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Blockchain is an incorruptible, decentralized, digital ledger of transactions that can be programmed to record not just financial transactions but virtually anything of value. Using this technology, participants can confirm transactions without the need of central certifying authority. In other words, blockchain is a distributed database that is used to maintain a continuously growing list of records/transaction, called blocks.
It was first used in the design and development of Bitcoin – Cryptocurrency in 2009 by Satoshi Nakamoto.
- Data/Transactions stored in the blocks are secured against tempering using cryptographic hash algorithm and are validated and verified through consensus (consensus protocol) across nodes of blockchain network.
How blockchain transaction functions
- Security -> Built in robustness -> no single point of failure i.e., no centralized points of vulnerability that hackers can exploit.
- Trust -> Increased Transparency and incorruptibility
- Permanent Ledger
- Reduces the role of intermediary.
- Speeds up the process
- Lowers transaction cost
- Applications in various sectors
Applications (Current and Future Potential)
Economy and Finance offers the strongest use cases for the technology.
- Financial transactions are typically granted by third party and block chain could be used to automate the process, reducing overall costs, by cutting out the middleman with autonomous smart contract acting as trusted intermediaries between parties on the network.
- Faster, Cheaper settlements could save billions of dollars from transaction costs while improving transparency.
- Stocks, mutual funds, bonds, and pensions may one day be stored on blockchains as many financial organizations explore the technology.
Automotive: Consumers could use the blockchain application to manage the fractional ownership in autonomous cars.
Public Ledger Information: Many governments are looking to adopt this technology to store information about the citizens and census. A decentralized platform to safely store data regarding, birth, death crime etc. can contribute to effectively curbing fraudulent activities. Even our judiciary can benefit by using this platform to store court judgments, making our legal system more transparent and accessible to litigants.
Voting: Using a blockchain code, constituents could cast votes via smartphone, tablet resulting in immediately verifiable results. Voting by blockchain can eliminate election frauds by making each vote stored as a block on the block chain, rendering it impossible to tamper with.
Healthcare: Patients encrypted information could be shared with multiple providers without the risk of privacy breaches.
Secure File storage
Identity Management: Decentralized, used controlled digital identity holds the potential to unblock economic opportunity for refugees and others who are disadvantaged, while concurrently improving the lives of those simply trying to navigate cyberspace securely and privately.
- There is definite need for better identity management on the web.
Supply chain auditing
Protection of intellectual property
Anti-Money laundering and Know Your Customer (KYC)
- AML and KYC practices have a strong potential for being adapted to blockchain.
Changing the nature of ownership of assets and managing titles
How blockchain can help governance in India?
- Optimize the delivery of public services
- Reduce Corruption
- Creates considerable value for citizens
- With Aadhaar cards becoming nearly ubiquitous in India, adopting blockchain could be the next logical step in India’s pursuit of becoming a digital economy.
- Blockchain can play an important role in storing individuals’ data, helping conduct secure transactions, maintaining a permanent and private identity record, and turning India into a digital society
- India needs to train its workers in block chain literacy and provide a supportive regulatory framework to become a trendsetter.
- Blockchain development programs should be introduced right from the school level itself
- Blockchain, however, is not a panacea. While it can help enhance the delivery of government services, it cannot replace an inefficient system. Although it can deter corruption by making governments more accountable and transparent, it cannot prevent the entering of false information into the network.
- Yet, it presents the government with a powerful opportunity. By embracing blockchain, it can create a bureaucracy that focuses on innovation and experimentation, a government that seeks to maximize efficiency and governance, and an economy sustained on the promise of technology.