Blockchain is rightly being described as a ‘new internet’ that can serve as a foundation for a new wave of applications in areas as diverse as finance to real estate to e-commerce to even government services
By Rashi Varshney
In 1990s, when the web came in the picture, websites were a very geeky concept, and up until 2000s, we could list out organizations with or without websites. With Digital India focused government, it took about last couple of years before most companies and government bodies were on-board on the website. Fast forward to now, the blockchain is the new web.
Blockchain- the same technology is behind powering Bitcoin, which was not able to create a big enough impact in the market but the technology surely has caught eyes of many across the globe. The blockchain is basically a database where all Bitcoin transactions are recorded and stored. However, now many have focused on the ways to use blockchain without involving Bitcoins for transactions or self-agreement ledger way. The blockchain or ‘distributed ledgers,’ as they are often described is updated and maintained not by a single body, company or government, but run by a network of users. It’s akin to the way shared Google spreadsheet is maintained by its users. The technology relies on a network of computers, and hence organizations view it as most attractive technology as it eliminates the need of central institution to keep records.
“Blockchain typically should be considered when you want to eliminate trusted intermediaries, add transparency and immutable audit trail, have multiparty data sharing when the parties don’t trust each other and improve efficiencies by maintaining constantly synced up distributed ledger,” said Pandurang Kamat, Chief Architect – Innovation and R&D at Persistent Systems.
The effectiveness of a website to digitally transform enterprises and various organization were seen with the likes of Amazon, Google and other internet giants. On the similar lines, IT leaders are of the opinion that blockchain can enable India to leapfrog the digital transformation.
“The lack of automation and digitization in many areas may actually turn out to be an advantage and allow us to ‘do it right the first time’. Just like we were able to bypass the telephone landline proliferation and leapfrog directly into the mobile revolution, we could do the same in our digital transformation journey across various sectors and industries by creating a next gen infrastructure based on Blockchain technology. This can provide a competitive advantage as compared to a lot of other countries who have a history of legacy infrastructure to worry about,” said Deepak Kinger, Vice President, Banking and Financial Services, VirtusaPolaris.
Looking at the wave of blockchain, IT enterprises are looking to ride on the tide with various strategies around it to build the ecosystem. Such as IBM, which is actively participating in every facet of blockchain technology. “We have contributed tens of thousands of lines of code to the Linux Foundation-led Hyperledger Fabric, an open-source platform that works across industries with support for security, consensus and smart contracts. We deliver services offered on the cloud which enables developers to setup a blockchain network in a short amount of time. Along with our clients, we are actively working on applying the technology to various industries and fundamentally rethink how business works in these industries,” told Sriram Raghavan, Director – IBM Research – India & CTO, IBM India/South Asia .
He also told that IBM is actively contributing and helping to grow the Hyperledger fabric, led by the Linux Foundation. It is a collaborative effort by many industry leaders to advance blockchain technology by identifying and addressing key features for a cross-industry open standard that can transform the way business transactions are conducted globally.
The fabric supports a permissioned blockchain network and provides support for many security features including confidentiality, user privacy and auditability. It has a modular architecture that allows for a pluggable consensus module. There is no native cryptocurrency – instead, the focus is on supporting smart contracts that can aid in codifying business processes that transcend organizational boundaries, where data and processes can be managed in a decentralized fashion amongst a set of distrusting peer nodes. The fabric can be used to build a variety of solutions in the areas of trade finance and logistics, supply chain finance, capital market settlement systems, payment systems, and shared KYC systems.
Similarly, Finacle- a universal banking solution from EdgeVerve Systems, a wholly owned subsidiary of Infosys, launched a scalable Blockchain Framework that allows enterprises to overhaul and simplify complex transaction-driven services. In addition to financial sector, it can be applied across several industries, and enable the company to co-innovate with clients.
“Our blockchain framework and applications on top of it is being developed in our R&D centers in India and Ireland. We have over 40 employees certified in this technology from Blockchain University in US. Leveraging this framework, banks will be able to process their payments, remittances, trade finance transactions on blockchain, further the framework provides for identity services to implement KYC, smart contracts to manage secure and digital contracts on blockchain network,” told Rajashekara V. Maiya, Associate Vice President & Head – Finacle Product Strategy, EdgeVerve.
