Technology
Is Blockchain the Future of Digital Transactions?
In October 2016, ICICI Bank successfully executed transactions in international trade finance and remittance using blockchain technology, in partnership with Emirates NBD from the Middle East. This was the first transaction using blockchain in India. This allowed all the parties—an importer, the bank from Mumbai, the exporter and Emirates NBD from Dubai—to track and authenticate ownership of assets digitally and execute the trade finance transaction in real time. The entire transaction was completed in a few minutes using blockchain technology, as against a few days under normal circumstances. So, what exactly is blockchain technology?   
 
Blockchain is an open, distributed ledger that can record transactions between parties efficiently, in minutes. Blockchain also has the potential to eliminate error and detect fraud by providing a decentralised digital repository to check and authenticate the veracity of the transacting parties.  
 
Another aspect of blockchain is that it allows us to move towards ‘trust less’ from ‘trusted’. Let me explain. As mentioned above, blockchain, a type of distributed ledger system, when sufficiently secured, makes it impossible for a single party, or group of parties, to reverse transactions, once recorded on the database. This eliminates the need for trusted intermediaries to authenticate and settle transactions. Contracts or records, stored on blockchain, or authentic digital ledgers, eliminate the need for a central intermediary to provide trust in the system. This is important for increasing transparency while providing ease of compliance and reporting. No wonder, legislators, regulators and governments are realising the potential for distributed ledgers through technologies like blockchain. 
 
There are certain challenges though, including security and privacy of data stored on public blockchain and permitted ledgers, as well as regulation and legal framework. In the US, the state of Vermont is taking initial steps to recognise blockchain contracts in its courts. There is a long way to go before legal and administrative hurdles across the world can be overcome. 
 
Blockchain is an incorruptible digital ledger that can be programmed to record not just financial transactions but virtually everything of value. No wonder, this was used in creating the Bitcoin phenomenon. Bitcoin, as we know, is virtual currency and not permitted by the Reserve Bank of India (RBI) due to several issues.  
 
R Gandhi, deputy governor of RBI, while speaking at the FinTech Conference 2017, rightly pointed out the issues and risks associated with virtual currencies. He said, “Blockchain, the foundation for Bitcoins-like innovations, is touted to be the death knell of currency. I believe its potential is being overstated. We can see that in these types of solutions for virtual currency, there is no central bank or monetary authority. They pose potential financial, operational, legal, customer protection and security-related risks. Virtual currencies, being in digital form, are stored in digital and electronic media; (they) are prone to losses arising out of hacking, loss of password, compromise of access credentials, and malware attack. Payments by virtual currencies are on a peer-to-peer basis. No established framework for recourse to customer problems, disputes and chargebacks is feasible. There is no underlying or backing of any asset for virtual currencies. Value seems to be a matter of speculation. Legal status is definitely not there.” 
 
Virtual currency, like Bitcoin, was just one of the innovations based on the blockchain technology. Hence it would be better that we do not mix virtual currencies (application) with blockchain (the technology). 
 
 Over the years, disruptive technologies have shown the capability to transform, wipe out, develop, shrink and turn upside down all the players from markets. With a bigger push for digital economy, innovative technology like blockchain can certainly offer better solutions for transactions in a transparent, effective and time-bound manner. But it will need not just push but also legal and regulatory framework to make the use of blockchain successful and productive.

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COMMENTS

Aravind

2 months ago

Some of the disadvantages projected out does not exist , for one it is a distributed ledger so if lost can be rebuilt from the duplicate one and hacking will be a momentous task as you have to hack into lot of ledgers with the transaction. Assuming if it gets implemented world wide no one can hide any asset from anyone.

Mahesh S Bhatt

2 months ago

2 challenges with BITCOIN who Regulates? Who accounts? they say people account but where is the Master Ledger?Also what's the hedge?

Too many unanswered questions another Technology scammy bubble already done?? Mahesh Bhatt

How foolproof is Aadhaar? Does it serve the purpose that was claimed?
Aadhaar, which is used as a tool under the Digital India movement, is ending up excluding rather than including eligible beneficiaries of government subsidies and programmes and has the potential to unleash undetectable financial crimes, was the broad conclusion of Prof Dr Usha Ramanathan and Dr Anupam Saraph. They were speaking at a seminar on "Legal issues that will arise if individual identity and biometrics are compromised" organised by Moneylife Foundation at Mumbai.
 
