Rattled by recent frauds, India is in dire need of a spill-proof technology to oversee its financial transactions, which amounts to about $0.6 billion (digitally) daily. India’s largest bank, State Bank of India, has 195 million customers, Paytm claims around 7 million daily transactions and MobiKwik about 3 million. Though the government is making desperate efforts in the direction to assail the menace of fake loan guarantees and money laundering, we are yet to see the measures materialized. Blockchain or shared ledger technology has a proven track record of being an astute tool to integrate financial transactions and bring in transparency in the financial trajectory altogether. Factburp tries to outline some major benefits of this technology in the Indian context.
1.Reduction in Processing Cost-Blockchain technology will enable banks to process payments more quickly and more accurately while reducing transaction processing costs and the requirement for exceptions.The distributed ledger technology will facilitate a definitive audit trail and as per the estimation will put a significant check in loan defaults.
2.Safeguarding Intellectual Property: Content creators used to be beholden to corporations to package and distribute their creations, paying a percentage back. In a recent Harvard Business Review article, Don Tapscott and Alex Tapscott observe there are blockchain-based startups and registries emerging that provide ways to distribute works and be compensated for full value.
3.Transparency In Supply Chain: Today’s global supply chains have many points of failure, providing risk to brands that rely on prompt and quality shipments. “What if a company could proactively provide digitally permanent, auditable records that show stakeholders the state of the product at each value-added step?The global supply chain is estimated to be worth $40 trillion and,a blockchain can be used to track diamonds, art, real estate, and virtually any other asset.
4.Collaborations made easy: Intermediaries, such as large social network providers, are still needed to establish some level of trust between people and organizations. Blockchain, supporting profiles owned by employees themselves, may eliminate the need for such intermediaries, the Tapscott’s point out reports.
5.Tracking Cryptocurrencies: Bitcoin is an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers.
6.Decentralisation Of Database:Though much more than just decentralizing the database, the earlier versions of blockchains allowed just the value to be transferred, along with limited Data per transaction but in the past couple of years there has been significant up gradation of this technology which has tagged it as a feasible option for its native scripting and programming capabilities.
7.Benefits of Smart Contracts: With smart contracts in function, automatic validation of agreements along with signature can be enforced through a blockchain.This will eventually eliminate the need for mediators and therefore will save the company time and money.
8.Better Syndication Of Debt: Banking giants like BNP Paribas, BNY Mellon, and state street have joined hands in the process of developing a blockchain powered marketplace for syndicated loans. The first pilots have already been successfully completed.This is being done on a war scale to bring in more efficiency and transparency in the syndicated loan market by improving the data sharing between agent and lenders.
9.Facilitates Fair Elections: There have been a lot of buzz after every poll result where the losing candidates often challenge the election commission about the elections being rigged.Using blockchain tech for elections is already doing the rounds in different parts of the world with Moscow already in the process of a pilot project regarding the same.
10.Stock Exchange Regulation: After Australia, major stock exchange around the world are considering it as a viable option to safeguard the investor’s interest as well as regulate the exchanges without any loose ends.Regulating the prices of the stocks through this technology ensures a transparent trading platform.
Some of the most significant Blockchains: