The year 2018 would be the tenth anniversary of what is turning out to be the most hyped technology of 2017. It was in the wreckage of the Lehman crash, and the hope of the Obama era, that Satoshi Nakamoto conceived this technology. Today, Blockchain is being touted as the one technology that which will change the world pretty much in the same scale as the Internet did.
As 2017 gathers its belongings to leave, you would perhaps be inundated with articles, commentaries and even some rants on how Blockchain, and its more glamorous child, Bitcoin, has become mainstream globally. However, it would be good to sort through the hype and see what happened with Blockchain and Crypto in 2017, with an India lens.
So, here is my two BTC worth:
Bitcoin became mainstream in India this year. Before 2017, there were a handful of traders and techies who knew what it was, and were buying this cryptocurrency, mostly for kicks. However, the astonishing rise in its value hooked the masses, with ‘Bitcoin’ reportedly breaking into the top 10 Google searches this year.
It took two years for India’s largest crypto wallet, Zebpay, to notch half a million users by May 2017. It took another four months to add another half a million. Now, it is projected to be adding half a million every month!
While it is good to have millions of Indians starting to dip their toe into the global cryptocurrency hurricane, it is not necessarily a good thing because several of them will lose money in the crash that will inevitably happen.
If Disney were to open their newest, most-terrifying roller coaster, I recommend they christen it ‘The Bitcoin’. Bitcoin started 2017 at $1000, and almost touched $20,000 before exiting the year around $14,000.
However, in this journey, it fluctuated violently all over the place, with a sharp 36 percent drop one wintery Sunday alone! It has the makings of a classic bubble, though there are soothsayers who say a coin could be worth $60,000 to $100,000 in the medium term; some, in fact, are prophesising $1 million per Bitcoin. Other cryptocurrencies, like Ether, BTC Cash, LiteCoin, however, hardly created a ripple in our country.
The Reserve Bank of India and other government bodies have started making a noise on how Bitcoin and other crypto assets need to be regulated and/or taxed. So far, the government has taken a cautious hands-off approach, with the RBI limiting itself to periodic warnings on how people should be careful of dabbling in crypto trading, and that it did not recognise these as currency.
This has been good for the fledgling new technology. But the government has started becoming wary of the dark side of Crypto – money laundering, tax evasion, and more seriously, possible funding of terror and other nefarious activities. Over the fag end of 2017, multiple government bodies started looking at the records of India’s larger crypto wallets and exchanges, and there were reports of half a million notices sent out to larger traders. Expect some regulation and clamp-down on this in 2018, and if done in the right way, it is not a bad thing. The SEC in the US, and a few other governments have already done so, and some like China and South Korea, have gone to the other extreme, and banned trading in crypto.
While crypto and Bitcoin stole the limelight, the real story of 2017 was the emergence of the ‘underlying technology’ - Blockchain. Even better was the news that multiple state governments in India, along with the Central Government, had started realising the potential of this technology in governance.
The lead, predictably, was taken by Andhra Pradesh, with the government setting up a Blockchain Center of Excellence, and inviting startups and experts to set up India’s first Blockchain State. Many other state governments have also stepped up – Maharashtra, Karnataka, Kerala, Rajasthan – and we have started seeing Blockchain experiments and CoEs in many states.
Blockchain has the potential to solve massive problems that governments have in land records, asset registries, auto records, voting fraud, national identity and KYC, financial transaction records and traceability among others.
In fact, at a philosophical level, Blockchain has the potential to eliminate corruption in Government!
Of late, news broke on Niti Aayog led IndiaChain: the government’s plan to implement a full-fledged Blockchain infrastructure that will complement IndiaStack, and might leverage Aadhaar. This could have a major impact on subsidy distribution, provenance, regulating land records, KYC in banking, SME-financing, energy distribution, court cases etc.
The year 2017 was one that large, traditional enterprises in India started getting interested in Blockchain. Admittedly, a lot of it was because of FOMO, or Fear Of Missing Out, but there was a genuine interest in experimenting with the technology across multiple use cases.
BFSI was the first sector to experiment, with virtually every bank and financial services company undertaking PoCs in remittances, bill discounting, supply chain finance, etc.
However, there was interest beyond BFSI, with Food, Agri, Supply Chain, Manufacturing, and even large conglomerates like the Mahindra Group taking leadership position in this technology. Interestingly, the Top five IT services players in India started investing in people and products around Blockchain and started positioning themselves as Blockchain services providers. 2018 will see a burgeoning of activity in this space.
Despite the enterprise excitement in this space, most activity was restricted to PoCs, and hundreds of PoCs were executed across multiple use cases. Many of them, as expected, were done just as ‘tick-mark PoCs’, so as to accomplish one of the KRAs of the resident CIO or CTO. A few of them, however, will hopefully go into production next year.
We must remember, though, that Blockchain as a technology is still work in progress, and there will still be PoCs done in 2018, perhaps even more than in 2017.
Globally, Blockchain start-ups attracted close to $2 billion in VC financing this year, excluding the ICO money raised. However, both the number and investment in Blockchain startups in India has been severely disappointing. Besides Unocoin and Zebpay attracting VC interest, there has really been no deal of note that I can think of. Angel investors have been moderately active in the space since the number of startups have underwhelmed. However, just the sheer numbers of startups, meetups, actual events, online and offline groups that I have been seeing over the second half of this year has been encouraging. Angel interest has perked up, and one hears of multiple startup teams in this space. Frankly, 2017 has been disappointing, but 2018 looks very encouraging.
Even as we bid goodbye to 2017, we must remember that Blockchain, as a technology, is in its very early stages; perhaps in the same stage as the Internet was in the early 1990s.
The Internet solved many major problems for us: the information problem with Search, the connectivity problem with Email and Chat, and the distribution problem with digitization and e-commerce.
However, there are two problems it was supposed to solve, but did not: the disintermediation problem and the trust problem. In fact, the Internet has created far more powerful intermediaries than ever – think Google, Facebook, Amazon, Uber. And it has created massive distrust and security problems. Blockchain is supposed to solve these two massive problems, and therefore, we believe it will be as big as the Internet.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)