Highlighting the risk factors associated with Aadhaar, Dr Saraph says, "It is shocking to know that the biometrics used in Aadhaar are stored by the enrolment agencies. Last month, the Unique Identification Authority of India (UIDAI) itself in a notice to some agencies notes this risk. What is more shocking is with the stored biometrics data, any transaction can be performed without the person's physical presence."
 
"Unlike other documents, like the passport, and driving license, which are issued by the government, the UIDAI letter is not signed by anyone. This on other words, mean, when the government official sign and puts up the official seal, he or she is taking responsibility of the data or information recorded. In case of Aadhaar, there is no verification, no authentication or auditing of the information collected by private agencies and hence, there is no sign or seal of any government official," he added.
 
 
Dr Saraph, also discussed alternative ways to use legal or police mechanisms to protect individual and national risk from Aadhaar. He stated people who are threatening to submit Aadhaar can resist it by writing letters to the concerned authority. He had written an article on resisting violation of the Supreme Court order in the Aadhaar matters. (Read: Resisting violations of the Supreme Court Orders on Aadhaar)
 
Dr Usha Ramanathan gave an overview of the issues that are already there before various courts in the country. She also highlighted the responsibility before the judiciary as well as the investigation agencies to protect the rights of individuals and the sovereignty of the country. 
 
Calling the government savings in subsidy through subsidy as a 'gimmick', she says, nobody wants to talk about those whose fingerprints were not detected or there was a mismatch in Aadhaar number. "This is misinterpreted as savings on subsidies. They even side lined the report from CAG, which clearly stated that the savings of about Rs1700 crore in LPG distribution was not because of Aadhaar or stopping leakages, but it was due to reduction in oil prices in global markets,"
 
Dr Ramanathan feels through the enforced use of Aadhaar, data points are being created to design and sell products to people who does not even have the basic knowledge of this digital thing. "Technology is now helping them to hide corruption. Increased dependence on technology is making sure that there are no administrators or government officials present on field to know, understand practical problems faced by people. There is no grievance redressal system on this digital thing," she added.
 
Both speakers also responded to the charges made by Mr Nandan Nilekani, founder of Aadhaar.  The meeting was attended by several senior lawyers and activists.
 
 

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COMMENTS

Rajan Vaswani

2 months ago

Highlighting the issue with Aadhar is fine, but what is the solution to fix it, as it is this big elephant in the room that is visible to all?

In my opinion, there can be trust levels placed on the aadhar data. For example, if the aadhar biometric has matched with the passport authentication and the passport is signed and hooked to that aadhar number, that is the highest possible trust that can place on the aadhar data.

Where this has not happened, aadhar data, unsigned by any govt. official will stand as no trust. "No trust" data needs additional validation to be authenticated, which is bypassed, as aadhar is used as basis of eKYC for phones, etc. leading to no trust being used as proof, whose identity data cannot be vouched for, although the biometric identifies to that physical individual, albeit not to other information about that individual.

Whilst capturing the data is something the government outsourced, the verification of it is a sovereign function of the state, which again was outsourced. Verifying aadhar identities via additional source like passport, where biometrics are captured, will partly fix the issue, but it is a long haul as there will be several aadhar holders without passports, to go to 100 per cent trust. Maybe, the government now undertakes the clean up for those whose aadhar data is not verified by it.

Mukesh kamath

2 months ago

Lpg gas consumption has increased. While there is a cap per connection this implies more people are using lpg. More over 1.8 crore consumers have given it up. Why no mention of that? Those with concerns of privacy can opt to lock their biometrics so that no one can misuse. India stack has provisions of consent mechanism and i am sure a privacy law to govern it will come our way soon.

No red beacon vehicles for Punjab ministers, officials
Chandigarh, The Punjab cabinet, in its first meeting here on Saturday, decided that the Chief Minister, legislators and top officials will not use a red beacon on their official vehicles.
 
Punjab Finance Minister Manpreet Singh Badal told the media after the meeting that the Chief Minister, ministers and legislators will also not lay foundation stones and won't do inaugurations.
 
"Even for big projects of Rs 100 crore or Rs 200 crore, the names of the Chief Minister and ministers will not be displayed (on the foundation or inauguration stones). It will carry only one line saying that the project has been executed with the money of the taxpayers," Badal said.
 
The Amarinder Singh-led Congress government assumed charge in Punjab on March 16 after the party swept the state assembly polls on March 11, winning 77 out of 117 assembly seats.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

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