Revolution Blockchain
The Blockchain Revolution is on! It's the next big disruption! ReadOn to understand the unimaginable beauty that Blockchain is, and its applications.
The advent of Blockchain has opened our minds to infinite possibilities. Possibilities of a better future. Possibilities of a revamped order of the world. Sounds like a deja vu of the internet revolution, no? Well, Blockchain is a proud flag bearer that promises to go even a step further.
(Before going any further, read the first part here to understand Blockchain). While the internet has converted the world into a big village, Blockchain can convert the village to one big mansion.
Its beauty lies in its transparency. All the stakeholders can see the same version of an event in real time with the application of Blockchain. Countries around the world, in their race to become superpowers, have been enamored with its untapped potential. China has started a Blockchain-based Service Network (BSN) to help its citizens adopt Blockchain. The United Arab Emirates has “Smart Dubai” initiative, which aims to become the “first city fully powered by Blockchain by 2021,”. U.S, U.K, Brazil, Chile, Canada, everyone of those countries is trying its hands on Blockchain in one way or the other.
By 2030, Blockchain is predicted to add a business value of $3.1 trillion globally. That’s bigger than the size of India’s entire economy!
Major FOMO for India?
Looks like it. The Ministry of Electronics and Information Technology (MeitY) came out with the National Strategy on Blockchain in January 2021.
The government has already carried out some pilot projects with Blockchain in the areas of pharmaceutical supply chain, fertilizer subsidy disbursement, educational certificates and land records. Reserve Bank of India (RBI) is exploring the application of Blockchain Technology in the banking domain. Mahindra and IBM are collaborating on supply chain management solutions.
But it’s still not easy to digest. Is it really that big a revolution?
Well, the impact of a storm can only be felt when we are in the middle of it. But, smart people don’t wait for the storm, they learn from the experience of others to understand its gravity and be prepared when it hits home.
A revolutionary tech can revolutionize our lives in the near future. It concerns us in ways we don’t know or understand. So let’s step inside the cupboard, into the world of Narnia, to see the promises and dangers of the new world order...
Land Registry
We have been living in the British era when it comes to ‘Ye zameen kiske naam pe hai?’. The Zameendari system has been long abolished but Zameen (land) ownership is a big cause of dispute. The problem is that the government does not certify land ownership. It can only be asserted by the owner of the land by showing a registered sale deed in their name.
So let’s say Aastha is selling a land to Shantanu and at the same time, Rajat, Aastha’s long lost relative, tries to sell the same land to Divya. Both Aastha and Rajat get into a feud and assert that only they are the rightful owners of the land and have the right to sell it. While one of them shows a property tax receipt, the other shows a survey document. Now the only way to resolve the dispute is to go to the Registrar, who has all the past records of the ownership of the land.
The Registrar gets all Sherlock Holmes and starts a treasure hunt for the old Kaagaz and Kaagzat of land ownerships. When we say Kaagaz, it means pieces of paper that are susceptible to natural and manmade calamities such as fire and flood.
The job of finding the trail of documents and establishing who the rightful owner is, is no less than finding a needle in a haystack.
And so my friend, the judicial system has been clogged with such land disputes, that account for two-third of all pending court cases and take about 20 years to resolve! Let alone Blockchain, this segment could improve a lot even with plain digitization.
Now, let’s introduce Blockchain in this arrangement.
All the stakeholders of the land, including all the relevant government bodies, the owner of the land, the financial institutions, the insurance providers, are stakeholders in the Blockchain. All the acts of transfer of land, mortgage, rent, etc are recorded on the Blockchain and verified by the stakeholders for each transaction. This records the perfect chronology, which cannot be erased or modified. It weeds out the need to verify the ownership trail of documents (putting a lot many Sherlock Holmes out of business).
Imagine, two-third of pending court cases gone poof in the air just by implementing Blockchain! Isn’t that huge?
