“Blockchain is the biggest opportunity set we can think of over the next decade or so” – Bob Greifeld, Nasdaq Chief Executive
The above statement by the Chief of the world’s largest stock exchange demonstrates how potent the Blockchain technology is anticipated to become in a very short span of time. As per the global research giant Gartner, blockchain may generate about USD 3.1 trillion in new business value by 2030, more than half of it in just the next four years on applications designed for operational improvement.
As per Gartner, several innovative companies would commence harnessing Blockchain technology and at least one business created using the technology would be worth USD 10 billion. The global research agency has said that the technology would be used as foundation for 30 per cent of customer base by 2030 including commercial activities.
The World Economic Forum anticipates that over 10 per cent of the global GDP would be on blockchain store by 2025. It also enlists blockchain as one of the seven technologies that will revolutionize various aspects of our lives.
How the Blockchain System Works
Blockchain is a shared, unchangeable ledger facilitating process of recording transactions as well as tracking assets in a business network. The asset can be tangible or intangible, effectively ensuring that anything of value can be tracked and traded on such a network, reducing risks as well as cutting costs. It becomes even more vital in the modern world as information is omnipresent and businesses are increasingly dependent on transparent and accurate information. The entire network is able to see details of a transaction, enthusing confidence amongst all stakeholders and augmenting efficiency. Its characteristics including tamper-evident, consensus based transaction validations and secured data storage are key driving forces for adoption in various sectors. Applications include education, governance, finance & banking, healthcare, logistics, cyber security, media, legal, power sector amongst others. In a nutshell Blockchain provides better security than a centralised system.
*Blockchain Network and the Process of Adding New Transaction to Ledger
Applications of Blockchain Technology
The applications of Blockchain technology are in numerous industries including Financial Services, Healthcare, Government, Travel and Hospitality, Retail and CPG.
Government: Blockchain technology can result in metamorphosis of government’s services and operations by improving data transactional challenges. Linkages and sharing of data with Blockchain enable better management between multiple departments ameliorating transparency and effective monitoring of the transactions.
Financial Sector: The technology has been harnessed in a number of innovative ways. This includes simplifying and streamlining the complete process related to asset management as well as payments removing the need for intermediaries and ensuring transparency.
Healthcare: Blockchain can be a game changer as it ensures privacy, security and interoperability of the healthcare data. Having the potential to address several challenges, it removes interference of a third-party and avoids the overhead costs.
Retail: One of the biggest sectors that can be the beneficiary of Blockchain technology is the retail sector as it can ensure authenticity of high value goods, preventing fraudulent transactions, locating stolen items, streamlining supply chain operations and managing loyalty points.
Travel and Hospitality: Blockchain can be applied in monetary transactions, storage of vital documents such as passports/ other identification cards, reservations and managing travel insurance, loyalty and rewards.
Some of the start-ups engaged in commercial applications of blockchain include Factom and Everledger. While Factom focuses on securing data and working on land registry project with projects for 80 smart cities in data infrastructure. On the other hand, Everledger is a firm focusing on identity of nodes involved in any blockchain transaction.
The graphic below demonstrates the myriad applications of Blockchain Technology:
*Mindmap abstraction of the different types of blockchain applications
India’s Digital Ecosystem to Spur Blockchain Growth
In December 2021, the Ministry of Electronics and Information Technology (MeitY) came out with the National Strategy on Blockchain – Towards Enabling Trusted Digital Platforms. It envisions creation of trusted digital platforms through Blockchain infrastructure, promoting research and technology as well as facilitating secure and trusted digital service delivery to citizens and businesses. The strategy identifies the system as unique making business transactions transparent and trusted in a consortium environment without any reliance on a centralized or third-party authority. MeitY identifies 44 key areas in the proposed framework from pharma and farming to education and energy. Digital certificate management, transfer of land records, pharma supply chain, e-notary services, e-sign solution, duty payments, automated customs enforcement and compliance, agriculture supply chains, e-voting, crypto wallet, health records, cross-border transports, public service delivery, charity donations, smart grid management, and vehicle registrations are just a few of them. However, challenges including scalability of the current transaction processing rate, security, ineteroperability and data localisation need to be addressed.
