After Internet, it's Blockchain Internet 2.0
But there comes a technology once in several decades that redefines innovation and allows new technologies to get built on that.
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Technology disrupts technology. That has been fundamental to every incremental innovation mproving lives. But there comes a technology once in several decades that redefines innovation and allows new technologies to get built on that. Internet was the most recent example of such technology until blockchain happened. What it can do? Well, in a nutshell it will make intermediaries – any institution, company or government body that governs transaction between two people or parties and store their information – either obsolete or transform them.
The technology behind bitcoin – blockchain is essentially an open-source decentralized or distributed ledger or database that records every transaction in a block, which is linked to other blocks. Think of it like a giant honeycomb running on every device in the world. Why it is Internet 2.0 is because unlike Internet, which is basically about sharing information in the form of content, blockchain allows you to share and store anything of value as Don Tapscott - one of the world's most influential management thinkers and co-author of his recent book "Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, BusinessThe technology behind bitcoin – blockchain is essentially an open-source decentralized or distributed ledger or database that records every transaction in a block, which is linked to other blocks.
Think of it like a giant honeycomb running on every device in the world. Why it is Internet 2.0 is because unlike Internet, which is basically about sharing information in the form of content, blockchain allows you to share and store anything of value as Don Tapscott - one of the world's most influential management thinkers and co author of his recent book "Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World" – says be it money, any kind of intellectual property like a new technology, work of art, research work, and even votes.
THE EVERYTHING' DISRUPTOR
What makes blockchain so acutely disruptive is the data that every transaction, every comment, every click, every website visit, every Google search that we as consumers generate remains under our control stored in the blocks, secured via cryptography and timestamped, and traceable. This hasn't been the case so far as all that information has been stored and used by the intermediaries to monetize them. This means we don't have control over what is ours. Prime examples of this is search engines like Google, social media platforms like Facebook, banks, governments, e-commerce businesses, technology companies or any intermediary that gets any information about you and use it for advertisements, promotions to make money or track our spending and keep an eye on us in case of governments. In short, our privacy is screwed.
Blockchain in this situation takes the concept of peer-to-peer (P2P) sharing of things to a whole new level. For e.g. if I have to pay for a product that I bought from someone, so instead of paying him/her offline or online and hence passing on my information to the bank, I can allow the other party to directly take that money from my blockchain by giving him/her access to only that much amount via a validation step like a one-time password.
"Like Internet or Wikipedia, blockchain is not owned by any single company or government. You will not be dependent on Googles and Facebooks of the world that owns your data. What if nobody owns or stores that data – this is what blockchain can do," says Kunal Nandwani, Founder and CEO, uTrade Solutions. Based in Chandigarh, the start-up that offers trading softwares, in around mid 2016 launched its blockchain solution, uClear, for real-time clearing of contracts in financial markets. Any exchange or trading market can clear and settle trades after execution through a private blockchain. uTrade also launched its blockchain arm, HashCove, in April last year for building and designing end-to-end solutions in blockchain. Nandwani is also an angel investor with Chandigarh Angel Network.
BLOCKCHAIN FOR ALL
One of the blockchain use case uTrade is working on is Know Your Customer (KYC). "If I have to buy a new mobile number, an insurance policy or open a bank account, I will have to give all my details to the company. What if I put all the necessary documents on a KYC blockchain platform and allow the bank to access my details," adds Nandwani. This will save time and effort for verification every time you buy something that needs verification.
Financial services is where the biggest impact of blockchain will be, as the Reserve Bank of India and other banks being the repository of customer information will not be required. But on the other hand, it offer opportunity to re-imagine the business model for its banking infrastructure, transactions and settlements. Last year, ICICI Bank was the first to experiment blockchain as a pilot project to "exchange and authenticate remittance transaction messages as well as original international trade documents related to purchase order, invoice, shipping and insurance, among others," the bank said last year. From few days, blockchain simplifies it to few minutes.
Last month, Mahindra Group also announced co-developing a blockchain solution along with IBM to rework its supplier-to-manufacturer supply chain finance business, wherein each party in the process will update their part of the process. "This new solution aims to enable more suppliers to access credit, with the goal of driving more financial inclusion throughout the supply chain," an IBM release stated. TCS and Infosys are also launching solutions around it.
Similarly for healthcare, all the records can be kept in a blockchain for accessibility in a decentralized way where no intermediaries like Practo own that information. In real estate too, a seller of a property can receive payment and transfer documents via blockchain.
"Blockchain adoption will be mass scale. Hence start-ups will benefit as it caters to various industries. They will clearly see upwards of 30-40 per cent of savings once blockchain is implemented," says Rajesh Mirjankar, Managing Director and CEO, InfrasoftTech – a Mumbai-based software development company for banks and other financial institutions.
Currently no law governs blockchain. The technology is new; hence regulators are expected to come up with some guidelines once there is a visible impact. "It is like Internet in which first everybody showed confidence then it came to the banking sector. Had it been vice versa, everybody would be scared. That's what happened with blockchain," says Subash George Manuel, Founder, Bee One and CryptoCarbon. Manuel is an international attorney and a blockchain legal consultant.
As blockchain gradually picks up the challenge of lack of awareness and knowledge will be mitigated. Currently, there is no consortium or association for blockchain in India, however Arifa Khan, London-based blockchain researcher and CEO of Zero Field Labs that does global conferences and workshops on blockchain has been talking to RBI for setting up Blockchain India Council.
"Awareness is the big issue because people must know whether there is going to be a tradeoff between privacy and different benefits that blockchain offers or whether it is all benefits. Also, many people don't understand blockchain as a concept," says Khan who last month hosted first blockchain summit in India. She adds, "I am planning with banks and financial institutions and had discussion with RBI for this. It will take some time for the council to come up."
One might expect for next Googles of the world to emerge from blockchain even as it will take at least five years for adoption and to scale up. To sound little far-fetched, we might never need any currency or any intermediary in next 50-year time.
(This article was first published in the January issue of Entrepreneur Magazine. To subscribe, click here)