Moreover, Mphasis unveiled Centre of Excellence (CoE) for Blockchain based solutions at its Bangalore headquarters in July this year. The CoE aims to conduct research, rapid prototyping, co-creation of use cases and IP creation on Blockchain technology and platforms. Mphasis’s Chief Innovation Officer and President – Global Delivery, Gopinathan Padmanabhan told that the Centre of Excellence launched a proprietary Mphasis Blockchain Framework to facilitate enterprises to adopt and onboard Blockchain based solutions and services for the Mortgage, Insurance and Payment industries on private Blockchain.
“Mphasis’ Blockchain framework consist of three layers – applications, data & routing layer and enablers to interface with multiple public Blockchain. The data & routing layer is the core of this framework, designed to help organizations store and publish millions of cryptographic proofs on Blockchain. The enablers will help accelerate the process of adopting Blockchain by the organizations, thereby reducing the time & complexity of onboarding and operating cost for adopting Blockchain,” he elaborated.
Companies such as VirtusaPolaris are also making investments in understanding and experimenting with the various frameworks and platforms while building a solution framework that can abstract the specifics of these platforms to align with the standards as they mature. VirtusaPolaris solution framework for blockchain has a two pronged approach, first blockchain Consulting framework, which can help company’s clients to make sense of the various flavors of Blockchain from Ethereum, Corda and IBM-Linux Hyperledger to the multitude of startups like MultiChain and Chromaway. “Specifically, we can help clients choose how they can participate (public/private blockchain or a hybrid approach), come up with the ROI and business case models, figure out how Blockchain will coexist with the legacy infrastructure and understand what the security and regulatory compliance requirements are,”told Kinger. Secondly, VirtusaPolaris is also providing sandbox environment to test the technology and experiment with the various flavors and solutions available today. They can implement their target use cases in a safe environment with minimal investments before they commit to long term projects leveraging Blockchain. This is especially relevant in the context of Indian banks and enterprises who have limited IT budgets compared to their global peers.
There is no sector, which cannot be disrupted with technology such as blockchain. Taking cue from Bitcoins, banking system come first in mind, which can be transformed with the use of blockchain.
Blochchain-BANKING
Recently Reserve Bank of India Deputy Governor H R Khan said that the central bank may soon set up a committee to study the use of ‘Blockchain’ technology to reduce the use of paper currency and also to reduce the cheque frauds.
“JAM (Jandhan, Aadhar and Mobile) has revolutionized the Indian banking ecosystem. This infrastructure further makes the adoption of blockchain easier, cheaper and faster in the country,” said Infosys’s Maiya
Maiya further told that RBI has outlined the benefits and advantages of Blockchain technology in their Financial Stability Report. “Interestingly, India is the biggest market for remittance with over $70 billion annually, the per ticket averages as low as $200. Even for such amounts, users pay as high as 18% fees to banks and intermediaries – Bulk of this is also due to the high costs associated with enabling these transactions. In such cases, the implementation of blockchain based remittances solutions can enable the consumers and banks to save up to as much as $7 billion,” said Maiya.
“With the Reserve Bank of India (RBI) forming a committee to explore Blockchain technology and RBI calling out to banks to explore Blockchain technology, we are already ahead in experimentation in comparison with many other developed economies.A large majority of the Indian population still does not have access to the banking system and this very fact is misused by a corrupt bureaucracy. These challenges can be altered by the application of Blockchain technology by Indian Government and Financial Institutions,” said Padmanabhan.
IBM’s Raghavan said that there is an enormous opportunity for blockchain’s smart contract capabilities for businesses using shared ledgers, specifically in the BFSI sector.
“Trade and supply chain finance are handled in high volumes by financial institutions in India, but the processes involve a lot of paperwork, manual processing and verification, and are wrought with inefficiencies. This makes financing difficult and expensive to obtain. Furthermore, customers have very little visibility into the status of their requests and transactions, leading to inefficiencies in their own supply chain planning. Blockchain has the potential to fundamentally transform such business processes, significantly reducing the time and cost for obtaining financing, while providing secure visibility into the status of transactions to all parties involved. Reducing the cost of financing, will have the additional positive effect of opening up financial solutions to the largely untapped small and medium enterprise sector in India,” Raghavan elaborated.
Maiya added that compared to core banking, blockchain technology will enhance the transaction capabilities across the network and significantly reduce the expenses.