A report by industry association National Association of Software and Service Companies (NASSCOM) in 2021 had estimated that the cryptotech market in the country has potential to create an economic value addition of USD 184 billion by 2030 both through savings and investments. Titled ‘Crypto Industry in India’, it also said that the industry could generate close to a million jobs by 2030 in the country. The report also said that Bitcoin, Smart Contracts, Decentralised Finance, The Wave of Tokenization, Non-Fungible Tokens, Rise of CryptoTech Capital as well as Central Bank Digital Currencies would be the key trends driving the growth and adoption of crypto-tech in India.
Singapore-based crypto exchange CrossTower had estimated in a report that Digital assets and related businesses can add up to USD 1.1 trillion to India’s gross domestic product in the next 11 years. The report further stated that web 3.0, including applications built around concepts of the third generation of the Internet, will accrue value if appropriate policies and regulatory frameworks are put in place.
As per a Deloitte-Assocham Report in 2017, Blockchain may be compared to what the Internet was in the early 1990s. The report stated the world has witnessed how the ‘Internet of Information’ has changed the society over in the last two decades. It added that it is now entering in a phase where Blockchain may do the same by ushering in a new paradigm comprising ‘Internet of Trust’ and ‘Internet of Value’.
The National Informatics Centre has established a Centre of Excellence in Blockchain Technology which operates as a coordinated, interoperable blockchain ecosystem around the nation, allowing the government to test run projects.
Think tank Niti Aayog in partnership with PwC and Intel, did a pilot for optimising fertilizer subsidy supply chain using a blockchain based solution. The goal was to streamline the fertilizer subsidy supply chain through transparent and tamper-proof ledger for the track and trace of fertilizer movement across the value chain as well as reduce turnaround time for subsidy activation. The pilot was done on Gujarat Narmada Valley Fertilisers & Chemicals, a leading fertilizer manufacturing company in India. The pilot project ensured increase in productivity, real time certification, zero paper trails as well as integration with Enterprise Resource Planning software.
Blockchain solutions are both appropriately suited for addressing several challenges and will also benefit from the existing infrastructure. Benefits of blockchain used in Indian enterprise would include better contract management and procurement, greater accountability and quality control across supply chains and decentralization of authority in decision making.
Investments in India
UAE-based Private venture capital firm, Cypher Capital, on March 23, 2022 announced launch of USD 100 million blockchain fund, in March 2022, which aims to invest 40 per cent in Indian cryptocurrency and blockchain start-ups. Cypher has made investments in fifteen Indian blockchain startups including SolRazr and Safle. In 2021, the Indian cryptocurrency and blockchain start-ups saw funding of over including big names such as Andreessen Horowitz, Sequoia India, Kalaari Capital and Antler India.
US-based SaaS blockchain orchestration platform, Cion Digital has confirmed setting up of its first Indian office in Pune in 2022. It aims to invest Rs 50 crore and plans to hire over 100 engineers with expertise in blockchain technology during the year.
A National Blockchain Framework can facilitate in scaling up deployments for developed applications as well as enable cross domain application development. While the framework may support Government applications initially, it can be easily adopted for other applications in future.
Global Developments in Blockchain
China has a Blockchain-based Service Network for rapid development of applications. On the other hand, European Blockchain Partnership is building a trusted European Blockchain Services Infrastructure for interoperability, privacy, and security.
The United Arab Emirates launched Smart Dubai initiative, which aims to ensure that the city will be the first one to be fully powered by Blockchain and augment everything from education and healthcare to environment sustainability and traffic management.
Singapore is focusing on Blockchain technology both in technological and financial domains. The Monetary Authority of Singapore is also working towards a solution for securing healthcare data as well as smart contracts adopted by Insurance companies.