Experts Explain: An India Blockchain Platform

Source: The post is based on the article “Experts Explain: An India Blockchain Platform” published in the Indian Express on 19^th August 2022.

Syllabus: GS 2 – e-governance applications, models, successes, limitations, and potential

Relevance: About public digital infrastructure

News: In recent years, India has made a significant effort to become a digital society by building a large citizen-scale digital public infrastructure.

With the commencement of the Digital India mission in 2015, India’s payments, provident fund, passports, driving licences, crossing tolls, and checking land records all have been transformed with modular applications built on Aadhaar, UPI, and the India Stack.

What are the limitations of public digital infrastructure?

a) Existing different digital infrastructures are not interconnected as a design. For instance, the information has to travel across multiple systems to complete the interaction, b) Rely on private databases: This makes the validation of data more complex as the network grows, driving up costs and creating inefficiencies.

What is Web 3.0 and how it can address the challenges in public digital infrastructure?

The Web 3.0 architecture establishes a new version of the Internet protocol incorporating token-based economics, transparency, and decentralisation.

Blockchain and public digital infrastructure

According to Gartner, by 2023, 35% of enterprise blockchain applications will be integrated with decentralised applications and services. Many countries have already begun establishing their blockchain policies and infrastructure.

For instance, a) Estonia, the world’s blockchain capital, is using blockchain infrastructure to verify and process all e-governance services offered to the general public, b) China launched a program in 2020 called BSN (Blockchain-based Service Network) to deploy blockchain applications in the cloud at a streamlined rate, c) Brazil recently launched the Brazilian Blockchain Network to bring participating institutions in governance and the technological system that facilitates blockchain adoption in solutions for the public good.

DeFi: There are well-established decentralised finance (DeFi) platforms that rely on blockchain infrastructure. DeFi allows users to borrow and lend cryptocurrencies on a short-term basis at algorithmically determined rates. DeFi users are rewarded with tokens that confer governance rights.

What India should do to build a resilient public digital infrastructure?

The Indian digital community should focus on supporting research in standards, interoperability, and efficient handling of current known issues with the distributed technologies.

Smartphone manufacturers can be asked to deliver blockchain-compliant devices by adding extensions. This will enhance the last mile reach of the program.

India should build a national platform operating at L1 that interconnects blockchains application providers, token service providers, and infrastructure managers. This can provide a reliable and efficient network for the Indian digital economy.

India should also work on an indigenous solution such as an India Blockchain Platform. This will transform the digital ecosystem in India and will enable the future of digital services, platforms, applications, content, and solutions.