With a decentralised system, blockchain technology addresses that concerns of online security to a large extent.
If you have paid a little attention to the world of finance in the past few weeks, you might have come across a few terms such as ‘blockchain’, ‘cryptocurrency, and ‘Bitcoin’. This might have left you wondering what the terms mean and why suddenly these topics are so hot. Okay, let us make this simpler for you.
A blockchain is basically a structure of data that signifies a record of transactions. In simple terms, blockchain technology is a shared and open ledger that comprises a record of the transactions and has ever-increasing blocks of data. These transactions can be anything from secure data to money to goods. It is designed specifically so that no other users can add, remove or change the data. It offers a way to create a tamper-proof log of sensitive activity.
Blockchain technology was introduced in 1991 but its first major application was Bitcoin, which was released in 2009. The blockchain is a technology that forms the basis of Bitcoin, a cryptocurrency (a digital coin). In simple terms, blockchain is a technology and cryptocurrency is its product and one of the cryptocurrency is Bitcoin. If we store physical data it can be destroyed if any calamities happen, while the data on the server has a risk of getting hacked. But in the blockchain technology, since all the blocks are connected even if the data in one of the blocks get destroyed it would not collapse the whole network.
Online security is one of the major issues with the digital economy. Blockchain technology addresses that concern to a large extent. All the transactions are permanently stored in the data blocks that cannot be altered or deleted by anyone. With a decentralised system, it is difficult for hackers to breach the transaction by targeting one block, a common issue in a centralised system where the data is stored at a single core.
Taking into consideration the way blockchain technology works it offers the promise of efficient and accurate results. In Indian courts, blockchain technology is of good usage given the massive amount of data they hold and how most of it is saved in hard copies. If the data is saved using the blockchain technology then all the courts, including Supreme Court, high courts, and other courts, can connect with each other and the information or records can be stored safely in a secure way. While in banking systems, if you are transferring funds, banks act as a mediator. In blockchain technology there are no mediators and transactions can be easily carried between two parties. All the details can be stored in cloud technology. I believe the technology is safe, direct, fast, transparent, immediate, tamper-proof and cost-effective. The technology can also be used in the public distribution system (PDS).
In October 2017, the Russian government has announced the first project based on the blockchain technology - converting the land and property registry of properties in Moscow to a blockchain. It went successfully.
Elections are prone to fraud and human error and blockchain can be plugged as a solution to fix the issue. Many countries have already adopted the technology. In India, during the elections, earlier there was ballot system and now EVMs are used. There are many instances when the EVMs are said to malfunction or hacked. The EVM claims can also be solved as the data can be kept confidential and safe. If EVMs are connected to blockchain technology it will be safe, tamperproof and the credibility will also increase.
While the hype and promise of blockchain is something that will be widespread within the next few months, Sinha warns it will be difficult to keep pace with other countries if we don't adopt blockchain technology. We may lag behind if we don’t update to the latest system. For instance, in the 90s, Kodak Company was at its peak and soon it began to think they are the market leaders. With the introduction of digital photography and computerisation, the company today is bankrupt. Murphy radio, Nokia phones, Rajdoot Motorcycles and Ambassador car are all outdated brands today. It is not that the quality has degraded or anything; it is because they did not update themselves with the latest technology, and soon became outdated. Similarly, we have to adopt blockchain technology or else we may fail to keep pace with other countries.
Blockchain’s decentralised and transparent system makes it beneficial to any system. So is there a need for the Indian government to regulate the technology? There is no reason for the Indian government to bring in blockchain regulation or a regulatory body. But taking a step further if the government plans to introduce a regulator body then it will be a welcome move. For instance, OPEC (Organization of the Petroleum Exporting Countries) coordinates and unifies the petroleum policies of its member countries and ensures the stabilisation of oil markets. Gold and silver are bullion products and has no regulatory and their rate depends on the trading. The commodities market today leads the world.
From banking to insurance, we are sure to witness a drastic change as organisations begin to adopt the use of blockchain technology. Since there is no middleman it is difficult to trace the transfer and transferee. There should be a proper system. Know Your Customer (KYC) should be taken proper care of. A bracket should be created. For instance, if a person’s net worth is Rs 5 lakh and he transfers Rs 1 crore, it means he has crossed his bracket. In this case, if a bracket is created that denies permission for any transaction over Rs 10 lakh then it can prevent any misconduct.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)