In the simplest terms, Bitcoin is a digital asset and a payment system which uses peer-to-peer technology to operate with no central authority or banks. Geographical boundaries don’t limit it, and unlike paper currency, managing transactions and the issuing of Bitcoins is carried out collectively by the network, using complex and cryptographic code used in its design.
The most striking feature about Bitcoin is that it makes use of the Blockchain technology. A blockchain is an incorruptible digital ledger that can be programmed to record details of financial and non-financial transactions. The data is stored in a distributed database and is immutable and permanent. The whole ledger is entirely transparent, and anyone connected to the network can view the transactions.
In the present digital age, India has the potential to become a huge market for Bitcoin and Blockchain. I say this with confidence, as I have been a witness to the latest trends in the gradual shift towards a digital and cashless economy. People are now starting to place their trust in a robust and dependable mechanism other than contemporary paper currencies. Adoption of Bitcoin has a thrilling potential to empower flawless transactions and deliver economic solutions for a transparent process.
Post demonetization, the financial institutions weren’t adequately equipped to handle the huge workload and this, in turn, brought out the problems of having a centralized authority for managing financial transactions. Following this, the RBI started encouraging banks to promote digitization and released a statement highlighting the potential of Blockchain to fight counterfeiting and the possibility of bringing about a significant transformation in the functioning of financial markets, collateral identification (land records for instance) and payments system.
The integration of Blockchain with financial transactions could save us substantial amounts of time and money, with a dramatic reduction in the time required for processing and authenticating transactions. The fact that it operates on a decentralized database has made operations seamless, ensured a tight security and made it safe from cyber-attacks. Multiple financial institutions have started investing heavily in research in the field of Blockchain after realizing the benefits offered.
Blockchain can also help us in curbing the circulation of “black money” and dealing with the widespread money laundering in the economy as every address used for transactions is permanently stored on the databases, making all transactions verifiable and accountable. The government is starting to see Blockchain as an avenue to explore a gamut of options that might help us enforce a tighter control on the economy of the nation.
Blockchain has also successfully dealt with the problems of unauthorized spending, double spending of the stored currency and race attacks, thereby increasing security. The increased security helps attract a wider audience, as there has been a significant increase in the number of cyberattacks in the recent years.
This concept could be extended to other fields too –
· Governance (by making the results fully transparent and publicly accessible, Blockchain technology could bring full transparency to elections or any other kind of poll taking. Issuing smart contracts helps to automate the process).
· Crowdsourced VC funds (where participants purchase tokens and vote on capital investments, thus initiating a paradigm shift in economic co-operation between businesses and the public)
· File storage (saving the data on distributed networks prevents it from getting hacked or corrupted)
· Protection of intellectual property rights (by enabling publishers and creators of content to track ownership by making the details of the origin of the data transparent and curbing the widespread piracy of content)
· Stock trading (increasing efficiency in share management, making trade confirmations quick and eliminating clearing houses, auditors, custodians), etc.
As a global IT competitor, it is the right time for India to start boosting its efforts to capitalize on this opportunity and become a key player at the global level in the field of Bitcoin and Blockchain. Venturing into open waters across these areas might lead to the creation of a stable and concrete structure across the digital world, thus enabling a holistic development of the entire IT sector.