BLOCKCHAIN TECHNOLOGY AND CRYPTOCURRENCY ARE FRAUD-PROOF DAY NOT FAR OFF WHEN CRYPTOS BECOME UNIVERSAL
There might have been some fake news about cryptocurrency, but blockchain technology on which cryptocurrency is based is certainly a disruptive technology. But days are not far off when digital currency and blockchain technology are adopted in a big way not only for digital currency but also to promote transparency and traceabilityof data in real time and make its storage fraud proof.
Notwithstanding the alleged scam in cryptocurrency in Karnataka, Indian crypto exchanges recorded their biggest investment levels ever, be it
number of investors or sum invested. Soon Reserve Bank of India may launch an official digital currency and the Union government bring in necessary legislation for it. Several other central banks world over are looking at this option.
With cryptocurrency gaining ground in the last few years, the technology behind it – blockchain—has attracted a lot of attention as this disruptive technology has wide application apart from digital currency. It has multiple uses in the financial sector, particularly banking, insurance, pension, healthcare and
education. Blockchain is a database that stores data in blocks of information that is linked to a permanent chain. Under this technology the data is decentralised and distributed with peer-to- peer protocol. This, therefore, enhances traceability and transparency in real time and hence fraud-proof. APwC report estimates that blockchain, which is mostly used in cryptocurrency, will add $1.76 trillion to global GDP in a decade.
According to Rajya Sabha MP, Amar Patnaik, who had worked in CAG as well, blockchain has best
possible use in government where problems of complex nature exist, particularly land records management, health, education and pension. Some state governments in India have already started using blockchain technology for land records. But it has not yet become wide- spread. Citing an example, Patnaik says that the government in Georgia was able to enhance efficiency in its land titling process by replacing the back-end software of the existing system with blockchain.
The PwC report says blockchain is useful in tracking and tracing of products and services for companies’ supply chains and this technology’s contribution to this sector alone will be $962 billion in a decade. This technology will cater to the needs of companies ranging from financial services to mining to textiles.
According to crypto research and intelligence business CREBACO, Indian crypto investments have increased to over $10 billion from
$923 million in April 2020. Over 105 million people in India currently own cryptocurrency. Most of the cryptocurrency exchanges in India have seen increase in the number of investors as well as in value of their assets. The trading in these exchanges is said to be around
$1billionon a daily basis. The trading
by Indians directly or indirectly in international exchanges is five times more at around $5 billion on daily basis. Indians are not only investing in bitcoin but also in other cryptocurrency. Bitcoin is the most popular of all cryptocurrencies. Sometime back when there was US sanctions against Venezuela, the LatinAmerican country adopted use of bitcoin, a popular cryptocurrency, for its oil exports to select countries.
There are many economic reasons for adopting blockchain technology at international level even though still many countries are cautious. But interest in the technology and digital currency is only growing and thattoo rapidly in many countries. The regulation of its usage is perhaps not very clear as yet and countries are grappling with what sort of regulatory model is to be adopted but solutions once evolved their adoption by various countries would become easier.
According to Patnaik, who has done research in management, blockchain technology has great use in the insurance sector as it can mitigate various issues arising out of information asymmetries. Issues like unprofessional conducts by agents and agents forging documents to meet assigned targets, misrepresentation of compliances leading to mis-selling of insurance products can be checked easily.
These problems arise mainly because of the absence of an integrated mechanism to track and prevent fraudulent conduct of the agent. Blockchain has the ability to bridge gaps and enhance customer experience by virtue of providing distributive, immutable and transparent rating system that allows agents to be rated according to their performance by companies as well as clients. This incentivises the agent to conform to company procedure and align with the interest of the principal. In areas like land governance, registrations, payment of property taxes, administration of food subsidies or payment of minimum support prices to farmers, the blockchain technology can be adopted to make them fraud proof. In health insurance, blockchain can be used to introduce electronic health records that store all the patients’ information in one system and in distributed fashion.
In spite of certain minor hiccups and some teething trouble, the Blockchain technology is certainly going to revolutionise data storage system. One would not be surprised if this technology is widely used in not only digital currency but also in many areas which are being digitised. The beauty is this technology makes every data stored traceable and done in a transparent manner making various financial, land, health and educations operations fraud proof.