Introduction:

Blockchains are a new data structure that is secure, cryptography-based, and distributed across a network. The technology supports cryptocurrencies such as Bitcoin, and the transfer of any data or digital asset. Anything recorded on them cannot be deleted, and is instantly uploaded to all users on that blockchain. Blockchain is being researched across the banking and financial services industries.

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Prospects:

• Bitcoin is just one of the applications for the technology, whose use is being tested across industries.
• Healthcare, banking, education, agriculture, electricity distribution and land records are sectors that could benefit.
• Blockchain-powered smart contracts, where every piece of information is recorded can enhance ease of doing business.
• It will augment the credibility, accuracy and efficiency of a contract while reducing the risk of frauds, substantially.
• Blockchain could play a crucial part in health insurance claims management by reducing the risk of insurance claim frauds.
• The technology can also be used to prevent the sale of spurious drugs in the country by tracking every step of the supply chain network.
• Artificial Intelligence and Internet of Things (IoT) can gain immensely from blockchain applications.
• In an IoT world, thousands of devices would need to rapidly and seamlessly transact with each other in real time.
• The adoption of blockchain by India’s banks could help avert frauds such as the one at Punjab National Bank as the technology updates information across all users simultaneously.
• It could be used to further strengthen our national institutions, including the judiciary and the Election Commission.
• Critical citizen information like land records, census data, birth and death records, business licenses, criminal records, intellectual property registry, electoral rolls could all be maintained as blockchain-powered, tamper-proof public ledgers.

Challenges:

• Blockchain technology is expensive to initially put it in place.
• The massive usage of energy for the functioning of blockchain.
• Safeguarding the privacy of individuals and companies as blockchains are usually open ledgers for everyone to see.
• Knowledge of the benefits of distributed ledger technology is still limited.
• If automated risk management, smart contracts, and similar tools are deployed across a network, cascades of rapid and hard-to-control obligations and liquidity flows could propagate across a network.
• This interdependence will likely call for creative organizational thinking to address the need for governance and strong risk management

Way Forward:

• Blockchain, with all its possibilities, needs a serious look at its vulnerabilities and commerciality.
• Before introducing blockchain into the public sector data-handling system, we need a robust and informative data repository.
• Linking IndiaChain with Aadhar, thus creating a secure personal identity for all Indians.
• Proper regulations for the use of blockchain technology in the country.
• Identifying and resolving key issues and challenges in implementing this technology, the prime amongst those being data privacy.
• India should effectively channel its technical human capital surplus to position itself as one of the pioneers during this upcoming wave of innovation.