Friday 27 October 2017

Blockchain and expectations from Government[1]


Background:
Blockchain is one of the most discussed and trending technological terms these days. It has potential to create some serious disruption across industries in the coming years. The ways things are shaping up, plethora of activities are likely to take place globally. Though technology seems to be relatively passive in India, it will not take long before it gains popularity. There are many startups trying to be a part of the bandwagon. There is slowness in the Indian startup space primarily due to low confidence in technology and adoption of the concept.
There is news trickling in about adoption of blockchain technology. IBM and Mahindra have collaborated to create a blockchain solution for Supply Chain Finance, ICICI is learnt to have adopted blockchain technology in the digital banking space and consortium of leading banks working on banking solution through blockchain are the developments currently being talked about. It is only matter of time that blockchain is adopted across industries, as increasing numbers of corporates and businesses are opening up to the importance of data security and validity. In public sector, there is hardly anything of substance achieved or done so far. Government of Andhra Pradesh is trying to use blockchain. The way it is going ahead, it is expected to use it in a big way and lead the nation in adoption of blockchain in public sector. Though India is considered to leader in ICT but as a nation we are not very good at R&D. Even adoption of new technology is a slow process here. It is high time we take a lead and create awareness in all quarters to go for this safe and progressive technology.
What is the way forward?
1.     Policy Makers: Role of policy makers is also very important in the formative period of any technology. Policy makers have a powerful incentive to embrace digitisation. Its use brings the challenge of integrity and usage of data. Integration of data is the in thing and synergy is giving unexpected benefits and throwing many challenges in the field. Blockchain will bring in confidence in data stored in different warehouses and policy formulation dependent on the same.

a.        Governments will have to adopt policies to encourage investment. More investments are needed to promote any new technology. It is not forthcoming due to risks inherent to such ventures
b.       Through tax benefits and other incentives, policy makers can encourage companies to invest in human capital. A broad range of incentives exists for businesses to invest in R&D or otherwise develop their capital. Something similar is needed to encourage investment in human capital. Policy makers could accelerate the creation of jobs in general through stimulating investment, and accelerate creation of digital jobs in particular.
c.        Create enabling eco system to encourage new forms of entrepreneurship and more rapid new business formation. In a slowing down economy digitally enabled opportunities for individuals to earn incomes must be found. In addition, accelerating the rate of new business formation will be critical. This will likely require simplifying regulations, creating tax and other incentives.

2.     Business leaders: Apart from policy makers role of business leaders is also equally important. In order to promote this technology business leaders with appetite to experiment are needed. They need to acquire some book knowledge, learn about the experiments done elsewhere, test in Indian settings, and experiment with new variants, acquire further learning based on experimentation and further exposure and then go for upscaling and replication. Business models and business processes would require redesigning and reengineering keeping in mind the known and expected digital disruptive technologies. Recent malware and cyber-attacks and threat of loss demonstrated the value of Digital assets. Now data base and software has become a very valuable asset and like to figure prominently in the balance sheet. These assets and capabilities, both hard and soft, are increasingly becoming a competitive differentiator and platforms for innovation and disruption. Block chain offers a workable and good technology to some extent overcome such threats and ensure safeguarding the value of digital assets.

3.     Skilling: Businesses and governments are facing sever challenge of finding right people for the right jobs. Desired skill sets are missing. Companies are likely to face gaps in skills they need in a more technology-enabled workplace, and would benefit from playing a more active role in education and training. Partial automation is more likely than full automation in the near to mid-term, and humans and machines will need to work together much more closely. That will require retraining and often redeploying workers. Policy makers working with education providers could do more to improve basic science, technology, engineering, and math (STEM) skills through the skill development programs and later on through the formal school systems, and put a new emphasis on creativity as well as critical and systems thinking.

4.     Research and Collaboration: Looking at existing research centers for Blockchain technology, it is realised that some counties have already taken lead and good work is already happening in the field of research and application of blockchain. There is no doubt that it might be very hard to nurture innovation in isolated environments built by particular companies or government agencies, as sometimes principles of these research centers might contradict with general priorities of the industry, there might be hidden agenda, as well as certain rules and limitations, which do not always facilitate development process. In the era of cooperative and collaborative growth, research efforts across the world have to look at each other looking for solutions to general problems. If it is done within one particular corporation or a state institution, there are certain limitations; there are also certain rules, which slow down the development. There is a need to create platforms to facilitate collaboration within existing Blockchain consortiums, institutes, stakeholders and research centers. There is no doubt that there is a huge space for research and development around Blockchain technology and not only because we don’t fully understand what this technology is about but also because the more we learn, the more challenges we uncover. The most efficient approach towards development of Blockchain technology might be when research and practical application go hand in hand and when practice summarizes theory and vice versa.

5.     Regulatory Framework: Regulatory framework is required to safeguard this sector. There will be mushroomed growth of new players and cases of loss of credibility will go up. Further, this technology will also need mechanism to handle disputes and mechanism for adjudication. In order to make Blockchain technology successful in the country India need to quickly establish standard business practices to attract mainstream investors and business experts. It is felt that a mechanism for regulatory oversight with positive frame of mind by delinking it to bitcoin is needed. There will be growth in service providers and so called service providers. There would be cases of theft of data, misuse of data and abuse of digital power. Society at large and business and government in particular will find it challenging to keep pace with technological innovations and challenges it throws in regulation and governance. It is the collective responsibility of everyone in general but government in particular to change the perception of Blockchain and delink it with crypto-currency and to legitimize this technology by creating ethical, moral and legal platforms. India needs to promote a powerful Blockchain ecosystem with a spirit of integrity. India needs passionate and talented members who have collective goal to be successful. Approach to achieving this goal is through a platform that creates the environment to incentivize the contribution of ideas, conversion of those ideas into business plans, and subsequent launch of profitable projects.

Blockchain technology has huge potential. Enabling eco system will accelerate its adoption in government and corporates. There is a need to create network of like-minded people and facilitate meeting grounds for fast growth and adoption of this technology.
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[1] By Ajay S Singh is an ICAS officer and currently working with Ministry of Rural Development, Government of India and Richa Singh, Public Sector Banker. Views are personal.

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