What is Blockchain technology?

 Blockchain technology is a technology that leads to a chain of blocks, containing digital information stored in a public
database. It is a distributed database existing on multiple computers at the same time, which constantly grows as new
sets of recordings or blocks are added to it.

How Does Blockchain Work?

 Blockchain consists of three important concepts: blocks, nodes and miners.

Blocks:

 Every chain consists of multiple blocks and each block has three basic elements:
 The data in the block. A 32-bit whole number called a nonce. The nonce is randomly generated when a block is
created, which then generates a block header hash.
 The hash is a 256-bit number wedded to the nonce. It must start with a huge number of zeroes (i.e., be extremely
small).
 When the first block of a chain is created, a nonce generates the cryptographic hash. The data in the block is
considered signed and forever tied to the nonce and hash unless it is mined.

Miners:

 Miners create new blocks on the chain through a process called mining.
 In a blockchain every block has its own unique nonce and hash, but also references the hash of the previous block in
the chain, so mining a block isn't easy, especially on large chains.
 Miners use special software to solve the incredibly complex math problem of finding a nonce that generates an
accepted hash. Because the nonce is only 32 bits and the hash is 256, there are roughly four billion possible nonce-hash
combinations that must be mined before the right one is found. When that happens miners are said to have found the
"golden nonce" and their block is added to the chain.
 Making a change to any block earlier in the chain requires re-mining not just the block with the change, but all of the
blocks that come after. This is why it's extremely difficult to manipulate blockchain technology. Think of it as "safety
in math" since finding golden nonces requires an enormous amount of time and computing power.
 When a block is successfully mined, the change is accepted by all of the nodes on the network and the miner is
rewarded financially.

Nodes:

 One of the most important concepts in blockchain technology is decentralization. No one computer or organization
can own the chain. Instead, it is a distributed ledger via the nodes connected to the chain. Nodes can be any kind of
electronic device that maintains copies of the blockchain and keeps the network functioning.
 Every node has its own copy of the blockchain and the network must algorithmically approve any newly mined block
for the chain to be updated, trusted and verified. Since blockchains are transparent, every action in the ledger can be
easily checked and viewed. Each participant is given a unique alphanumeric identification number that shows their
transactions.
Benefits of using Blockchain Technology:

 Immutability: In Blockchain, there is no possibility of changing the data or altering the data; the data present inside
the Blockchain is permanent; one cannot delete or undo it.
 Transparency: By utilizing blockchain technology, organizations and enterprises can go for a complete decentralized
network where there is no need for any centralized authority, thus improving the transparency of the entire system.
 High Availability: Unlike centralized systems, Blockchain is a decentralized system of P2P network which is highly
available due to its decentralized nature. Since in the Blockchain network, everyone is on a P2P network, and everyone
has a computer running, therefore, even if one peer goes down, the other peers still work.
 High Security: This is another major benefit that Blockchain offers. Technology is assumed to offer high security as
all the transactions of Blockchain are cryptographically secure and provide integrity. Thus instead of relying on third-
party, you need to put your trust in cryptographic algorithms.

Applications of Blockchain Technology:

 Industry: A few companies that have integrated blockchain in their functioning are Walmart, Pfizer, AIG, Siemens,
Unilever, etc. Blockchain has made its way into many industries due to its host of benefits and ease of use and
accessibility.
 Healthcare: In healthcare, blockchain can be used to store the medical records of patients. The data is immutable, so
tampering with it is not even a possibility. Confidential data can be encoded and stored in a private key to limit access
by various individuals.
 Agriculture: According to Forbes, blockchain is making a hero entry in the food industry as it makes it easy to track the
path and safety of food, right from its journey from the farm to the buyer/user. IBM’s Food Trust blockchain is one of
the most successful implementations of blockchain in the food industry.
 Banking: The banking industry has benefitted the most by integrating blockchain into their business. It has increased
their efficiency, reduced transaction time and fees, helped them store customer data, and much more. In 2016, a report
from Capgemini stated that consumers could save up to $16 billion in banking and insurance fees each year through
blockchain-based applications.
 Governance: Blockchain technology can help in ensuring good governance. It ensures transparency of the public
records through the usage of a digital form platform and allows auditing of government documents. Moreover it allows
to maintain the authenticity of the document and clearly reduces the processing time.

Potential Challenges to Blockchain technology:

 Infrastructure and Cross Domain Applications

 Scalability and Transaction Speed (achieving higher number of transactions per second)
 Data Security and Privacy
 Standardization and Interoperability (cross-platform and cross-chain protocols)
 Applying AI & Data Analytics
 Regulatory Aspects
 Ecosystem and supporting framework
  Decentralized Infrastructure
 Skilled Manpower (Talent)

Way forward:

 Blockchain technology has proven itself robust and secure. It ensures integrity of the data and reduces incidents of
fraud. But we needs a serious look at its vulnerabilities and commerciality. Before introducing blockchain into the
public sector data-handling system, we need a robust and informative data repository. So there is a need of Proper
regulations for the use of blockchain technology in the country.

What are Blockchains?

They are a new data structure that is secure, cryptography-based, and distributed across a network. The
technology supports cryptocurrencies such as Bitcoin, and the transfer of any data or digital asset.
Spearheaded by Bitcoin, blockchains achieve consensus among distributed nodes, allowing the transfer of
digital goods without the need for centralized authorization of transactions.

How does it operate?

