BLOCKCHAIN – Future of Blockchain in World Economy

Greek philosopher, Plato, once said: “Everything changes and nothing stays still”. That is true for everything even current economies and industries. Industries changes at a very slow pace but every once a while a technology comes which revolutionize every aspect of the industry. This makes the change inevitable. Once such technology is Blockchain.

INTRODUCTION

Before moving any further, let’s start with basics. What is blockchain exactly? As per Wikipedia, it is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.” While the technology seems complicated, the idea remains simple. To be able to send money and other things more securely and efficiently. While Blockchain is a vast sphere, most famous entity within the sphere is cryptocurrency which gave blockchain a limelight.

BACKGROUND

it all started as early as 1981,  attempts were made to secure internet’s privacy with the introduction of cryptography. In 1998, Nick Szabo wrote a paper entitled “The God Protocol” emphasizing on the creation of a be-all end-all technology protocol. A major breakthrough was provided in 2008 by pseudonymous Satoshi Nakamoto outlining a new protocol for peer to peer electronic cash system using a cryptocurrency, called Bitcoin. This protocol is the cornerstone of a growing no. of globally distributed ledgers called blockchain. To summarise a blockchain is a list of all transaction across a peer to peer network. This technology is a ground-breaking technology and a potential to disrupt a large no. of business processes.

WORKING

So how does it work? A blockchain distributed ledger stores record in the form of “blocks”. When a transaction is logged, it is added to the chain in a linear order subject to the approval of other nodes. Block can either be rejected or validated subject to verification. New blocks are added to the chain in a linear order and chain is formed. A chain is continuously updated so that every ledger is same. This decentralized network on a no. of devices make it so secure since the data is not on a single system.

CURRENT POSITION

This technology is quite advanced, but the structure (financial as well as legal) needs to be updated too.   The current regulatory and legal framework can’t support the distributed ledger and digital values. Such laws may be incongruous with transactions where nothing is physically delivered to or held in escrow. Current IP laws focus on contractual relationships, not transferable in rem property rights that could be sold downstream. However, blockchain system could change IP law as applied to digital products.  The current laws can’t cope up with the legal nature of blockchains and shared distributed ledger and the documents and financial instruments stored in them. The result of which was Banning of cryptocurrency in India. However, considering its inevitable uses, the framework to support the same will be made.

FUTURE OF BLOCKCHAIN

The future would be dominated by Blockchain technologies. Blockchains will be future of finance. It will change the global banking system making it as digital as it can be. Cryptocurrencies like bitcoin will do for payments and other things what email did for communication. In a foreseeable future,  central banks can adopt blockchain and cryptocurrency can be globally accepted. In a more distant future, blockchains can also replace central banks. Blockchains can also be used to reduce cybercrimes by providing identity authentication and visible ledgers.

CONCLUSION

Distributed ledger and blockchains are about to cause major business transformation in the financial industry. Although projects are still in infant stages, everyone including banks, legislature and industries should monitor closely because you either move with the tide or get swept out to sea.

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