments around the world have expressed an interest in blockchain technology to store public records on a decentralized data management framework. Essentia is developing an e-government pilot with Finland’s Central Union of Agricultural Producers and Forest Owners. Blockchain will enable urban and rural citizens throughout Finland to access records. Other use cases include government applications such as education, public records and voting.There are many other areas where Government can adopt the decentralized trusted without getting annoyed and distracted by risky application of Blockchain such as Bitcoin

• Waste Management
• Healthcare
• Real Estate- Land Registry
• NGO’s
• Vehicle Registration

   What are the risks and opportunities that this new technology represents?

“Given that kind of trajectory it is going to be fascinating to see what will be happening in a couple of years’ time, simply because of what is going on at the moment.”

Research by IBM and the Economist Intelligence Unit undertaken in 2016 on the adoption of blockchain technology showed that of 200 financial institutions surveyed, 14% of them were planning to implement blockchain into production by the end of this year. The overwhelming majority (70%) expect to be in production by 2020 at the latest.

“There was a lot of debate in the middle of 2016 as to whether this “blockchain” was just about experimentation – no-one was actually prepared to pull the trigger. “So the figure of 14% was quite interesting at the time as a statement.”

There are, however, issues which exist. “The classical one if you are using blockchain in a settlement context, what happens at the point of settlement finality when settlement has actually happened but for whatever reason one party is in dispute with the other?” “Is what a legally viable statement of fact is on the blockchain at that point? Technically it is but is it true from a legal and regulatory point of view specially in country like India where we government yet to accept the fact that this technology is going to impact us in very near future as part of global ecosystem? So the question of settlement finality is something where the law to some extent has to catch up with what the technology enables, because you are talking about a different environment to what exists today in the markets.”The transparency of blockchain is a distinct advantage from a regulatory perspective.

One of the blockchain network participants can be the regulator, so they have complete visibility and transparency about what is going on, which they don’t have today because that is typically based on post factum reports that are provided which may or may not be accurate depending on the systems and the processes supporting them. There is a direct benefit to market transparency in the race for that.But there are other associated risk due to different types of blockchains. Majorly Blockchains fall under two types: Permissionless and permissioned chains.

Permissionless blockchains allow any party without any vetting to participate in the network, while permissioned blockchains are formed by consortiums or an administrator who evaluate the participation of an entity on the blockchain framework.Regardless of the type of blockchain, the business logic is encoded using smart contracts. Smart contracts are self-executing code on the blockchain framework that allow for straight-through processing, which means that no manual intervention is required to execute transactions. They rely on data from outside entities and can act on data associated with any public address or with another smart contract on the blockchain.While the blockchain technology promises to drive efficiency or reduce costs, it has certain inherent risks. It is imperative that firms understand these risks and the appropriate safeguards in order to reap the benefits of this technology. Additionally, it’s important to understand the evolution of regulatory guidance and its implications.

These blockchain risks can be broadly classified under below categories:

• Regulatory and legal environments are still under development and as such are open for interpretation
• Implementing and standardizing Blockchain requires significant investment, including legacy system integration and retraining of the workforce where appropriate
• A lack of real-world enterprise testing, and the rapid development of Blockchain platforms make it difficult to stay ahead of the curve
• Timescale for implementing decentralized system can increase complication
• Standard risks: Blockchain technologies expose institutions to risks that are similar to those associated with current business processes but introduce nuances for which entities need to account.
• Value transfer risks: Blockchain enables peer-to-peer transfer of value without the need for a central intermediary. The value transferred could be assets, identity, or information. This new business model exposes the interacting parties to new risks that were previously managed by central intermediaries.
• Smart contract risks: Smart contracts can potentially encode complex business, financial, and legal arrangements on the blockchain, and could result in the risk associated with the one-to-one mapping of these arrangements from the physical to the digital framework.

What roles can each government, academia and private industry can play in shaping the new future that blockchain can enable?

While most people use the terms Bitcoin and blockchain interchangeably, they are very different things. “At bottom, blockchain is not about money, even though this is the technology underlying Bitcoin and other cryptocurrencies — and it’s not fundamentally about destroying governments and replacing them with purely private, decentralized systems, even though it is a system that creates a new kind of decentralized infrastructure

The government around the world are having a cautious views over Block chain due to the fear of its underline usage of cryptocurrencies like Bitcoin but the opportunity with Blockhain is not just limited to Bitcoin rather there is massive opportunity for governments to re-think about its utilities in public domain and mainly focusing on structuring the micro economy and building trust of common people for their benefits like setting up Vehicle Registration system on Blockchain taking our all the nuisance, corruption which law enforcement teams have to bear to make it work. And this would enable a faster trusted national level mechanism and data derived out of this system which is owned and operated by regulators themselves can feed in to public planning for road expansion, traffic management, pollution control and automobile expansion etc.

By making the results fully transparent and publicly accessible, distributed database technology could bring full transparency to elections or any other kind of poll taking. Ethereum-based smart contracts help to automate the process.

The app, Boardroom, enables organizational decision-making to happen on the blockchain. In practice, this means company governance becomes fully transparent and verifiable when managing digital assets, equity or information.

Another example where the government and corporates can get real benefits in implementing blockchain on CSR, NGO’s funding. Currently every organization runs a CSR thru defined 3d parties and similary government support hundred and thousands of NGO for the benefit of those who really need them. But in reality the 1/10th of the allocated budget reach out to end point not that it’s just an abuse of the tax payers fund but same time the society which is deprived of its real benefit never shapeup due to lack of ground level implementation it does need specially in developing countries like India.

In order words there is massive mindset change required by lawmakers and partnership by big corporates to start visualizing Blockchain as social tool to enhance the productivity and increase the level of trust with people by creating an ecosystem which support, enable and acknowledge blockchain as part of global system which can be delayed but not ignored.