Why Blockchain is im­por­tant for In­dia

Blockchain sim­ply al­lows peo­ple to do busi­ness peer to peer re­motely, i.e., over the in­ter­net, in a trusted and se­cure man­ner.

The Sunday Guardian - - World -

Isn’t Blockchain that thing that is some­times called Bit­coin which is used by hack­ers who want ran­soms? Was it also not some­thing to do with the Silk Road where you could buy drugs, weapons and coun­ter­feit goods, some­thing that the FBI closed down and seized 140,000 Bitcoins, mak­ing them one of the largest hold­ers of Bitcoins in the world?

Why would I care or want to know any­thing more about such a du­bi­ous topic?

If I told you that some of the largest banks in the world had in­vested in a com­pany called Rip­ple, which was try­ing to cre­ate a com­peti­tor to Swift— which is the way many banks trans­fer bil­lions of dol­lars a day be­tween them— that could be 50% cheaper, you can start to see why you may want to carry on read­ing. Rip­ple is be­ing used by Amer­i­can Ex­press as it too can see how it can re­duce their costs of mov­ing money. But how does this af­fect you?

Ac­cord­ing to the World Bank, in 2015, over $575 bil­lion was sent from one coun­try to an­other, with In­dia hav­ing the high­est amount sent to it typ­i­cally by work­ers overseas—a mas­sive $67.2 bil­lion. The cost of send­ing money home to In­dia is not cheap, of­ten rang­ing from 7% to 12%. How­ever, by us­ing an all-In­dian com­pany like Cassha, the costs could be re­duced sub­stan­tially. Cassha is cur­rently rais­ing cap­i­tal, us­ing a process called an Ini­tial Coin Of­fer­ing (ICO) to cre­ate a crypto cur­rency (CC) and uses Blockchain tech­nol­ogy, which could re­duce your costs by 3% to 6%. This equates to over $2 bil­lion less prof­its for the banks, but $2 bil­lion of ex­tra money to those that need the money the most.

So what is Blockchain and why is the In­dian gov­ern­ment wor­ried about ICOs and crypto cur­ren­cies? Blockchain is a tech­nol­ogy that has been around since the 1970s and sim­ply al­lows peo­ple to do busi­ness peer to peer re­motely, i.e., over the in­ter­net, in a trusted and se­cure man­ner. It was the tech­nol­ogy that al­lowed one to share mu­sic via Nap­ster, so it has been tried and tested. It uses mil­i­tary grade cryp­to­graphic se­cu­rity and cre­ates a record of a trans­ac­tion, which is then held on a mul­ti­tude of com­put­ers around the world, which means that there is no cen­tral data­base that can be hacked, and a trans­ac­tion once fi­nalised can­not be al­tered.

In 2008, Bit­coin was cre­ated and launched at $0.01 as a cur­rency that was to have a max­i­mum of 23 mil­lion coins, un­like a cen­tral bank, which can print un­lim­ited amounts of eu­ros, GBP pounds, dol­lars, ru­pees, etc. Bitcoins can now be used to buy al­most any­thing: a cin­ema ticket, a house, food, it is even pos­si­ble to have a credit card linked to your Bitcoins, mean­ing the spend­ing pos­si­bil­i­ties are al­most lim­it­less. It took un­til 2015 for an­other crypto cur­rency called Ethereum to come along and de­velop an­other type of Blockchain. Us­ing this Blockchain it be­came easy to raise cap­i­tal do­ing an ICO, thereby cre­at­ing new coins. These ICOs in the last year have raised over $3 bil­lion and the size of the crypto cur­rency mar­ket has risen from $12 bil­lion to over $200 bil­lion.

