Block Chain and Distributed Ledger Technology

In India, governance bodies at all levels are grappling with an explosion of information from various traditional channels of information supply like property and land records, data pertaining to population, geography, welfare schemes etc. Apart from the traditional channels newer sources of data emanating from corporate compliance requirements, securities laws, banking and finance regulations, intellectual property, corporate social responsibility compliance have all led to explosion of information that needs robust information architecture to preserve and access the data. These data are currently present in a set of disparate ledgers, books and databases. But there are problems with the present information architecture. This allows government (coal gate scam) and the private players (case of Kingfisher’s claims on its account books) to alter or manipulate the data which ultimately leads to a lack of trust in the records maintained by the government and private players. Secondly, the centralised control over information governance results in a denial of access to important data which also clutters the real-time decision-making.

In this atmosphere of mistrust in data management, Block chain and distributed ledger technology can make the state more accountable.

About Blockchain and Distributed Ledger

This technology was first used in bitcoins and other crypto-currencies. It uses single shared ledgers to store information. Advanced cryptography technology is used to make sure that information once entered in to the ledger cannot be altered except if the changes are in compliance with some of the pre-defined parameters. Additionally, this technology uses different nodes instead of one centralized agency to have access to multiple copies of the same distributed ledger. This technology allows the changes made by the trusted peers to the ledger to be immediately reflected for faster decision making.

From the security angle, the ledger is also less vulnerable from cyber hacks as it does not present a high cost single point of breach like the way the centralized information architecture does. This technology also allows creation of hierarchies within the structure which in turn will help in the creation of suitable degree of access at each level of authority.

Benefits

To begin with, implementation of this technology would go a long way in resolving the trust and centralisation problems of the present information architecture. Secondly, it can revolutionise the management of land records. Inefficient and non-transparent functioning of property registries have led to an all time low trust deficit among the public. These registries have centralised access to land records and related property deeds which provides ample opportunities for the stakeholders to involve in fraudulent practices. The distributed ledger technology can help in systematic access, management and modification of the registry and will save the public from fraudulent land transactions. Similarly, it can improve efficiency in the corporate compliance and the tracking of implementation progress of the welfare schemes.

Challenges

  • Initial cost of transitioning to a new unique data storage system
  • Identification of peers and creating hierarchies who can be trusted to access the data.
  • Privacy and security challenges that might arise from the decentralised access of data. This may also need to modify the Information Technology Act.
  • Probable resistance from the government staff to the new technology and to the shift in to the way in which the state and citizen interacts.
  • Developing a regulatory framework in guiding the application of the new technology.

Way forward and Conclusion

Immediate implementation of blockchain and distributed ledger technology is imperative for the state to bring in efficiency and transparency in the information architecture. Though, the technology is in nascent stage of adoption and development it can be used for basic implementation. Moreover, the government with adequate resources and capability can significantly aid and guide the innovation’s future trajectory while also benefitting from it.  Early adoption of this technology will also send right signals about the government’s efforts in promoting transparency and will also prompt the private sector to follow suit. Overall it will help in increasing transparency and reducing scams.

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