Pharmaceutical Drugs Supply Chain
As per the recent WHO estimates, 1 in 10 medicinal products circulating in low- and middle-income countries is either substandard or falsified. The industry is plagued with counterfeit medicines and Blockchain, combined with Internet of Things (IoT) promises to solve this problem.
But, how does counterfeit medicines creep into the system?
Drugs coming directly from the manufacturer’s facility are trustworthy. The risk of entry of fake drugs arises when the products are handed off between the various layers of the supply chain. At each transfer point from the factory to the patient, drugs can be stolen, adulterated, and replaced.
With the implementation of Blockchain, every change of hands of the medicines will get recorded. The user can thus verify if the medicine has been transported under the prescribed condition or not (thanks to Covid vaccines, we now know how important the right temperature is). The trustworthiness of the health sector will increase immensely. And, most importantly, it can save the lives of many.
Fertilizer Subsidy Disbursement
In India, fertilizers are provided to the farmers at subsidized rates. Now, the manufacturers of those fertilizers are not born with a plum pocket. The government reimburses this amount of subsidy to them. In fact, fertilizer subsidy is the second largest component of India’s subsidy program. But the system is rote with delays in releasing the subsidies and inaccuracies in calculating them.
A Blockchain pilot was run by Niti Ayog in association with PwC at Gujarat Narmada Valley Fertilisers & Chemicals (GNFC), one of the largest fertilizer manufacturing companies in India.
Here’s what GNFC’s existing supply chain looks like:
As you can see, the system involves a lot of back and forth and paperwork. The system consists of different events being recorded in different systems without any well-defined trail or chronology. There are several redundant processes involved such as manual sending of invoices from one party to the other. Due to all this, it takes about 3-4 months for GNFC to receive the amount of subsidy. The working capital of the company gets unnecessarily blocked and the trust-factor is also low.
With the implementation of Blockchain, the entire flow from manufacturing facility to the Point of Sale to the farmer can be tracked on a real-time basis. The system becomes more reliable, and companies like GNFC can receive subsidies in very less time.
As you can see in all of the above cases, the root of these problems are not complex. It is the scale of the projects that makes them complex. So even if the solution looks very easy-peasy, its implementation can remove major worries for all stakeholders.
Challenges to Implementation of Blockchain
However, implementation of Blockchain is not snap-of-a-finger easy. Many challenges have to be combated for its large scale implementation.
Because data on Blockchain cannot be deleted, imagine the quantum that we will amass over a period of time. This will require heavy storage. On top of it, public Blockchains send data to many nodes for verification; this will slow down the system and impact its efficiency. Moreover, for the technology to improve, extensive Research and Development is required. We don’t have sufficient skilled labour force in this domain.
While the technical challenges are somewhat the same globally, and can be overcome with time, we have our very own legal challenges as well.
Blockchain can be seen as a trade-off between privacy and visibility in a lot of cases. The Draft Personal Data Protection Bill, 2019 gives a right to every individual to delete their old data that could be misleading and are not required to be present. This, however, goes against the very construct of Blockchain.
Implementation of Blockchain will also involve implementation of digital currency at some stage. And this one move threatens the existence of the central authority that verifies all transactions- the banks. Now, the government and the banks are not willing to let go of this control. They will introduce their own crypto currency, but if whispers are to be believed, all efforts of introducing a currency by private entities will be banned. Is this good for the ecosystem?
No matter what the challenges are, the government is keen to implement Blockchain. And, since it feels that no single platform is capable of making different application domains for the country (do you really think the government would give so much power to any private entity?), they will themselves be building an infrastructure that can help in hosting multiple Blockchain platforms.
You can check out the draft of the National Strategy on Blockchain here and tweet your suggestions to us. As promised, we bring you interesting stuff from the world of business and finance before anyone else does. We do the hard work, so you won’t have to!
Until next time.
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Yavantika, the writer for this blog slept thrice while reading this National Strategy document!