Challenges in adopting and implementing Blockchain in the Indian market
Blockchain technology allows for the decentralisation of value transaction, make it accessible yet secure, transparent yet tamper-proof and traceable, thus making it a utopian solution for many business verticals.
In 2019, the hype and hoopla surrounding Blockchain and cryptocurrency seemed to have died down a bit. While awareness about this technology has begun, it still remains a far cry from being accepted into mainstream businesses. It has taken considerable time for blockchain to break away from the myth of being only a cryptocurrency technology, suitable only for crypto transactions. However, it still has not completely lost that shadow.
On the other hand, the promise and possibility that blockchain presents have prompted many global economies to adopt and implement it. India is a global emerging economy that has been left behind in the blockchain race.
A technology that allows for the decentralisation of value transaction, make it accessible yet secure, transparent yet tamper-proof and traceable, makes it a utopian solution for many business verticals. The compelling benefits of blockchain have been a driving factor for its adoption in banking, healthcare industry, pharma, supply chain management, education, digital identity, logistics, and others.
But there is more to the Indian chapter of blockchain than what meets the eye. Unabated adoption of blockchain needs human capital - skilled, competent, and exciting to be part of a new paradigm. There are a plethora of opportunities for blockchain adoption in India as well as challenges. Overcoming these by creating awareness will be the decider for blockchain implementation.
Opportunities for Blockchain in India
- Post demonetisation, India has developed a progressive outlook towards digitisation, and is aware of the benefits blockchain offers, and its potential in good governance.
- The Indian government's blockchain initiatives are clearly visible through the showcase of many proofs-of-concept (PoC) demonstrated in the areas of banking, land registry, and insurance.
- The Institute for Development and Research in Banking Technology (IDRBT), the technology arm of the Reserve Bank of India (RBI), led two PoCs – domestic trade finance letter of credit and enhanced information for payments – by involving banks and technology firms such as Infosys and IBM.
- Andhra Pradesh is the first state in the country to introduce blockchain in land records and is also setting up a Blockchain Centre of Excellence to set up India’s first Blockchain state. Other states like Maharashtra, Karnataka, Kerala, and Rajasthan are following the lead.
Many other Indian corporate players too have become early adopters and have tested concepts in the sectors of trade finance, cross-border payments, supply chain management, digital identity, and loyalty programmes. Before they reached the PoC test usage stage, they have met a fair share of challenges.
Challenges for Blockchain adoption in India
While blockchain adoption and initiatives are only concentrated in certain tech-savvy circles, the biggest challenges facing widespread adoption and implementation include:
- Awareness about blockchain is very limited and shrouded by the disrepute of the unregulated cryptocurrency market. Businesses interested in blockchain could probably set aside an internal team focused to understand the technology, its impact, and areas of usage.
- Blockchain is considered as a complete technology that will replace existing technologies. This misunderstanding has also been a hindrance in its adoption. People need to comprehend that blockchain is a tech component that will be integrated with the current system to enable business applications and new approaches. A professional services company has debuted a miniature model of a blockchain framework to demonstrate blockchain in a practical and tangible manner.
- Blockchain-based financial services are being worked upon. Many Indian banks have started to implement the blockchain ecosystem within their banking system. But the lack of regulation and a specific regulatory body to bring in standardisation and approval for mainstream implementation is another complication.
- Another complexity is in the integration of the current technology with the blockchain and data security during the early stage development.
- Adding to all this is the ban on cryptocurrency in India. Indian blockchain startups raise their funds through ICO (initial coin offering) rather than through the traditional funding process. The ban on cryptocurrencies has adversely affected them, and now startups are moving outside India to raise funding.
Regulation and widespread awareness through purposeful research into blockchain will only be the way forward to remove these complications.
(Edited by Megha Reddy)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)