If you ask me to name the digital innovation with potentially the most far-reaching impact on governance and ease of living, my answer would be the Blockchain. The fast-paced developments in digital technologies have opened up to those at the base of the social pyramid the opportunity to aspire for education, health, hygiene, basic physical infrastructure and financial inclusion. However, the most critical drag on their aspirational dreams is the insensitive, bureaucratic and corrupt governance practices. This governance deficit, especially in the developing and less developed countries, impacts the lives of billions of people around the world and reinforces the digital divide created by the lopsided accessibility and affordability of the internet.
In this milieu, blockchain is fast emerging as the much-needed solution to unclog the path to inclusive, secure and cost-effective delivery of public services. Blockchain is still in the early stages of maturity. To many people, blockchain remains “a riddle, wrapped in a mystery, inside an enigma” (to quote the famous words of Winston Churchill at the early signs of World War II).
Let us look at the concepts, processes and possibilities of this strategic digital development from a layman’s perspective.
Simply put, blockchain is a distributed ledger technology, a chain of databases spread across multiple sites in which any change of data requires the consensus of its participants. It was on October 31, 2008 that a certain Satoshi Nakamoto published a paper introducing the cryptocurrency ‘bitcoin’ and blockchain, its underlying technology. It is speculated that Satoshi Nakamoto is a fictional name used by an unknown person or a group of people. Since anonymity is at the core of the distributed ledger system that Blockchain is, it is only a befitting coincidence that the author of the path breaking idea remains anonymous to date.
Spread of internet and the development of web-based platforms and applications have created global concerns on issues like individual privacy and security of database and systems. With innumerable instances of data-breaches and public outcry on invasive practices of government and commercial players in mining personal data, the confidence in the privacy of web-based services is not at the optimal level. In India the security of Aadhar database has been subject of repeated legal scrutiny and the Supreme Court has put restriction on access and application of personal data from Aadhar stack for commercial purposes and even for extensive government purposes. The apex court sees this as more of an identity verification system for direct benefit transfer of subsidies and support.
There seems to be a critical need for enhanced security and safety of personal database, robust identity verification process, permanent and reliable trail of transaction and access history. Blockchain addresses these concerns holistically and provides a path to scale up efficiency and transparency of web-based services. Precisely because of the security, scalability and minimal cost of administration, blockchain technology is ideally suitable for massive rollout of public services.
In blockchain, data are arranged in clusters or blocks of related facts or transactions. Each transaction is digitally signed to ensure its authenticity. So, the ledger itself and the existing transactions within it are assumed to be of high integrity. These digital ledger entries are distributed among a network of server installations. The additional nodes and layers in the infrastructure serve the purpose of providing anonymity and consensus about the state of a transaction at any given time.
We can understand the way blockchain functions by using the analogy of accounting process. In the olden days, we had single entry book-keeping. It was simply a log of transactions and was prone to errors and omissions. There was hardly any way to cross-check and correct the entries afterwards. When double entry book-keeping was introduced, the process shifted to a set of complementary recordings of transactions with a debit corresponding to each credit and vice versa. As a result, the verifiability improved significantly. The trial balance process ensured a verification and rectification mechanism.
Using the same logic, in blockchain technology we have a system of distributed ledgers wherein every transaction is recorded in multiple ledgers. These are anonymously distributed across a wide network of computers. Every change needs validation by the majority of the complementary ledgers with the help of high integrity algorithms. This ensures continuous validation and real-time co-audit. Also, the permanent trail of transaction chain ensures the possibility of post-facto verification thereby further increasing the data integrity and confidence levels of all stakeholders.
Many people understand blockchain in the limited perspective of crypto- currencies (notably the bitcoin) and tend to ignore the tremendous possibilities the technology has for transforming the quality of public service delivery. Perception of bitcoin varies from a puritanical ethical viewpoint to addictively speculative attraction for it. Bitcoin, the immensely successful cryptocurrency, became the first mover in the digital currency space and with its novelty aroused fantasized curiosity. The speculators, or the habitual manipulative bulls fell for it soon lifting it to the level of an alternative currency, devoid of regulation and prone to extreme volatility. The scandalous disorder of cryptocurrencies has attracted sovereign reviews and global calls for moderation and control. However, the underlying idea of cryptocurrencies has been subject to serious analysis by several central banks and monetary experts.
