Indian Prime Minister Narendra Modi recently hailed blockchain’s transformative potential and emphasised the need for “rapid adaptation,” a rare instance of a head of state publicly praising the technology during the inauguration of the 22nd edition of World Congress on Information Technology (WCIT).
Similarly, Chinese President Xi Jinping publicly endorsed blockchain technology at the annual Academic Conference hosted by CAS on May 30th of this year. The Chinese president called blockchain a “breakthrough” technology. The Communist Party also published a book in August whose title translates roughly as “Blockchain — A reader for cadre leaders.”
Blockchain’s grand promise is to do for transparency what the Internet did for communication. It increases trust between two parties — a particularly big deal in economies with low counterparty trust.
Why blockchain is more relevant in Indian context than any other country in the world
More than 80% of Indians work in the informal economy, which relies more on interpersonal trust than formal contracts, leaving them vulnerable to fraud. The country has a 69% bribery rate and was ranked the most corrupt nation in Asia in 2017.
Loan frauds average almost $2 billion a year, and to hedge against this, interest rates on business loans routinely run high, up to 20%, denoting low trust.
Vizag is becoming the hub of Blockchain
Andhra Pradesh has become the first state in India to adopt blockchain for governance. It has piloted two key projects: managing land records and streamlining vehicle registrations.
Blockchain helps to protect the state’s digital assets and transactions, preventing tampering by outsiders or even government insiders. This is a big deal in a country where, as per a study by think tank Daksh, property-related disputes account for a staggering 66% of all civil cases and a 0.5% drag on the GDP. The state plans to eventually implement blockchain across the entire administration.
Andhra Pradesh state has also partnered with private companies to test use cases. For example, it has now secured more than 100,000 land records through Indian blockchain startup Zebi Data, which is also working with other states including Maharashtra and Telangana.
Swedish blockchain startup, ChromaWay, has also partnered with the state to provide land registry solutions, leveraging lessons from projects abroad including those with Lantmäteriet, Sweden’s land registry authority, and Kairos Future, a consulting firm.
FinTech Valley Vizag plans to build the largest repository of blockchain use cases in other key areas such as transport, finance and digital security. It has partnered with Covalent Fund to create Velugu Core, a pioneering India-focused blockchain stack.
This would make government data freely and digitally available through open APIs (Application Programming Interfaces), which could then be used by developers to build apps.
For example, an individual looking to purchase a particular property could hypothetically access government data through an app built using this stack and get public information on all previous ownership and transaction details.
Vizag has also partnered with KPMG to launch a BFSI use case repository program to identify blockchain and other tech solutions to common problems in the banking, financial services and insurance sectors.
Other Indian states are following the suit
Telangana, Karnataka, Maharashtra, and Kerala recently announced broad support for blockchain and pilot projects to bring more transparency to governance. This will pave the way for an India-wide rollout and bring blockchain into the mainstream.
China’s stance on Cryptocurrencies and Blockchain
China represents an interesting dichotomy when it comes to cryptocurrencies and blockchain technology. On one hand, they are incredibly restrictive, having instituted a nationwide ban on ICOs last year, as well as cracking down on local crypto exchanges – and banning foreign exchanges altogether. On the other hand, however, aspects of both industries appear to be flourishing.
Despite the restrictions, China accounts for more than 70% of the total Bitcoin network’s hash rate and they lead the world in the number of blockchain patent applications. And now, it appears that the Chinese government has officially decided to take a more proactive stance with regards to the development of blockchain technology within the country.
Chinese Investments made on Blockchain
Several local governments including that of Hangzhou — home to tech giant Alibaba — Shanghai and Nanjing have announced blockchain investments. That makes for a total of about $3.57 billion since 2016, according to estimates published on news site SupChina.
The Chairman of Zhongguancun Blockchain Industry Alliance, Yuandao, believes as industries adopt blockchain technology and more chains are created, more technological breakthroughs will come along, too.
This program focuses on the integration of big data, advanced mathematics, and blockchain technology. China has become more active in the creation of these mathematical formulas after realising that they are a vital component in the blockchain space. China seeks to create more blockchains for government and commercial sector use.
The blockchain lab is made possible through a joint venture with blockchain startup Tai Cloud Corp. Tai Cloud is a Beijing-based firm. Additionally, the Tai Cloud Corporation now represents one of China’s largest blockchain-based firms. The company currently holds over 150 blockchain-related patents, and they operate with the blessing of the Chinese government.
Adoption of blockchain technology in China
BlockVC, which counts Beijing among its main offices, is investing in 40 to 50 blockchain-related projects, according to Mingxuan Li, its chief operating officer and co-founder. He said the company’s focus is more on underlying technological development.
Anecdotally, he said, it’s typical for a Chinese person to have one or two friends involved with blockchain and that they will not hesitate to try to convince you to join them. As a result, he said he thinks the development of blockchain will spread rapidly in the country, especially since China’s large population offers the opportunity to test applications at scale.
The road ahead for blockchain in India and China
It’s now safe to assume that India and China have recognised the advantages of blockchain technology. As you now know, that both the countries are taking significant steps towards to integration of this technology within its local economic structure.
You can expect to see further investment in the blockchain space as China and India aim to become global leaders in the blockchain development sector.
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Nitin is a part of the AIM Writers Programme. He is an experienced data and analytics consultant. For the last two decades, he has been extensively working with large organisations in implementing and managing data warehouses and creating analytic solutions for various domains, predominantly in the BFSI sector.