Digital India
The tech-savvy Prime Minister Narendra Modi-led government can effectively achieve Digital India vision by leveraging blockchain. Persistent’s Kamat said that blockchain has the potential to disrupt multiple industries and practically all of those are relevant and applicable here in India. “The use of this technology in land/property registrations and digital locker for all our KYC documents, can add speed and transparency to government, and can create auditable SLAs around delivery of government services,”said Kamat.
Moreover, with the Aadhar card and eKYC becoming mainstream in India, it should be practical to setup an electronic voting system leveraging Blockchain. “Due to the attributes of Trust, Transparency and Immutability, such a system will help solve the issues like vote manipulation in our political process and ensure that the voice of the people is counted,”said Kinger.
Such solutions are already being spotted outside India. Like, a blockchain company in US, Follow My Vote, has already released the Alpha version of their stake weighted voting software. The alpha version runs on a blockchain using the open-source Graphene Blockchain Framework architected and developed by Follow My Vote CTO, Nathan Hourt and Dan Larimer of Steemit Inc. The software can enable more advanced anonymous, verified identity system which will be used to run a parallel election to the United States Presidential Election in November. Follow My Vote develops open-source blockchain voting software that supports early voting from mobile devices and provides immediate transparency into election results by allowing voters to independently audit the ballot box to ensure that election results are honest.
Tamper-proof land records
Land ownership disputes is a challenge in India and often leads to the poorest sections of the society being impacted due to their land titles being mismanaged and assigned to the rich and powerful. “Having the registry on a Blockchain based solution will ensure tamper-proof land title records due to the immutable nature of the technology,” said VirtusaPolaris’s Kinger. Countries such as Honduras, Georgia and Sweden are already on their way to implement such a solution and we can learn from them.
Padmanabhan says that applying blockchain can make our public services highly efficient and future proof. The business processes in the government are not mature and automated as compared to those in other countries. “Blockchain could bring serious disciplinary enhancements in these business transactions and improve the operational efficiency of public departments like Utilities, Infrastructure, Tax, grants, property or land registry system. Blockchain technology can be utilized to make a huge impact on many of the common problems that we face today – prevent traffic violations, better management of land records, preventing land encroachment, etc. are some ideal use cases,” he added.
Blockchain in solar energy
The Mphasis Blockchain CoE, is also developing a prototype for automated claim management in the insurance industry that uses Blockchain with IoT devices. The process of fault detection by an IoT device to repairs followed by claim management can all be automated with the help of Blockchain technology.
Padmanabhan said that blockchain will be critical to IoT, another emerging technology area. Blockchain can instill intelligence into these IoT devices that can communicate, report and process certain operations by themselves without human intervention. We believe, Blockchain will be critical to power this intelligence. “India can be a major source of solar energy and IoT will be critical to distribute this energy. These solar farms can now use Blockchain-based micro grid to distribute and trade energy,”he added.
Intellectual property (IP) and fraud management
Intellectual Property and Asset protection has always been a concern area in India and has hampered foreign investment in many areas. This is true for offline assets such as diamonds, art and sculptures as well as new age digital content including art and music. “A Blockchain based registry and distribution platform will not only help manage IP and prevent fraud and piracy, but also enable content owners to derive maximum revenue from their creative work by removing intermediaries and putting a lot more value and sovereignty in the hands of the creators. As an example, platforms such as Ujo, Peertracks and Bittunes are being setup the consumption and licensing of music in the west. The time is right for such platforms to be setup in India,” said Kinger.
Tamper-proof medical records
In healthcare, blockchain can be used for health records. “In healthcare, a huge problem is that we want our health privacy but we also want the ER doctor to ‘know all about us’ immediately. Blockchain technology is capable of providing tamper-proof data management for medical records company. For instance, Factom, a blockchain technology is providing an unalterable record-keeping system to medical records and services solutions provider, HealthNautica, to secure medical records and audit trails using the blockchain,” said blockchain expert Thomas Keenan, Professor at University of Calgary.
Factom’s technology first cryptographically encodes the private medical data, and a digital fingerprint of the data is used for time-stamping and verification processes. This practice protects patient confidentiality by ensuring the actual medical records are not revealed to third parties, including Factom.
Kinger concluded that blockchain is rightly being described as a ‘new internet’ that can serve as a foundation for a new wave of applications in areas as diverse as finance to real estate to e-commerce to even government services.