In a striking approach by the country’s Ministry of Electronics and Information Technology (MeiTY), the integration of Blockchain within India’s multi-sectoral economy seems clearer than ever.
The Ministry has released a 52 paged policy document by the name: “National strategy on blockchain”, that has recognized 44 potential areas for using this technology and increased digitization.
These encompass varying fields like finance & banking, governance and law, healthcare, education, logistics, media, cyber security etc.
It also asked for a multi-institutional ‘National Blockchain Framework (NBF)’ that will help collaborate with different organizations and the responsibilities required of them.
“Involvement of innovative start-ups and industry would bring in the agility. Institutional mechanism within MeitY and a collaborative framework with other ministries/ departments and states may be evolved”, explained the doc.
NBF will “enable citizen services at large scale and enable cross-domain application development” and become “geographically distributed national-level shared infrastructure”.
For simplicity, it NBF will deal with three kinds of participants:
- Confident (professional) user of the Technology like application developers
- Provider or operator of technology like those offering Blockchain as a service, and
- Technology stack builder (IP creators)
What is a blockchain?
It is a form of distributed database to be shared amongst different nodes of a computer network, which stores every possible information in digital format, electronically within a block.
Blocks have limited storage capacity and once filled are closed and linked to each other, forming a chain of data which is finally called the blockchain.
This form of data structure eventually makes an irreversible string of data elements when implemented in decentralized nature, making these transactions permanently recorded as well as viewable to anyone.
They are known to support and underpin cryptocurrencies because of its secure environment.
Why the governments are apprehensive of using blockchain?
Blockchains have attracted their share of criticism because of certain reasons:
Its heavy diet on energy: For example, Bitcoin has been claimed to have used an energy equivalent to the amount used by 159 world countries, just for its computation mechanism in 2020 alone.
But there have been doubts when compared the same to the energy consumed in other alternative transactions including those by banks.
Also, there are newer upcoming lighter cryptocurrencies, like Ethereum 2.0
Lack of regulation: In this scenario, scams and market manipulation will become a common thing.
If the government does not guide on this, even the very trustworthy platforms or online wallet for coins may get hacked.
For a country like India where changes are never allowed to seep-in easily, one may not be able to exploit all the benefits offered by such technology.
Blockchain’s complexity makes the matter even worse.
Is MeiTY planning it seriously?
As per the released document, MeiTY will endure to work on this technology with various stakeholders in the Government and private entities to bring this strategy to life in India.
“A dedicated team would be identified to hand-hold the implementers at various central / state government applications.”
“Existing services offered by MeitY and other government organizations would also be onboarded onto the trusted digital platform.”
The ministry’s document professed its conviction for the Blockchain technology in lieu of its enhanced security, distributed trust and ability to restrict tamper-evident transactions.
Several research papers have outlined the unexplored but potential uses of blockchain, to take it to the value of $176 billion by 2025 and nearly $1.3 trillion by 2030.
As per MeiTY, greater adoption of blockchain in the country should require an assessment of value proposition specifically for Indian market, check pilot deployments and prototypes, run future-based evaluations for these platforms.
The detailed report reiterated the need of industry-wide variety of experts, including private sector, civil society, start-ups and even legal firms, who will be required to contribute through their valuable consultations and feedbacks in shaping the document.
“The National Strategy to evolve a trusted digital platform for providing e-Governance services using Blockchain lays out overall vision and the development and implementation strategies for a National Blockchain Platform covering the technology stack, legal and regulatory framework, standards development, collaboration, human resource development and potential use cases.”
The document has been prepared with useful insights from the Centre for Development of Advanced Computing (C-DAC), National Informatics Centre (NIC) and National Informatics Centre Services Inc. (NICSI).
“It is hoped that this strategy document would provide the necessary guidance and support for realizing the vision and creating a nationwide ecosystem for creating the National Blockchain Platform and development of relevant applications using this platform in various domains”.
The document has been comprehensive enough to include weaknesses and challenges in the technology adoption plan.
Out of various weaknesses that have been pointed out by various experts, the institution has selected five to be the prominent: ‘scalability, security, interoperability, data localization and availability of the records.’
Similarly, in deeper penetration of this technology in the Indian land, certain challenges are to be overcome including regulatory compliance, finding the right data format, awareness and above all, the skill set.
Exemplifying the need for an ultimate showdown of this technology and its resistance, the document talks of various government-led initiatives operating on blockchain which are being underway in China, Brazil, UAE or Europe.