Sansad TV: Perspective- Blockchain Technology | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction

• Blockchain is a groundbreaking distributed ledger technology that was initially introduced through the development of Bitcoin in 2009, offering the potential to represent and monitor both tangible and intangible assets of value. This technology operates on a network that enhances transparency, accelerates transaction processing, and reduces costs. On both global and national levels, significant efforts are underway to explore and implement Blockchain-based applications through proof-of-concepts and pilot initiatives. 
• In December 2021, the Ministry of Electronics & Information Technology released the National Strategy on Blockchain, which outlines the vision and strategies for the development and implementation of a National Blockchain Platform. This encompassing document covers the technology stack, legal and regulatory framework, standards development, collaboration, human resource development, and potential use cases.

Blockchains

How it operates?

• Blockchain technology allows for transactions that are simultaneously anonymous and secure, peer-to-peer, instantaneous, and seamless. This is accomplished by decentralizing trust from powerful intermediaries to a vast global network. Through collective collaboration, sophisticated code, and cryptography, it establishes an immutable public ledger containing records of all network transactions.
• A "block" represents the most recent segment of a blockchain, recording recent transactions. Once complete, it becomes a permanent part of the blockchain's database. Each time a block is finalized, a new one is generated, and these blocks are interconnected in a linear, chronological order, with each block containing a hash of the preceding block.

Potential of Blockchain Technology in Transforming the Public Sector and Citizen Service Delivery:

• Governments worldwide have initiated pilot projects to integrate blockchain technology into their operations. In developed countries, blockchain promises to streamline government functions, enhancing efficiency. For instance, the Illinois government is conducting multiple blockchain pilots across various departments, including record-keeping (for property and birth records) and an energy credit marketplace for monitoring renewable energy credits.
• In emerging economies, blockchain holds the potential to assist governments in achieving policy objectives by bypassing intermediate technological layers. It can play a crucial role in social welfare by eliminating the need for credit cards or bank accounts for fund distribution to the unbanked population.
• Building Trust with Citizens: Blockchain technology could potentially contribute to rebuilding trust in government institutions. Trust in government is currently low, with only 18 percent of Americans believing the government consistently does what is right. Blockchain offers a promising avenue to reverse this trend.
• Protecting Sensitive Data: Blockchain has the potential to revolutionize online identity management and internet access, bringing us closer to a more secure digital environment.
• Reducing Costs & Improving Efficiency: Blockchain solutions can reduce redundancy, streamline processes, reduce audit burdens, enhance security, and ensure data integrity. For instance, a blockchain-based payment and accounting system could provide a permanent audit trail and expedite reconciliation of intra-governmental transfers.

Regulation in India

• The current debate in India primarily revolves around cryptocurrency trading and speculation, often overlooking the core potential of blockchain technology and the fundamental role of cryptocurrencies as incentive mechanisms for securing decentralized transactions.
• Existing cyber laws in India encompass various aspects of online transactions and activities (such as the IT Act 2000, amended in 2008, section 463 of IPC, and section 420). However, these laws fall short in addressing the evolving sophistication of cybercrimes in today's tech-savvy environment.

Conclusion

• We are in the midst of a technological revolution, with every industry witnessing advancements. Biotechnology and genetics have transformed medicine, robotics and artificial intelligence are reshaping the economy, and e-commerce has revolutionized traditional business models. The financial sector has embraced digitalization, and blockchain has the potential to reduce reliance on intermediaries and foster increased peer-to-peer interactions in the future.
• The Government of India has undertaken various initiatives, including demonetization, the implementation of GST and e-way bills, the BHIM app, and RuPay cards, aimed at fostering a cashless society and enhancing governance transparency. Blockchain technology aligns with these objectives and has the potential to further drive innovation and efficiency in India's public sector and citizen service delivery.