The technology allows transactions to be simultaneously anonymous and secure, peer-to-peer,
instant and frictionless.
It does this by distributing trust from powerful intermediaries to a large global network, which
through mass collaboration, clever code and cryptography, enables a tamper-proof public ledger
of every transaction that’s ever happened on the network.
A block is the “current” part of a blockchain which records some or all of the recent transactions,
and once completed, goes into the blockchain as permanent database.
Each time a block gets completed, a new block is generated. Blocks are linked to each other (like
a chain) in proper linear, chronological order with every block containing a hash of the previous
block.

Prospects:
Bitcoin is just one of the applications for the technology, whose use is being tested across
industries.
Healthcare, banking, education, agriculture, electricity distribution and land records are sectors
that could benefit.
Blockchain-powered smart contracts, where every piece of information is recorded can enhance
ease of doing business.
It will augment the credibility, accuracy and efficiency of a contract while reducing the risk of
frauds, substantially.
Blockchain could play a crucial part in health insurance claims management by reducing the risk
of insurance claim frauds.
The technology can also be used to prevent the sale of spurious drugs in the country by tracking
every step of the supply chain network.
Artificial Intelligence and Internet of Things (IoT) can gain immensely from blockchain
applications.
In an IoT world, thousands of devices would need to rapidly and seamlessly transact with each
other in real time.
The adoption of blockchain by India’s banks could help avert frauds such as the one at Punjab
National Bank as the technology updates information across all users simultaneously.
It could be used to further strengthen our national institutions, including the judiciary and the
Election Commission.
Critical citizen information like land records, census data, birth and death records, business
licenses, criminal records, intellectual property registry, electoral rolls could all be maintained as
blockchain-powered, tamper-proof public ledgers.

Challenges:
Blockchain technology is expensive to initially put it in place.
The massive usage of energy for the functioning of blockchain.
Safeguarding the privacy of individuals and companies as blockchains are usually open ledgers for
everyone to see.
Knowledge of the benefits of distributed ledger technology is still limited.
If automated risk management, smart contracts, and similar tools are deployed across a network,
cascades of rapid and hard-to-control obligations and liquidity flows could propagate across a
network.
This interdependence will likely call for creative organizational thinking to address the need for
governance and strong risk management

Blockchain in Social sectors:

Personal Identification: Governments manage vast amounts of personal data from birth and death
records to marriage certificates, passports and census data. Blockchain technology offers a
streamlined solution for managing all of it securely.
Fight corruption: Registering government transactions in the blockchain helps create a trusted
history for any transaction and significantly eases the auditing process. This would contribute to
making public procurement more transparent
Cut red tapism: As government agencies currently store data in autonomous centralized
databases, they tend not to interoperate in an optimal way. This results in duplication, overlap and
contradiction in the information held. Blockchain eliminates this lack of interoperability which
generates unnecessary red tape in obtaining relevant information from a user, and makes the
process for sharing data between agencies clear and inexpensive.
Identity and Land rights: The World Identity Network and Humanized Internet project can store
identifiers such as birth certificates and university degrees on a blockchain, in the form of
distributed digital lockboxes. Users can keep their information private and secure, but also give
permission for anyone to access it anywhere in the world. Several governments, including those in
Dubai, Estonia, Georgia, and Sweden are making early forays into blockchain-based approaches
to securing property rights.
Agriculture: First of all, it can reduce contamination and food fraud. This can happen with the
help of blockchain efficiency and transparency. Blockchain’s role is to improve the third party
involvement by ensuring that they are tracking, collecting and managing data in the best possible
way. With blockchain, farmers and distributors are going to get their payments faster than ever-
improving their ability to work on their next set of projects faster.
Health: The health sector is one of those sectors that have tons of initiatives by both for-profit and
nonprofit organizations. With blockchain, healthcare can improve digital healthcare records. It also
improves pharmaceutical supply chain management. As usual, blockchain offers a decentralized,
efficient and secure solution.
Governance and democracy: Government and civil society can also leverage blockchain
technology to strengthen democratic processes and participation. Blockchain systems such as
Ballot Chain can manage online elections with secure and anonymous voting that participants can
verify at any time.
Environmental protection: In the environmental arena, new blockchain-supported supply chain
management systems, which are transparent but cannot be tampered with, can track products from
the farm to the table, and show whether or not a food product is organic or Fair Trade.
Philanthropy and Aid: Billions of dollars are invested in helping the needy. However, these aids
are mostly misused due to a lack of transparency. In fact, most of the aid never reaches the intended
people. This has also led people to not contribute to these non-profit organizations. Blockchain
can solve all of these problems and help elevate the confidence in non-profit in utilizing the funds.
Crowdfunding: As with traditional crowdfunding, a blockchain powered crowdfunding campaign
seeks to secure investment for a new project from an interested community. But in this instance,
funding is most likely to come in the form of bitcoin or other cryptocurrencies.

Way Forward:
Blockchain, with all its possibilities, needs a serious look at its vulnerabilities and commerciality.
Before introducing blockchain into the public sector data-handling system, we need a robust and
informative data repository.
Linking IndiaChain with Aadhar, thus creating a secure personal identity for all Indians.
Proper regulations for the use of blockchain technology in the country.
Identifying and resolving key issues and challenges in implementing this technology, the prime
amongst those being data privacy.
India should effectively channel its technical human capital surplus to position itself as one of the
pioneers during this upcoming wave of innovation.