Driven by fear and greed i.e. fear of miss­ing out and greed, find­ing a crypto cur­rency will hope­fully rise in value by over 3000% (which is what Rip­ple has done in the last year) in the fu­ture. Un­for­tu­nately, these ICOs are not reg­u­lated and have at­tracted some ques­tion­able char­ac­ters pro­mot­ing du­bi­ous busi­nesses. Re­serve Bank of In­dia (RBI) is look­ing to ban the use of crypto cur­ren­cies as a form of pay­ment, but is sup­port­ive of Blockchain. As proof of Blockchain’s great prom­ise, sev­eral banks in In­dia such as ICICI, Ko­tak Mahin­dra and Axis are al­ready us­ing Blockchain in such ap­pli­ca­tions as overseas trans­ac­tions and in­ter­na­tional re­mit­tances. How­ever, the reg­u­la­tors are con­cerned by the num­ber of In­di­ans who are get­ting in­volved in crypto cur­ren­cies. To curb the use of crypto cur­ren­cies, a gov­ern­ment panel is said to have ad­vised shut­ting down crypto cur­rency deal­ers. Mean­while, Ze­pay, a crypto cur­rency trad­ing app is adding 200,000 new users a month. Mu­n­ish Sharma, con­sul­tant at the In­sti­tute for De­fence Stud­ies and Analy­ses in New Delhi, dis­cussed the on­go­ing dilemma that most reg­u­la­tors of­ten strug­gle with, when han­dling the nascent tech­nol­ogy, es­pe­cially in such a high- ly reg­u­lated space: “Widely seen as a dis­rup­tion for the tra­di­tional bank­ing and fi­nan­cial in­sti­tu­tions, crypto cur­ren­cies have gained sig­nif­i­cant trac­tion over the last half a decade, at the same time cre­at­ing a reg­u­la­tory night­mare for bank­ing reg­u­la­tors across the globe. Gov­ern­ments and their reg­u­la­tory bod­ies have been brain­storm­ing for mea­sures to either reg­u­late the growth of crypto cur­ren­cies, as against just let­ting them pro­lif­er­ate with­out reg­u­la­tion and in­ter­fer­ence.”

There is no need for a full ban, in­stead the Min­istry of Fi­nance needs to work on ways to reg­u­late cryp­tos. The key is­sues be­ing con­sumer pro­tec­tion, tax­a­tion and money laun­der­ing. In­dia is by far the largest English-speak­ing pop­u­la­tion in the world, mak­ing it an ideal re­cruit­ing ground. It is also a free-mar­ket coun­try where think­ing and in­no­va­tion lead to suc­cess and are en­cour­aged.

In­dian sec­ondary ed­u­ca­tion (high school) is fo­cused pri­mar­ily on a few sub­jects. Sci­ence or Commerce are two pri­mary streams, with Maths/Com­pSc/Eco­nom­ics be­ing op­tional sub­jects.

These three fac­tors help ex­plain why some of the bright­est In­dian brains are run­ning com­pa­nies like Mi­crosoft, whose CEO Satya Nadella is In­dian. In­di­ans are seen to have some of the most math­e­mat­i­cally skil­ful minds and are be­ing re­cruited to build new busi­nesses that are har­ness­ing the power of Blockchain in many dif­fer­ent sec­tors. These or­gan­i­sa­tions are de­vel­op­ing ways to re­duce costs, cut fraud and open new mar­kets for the im­pov­er­ished ru­ral, as well and the so­phis­ti­cated wealthy city dwellers all across In­dia and in­deed the world.

Blockchain has been her­alded by Ginni Rometty, the CEO of IBM, as a pow­er­ful tech­nol­ogy that has the abil­ity to change the way we do busi­ness. It is a tech­nol­ogy that the In­dian econ­omy and reg­u­la­tors need to em­brace and use to drive the econ­omy for­ward. Yes, there are chal­lenges es­pe­cially with ICOs, but these two are help­ing to raise cap­i­tal, cre­ate jobs, and de­velop new so­lu­tions for to­day’s prob­lems. The process of an ICO also of­fers gov­ern­ments and global brands a fan­tas­tic op­por­tu­nity not to raise cap­i­tal, but to run their or­gan­i­sa­tions more ef­fi­ciently, build stronger re­la­tion­ships with their cit­i­zens, clients, sup­pli­ers and staff… but that is for an­other day. Jonny Fry is the co-founder and CEO of TeamBlockchain Ltd. He is a Blockchain, crypto eco­nom­ics, ICO and funds spe­cial­ist, with over 25 years’ ex­pe­ri­ence as CEO of an as­set man­age­mEnt Busi­nEss whiCh hE floAtED in Lon­don with over £1 bil­lion un­der man­age­ment. Twit­ter: @ jon­nyfry175

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