Some Central Banks are seriously considering launching authentic digital money. Bank of England has had many discussions; Swedish Central Bank is also examining the proposal seriously. Central Bank of Uruguay has announced trials on a version of cryptocurrency.
In India cryptocurrencies have not yet been banned, nor are they encouraged. However, in Apr' 18, RBI issued a circular asking banks not to participate in cryptocurrency transactions. Some experts recommend that Reserve Bank could possibly launch a sovereign backed bitcoin as part of financial inclusion agenda and extending the concept of mobile wallet products.
Probably, with sound regulatory controls, such a product will be able to checkmate counterfeiting, currency hoarding and terror-funding to mention just three of the strategic monetary issues. Blockchain can have wide-ranging applications to further the inclusive governance initiatives and upgrade of public service delivery. A look at a few use case scenarios would make this clear.
Ajay, a Sales Executive with a leading MNC, was on a business trip when the cab, which he boarded as a co-passenger between Mumbai and Pune, collided with a truck in the Western Ghats during the wee hours. Passers-by reached them to a Government Health Centre. The passengers had serious injuries and Ajay was nearly unconscious. They found his Aadhar ID in the wallet, but the doctors had no clue as to his medical history or allergy-proneness to medicines. Obviously, this delayed the treatment and led to his fatality. What if the doctors could use the Aadhar (Unified ID Number) to access his medical records from a secure, central data-bank and launch the appropriate treatment as soon as he was brought in? Well, this could be possible in future if the Government establishes a National Health database with security features and restricted access to authorized medical professionals. Such a database can be built on a well-designed blockchain platform.
Or, take the case of Poovamma, a tribal in the hilly terrains off Munnar in Kerala who has been running from pillar to post to get the title to her tiny plot of land regularized in her name post the sudden demise of her husband. She could hardly comprehend why she had to repeatedly tread all the way to the village office for getting the documents authenticated by revenue authorities. As days passed, she was getting worried if she would indeed be evicted from the land, the only few foot-lengths she knew as her own ever since her marriage. What if there was a robust land record database which could be tapped by the officials to verify the documents and reassure Poovamma on her first visit? Or, better still, if a Government official could visit her hut and hand over the document to her. Again, a possibility with the help of blockchain enabled registry of land records.
In a large and heavily populated country like India with its archaic systems and even more outdated social behavior indicators like power-distance and exclusion-proneness, the entrenched corruption makes it a struggle for those at the lower end of the social hierarchy to get routine citizen services done as a matter of right and with dignity. It is here that a system that ruthlessly enforces order, anonymity and security comes to their rescue. These are the features that blockchain-based platforms can provide, creating a digitally- empowered society where citizens can claim their entitlements without seeking the help of intermediaries.
True, the most important applications of blockchain would be in securing prompt, efficient and targeted delivery of subsidies and financial support to the weaker sections of the society.
A blockchain enabled direct payment system can bundle all payouts for an entitled citizen, ensure a sound identity-verification process (probably through an upgraded Aadhar with reinforced legal sanctity) and deliver through the banking system with the recipients having multiple digital delivery options. For the vast majority of subsidized population, the Unified Payment Interface (UPI) like BHIM should be the natural delivery mode due to the reach and ease of access. With financial inclusion and mobile enabled payment options, we can accomplish not citizen empowerment and boost grass root consumption leading to enhanced quality of life. A win-win for the economy and people at large.
Postscript: When we wake up to the cold realities around, we realize with a bone-piercing chillness that from 2012 (Nirbhaya Case) to 2019 (Unnao incident) we have hardly evolved as a sensitive and inclusive society. Before we talk of digital inclusion, we need to talk of respecting human dignity and basic safety. We indeed have miles to go!
*The author is Principal Consultant & CEO of Cherrypick India, Trivandrum and can be contacted at email@example.com