Blockchain won’t save the world, but might make it a better place
In the early days of the internet, it was considered that the internet will solve all the problems of the world including the world hunger problem. However, as people understood the inherent capabilities of the internet and its limitations, it became clear that it is a means to solving a problem rather than a solution itself. Similar things are being said about blockchain today. It will not be surprising to see that once blockchain technology’s real capability and its limitations are clearly understood by all, it will turn out to be somewhat different than expectations.
It is unlikely that blockchain technology will replace all governments and regulations in the world any time soon even if it had the capability to do so. If, for no other reason than, due to the fact that no country can afford to take that giant a leap that quickly.
However, there are clear benefits of using blockchain technology. Most countries and companies that are investing in blockchain technology in terms of both research & development as well as deployment, are doing it to improve their services rather than to use this technology as a replacement of their service.
Blockchain technology decentralizes transaction control and brings in transparency. For e.g. in banking rather than a central bank controlling transactions, an application of blockchain technology can ensure transparency due to pre-defined rules. However, it is highly unlikely that any central bank will give up the authority to define rules for transactions even if it does give up its ability to manually monitor every transaction to automated blockchain technology based computers.
Blockchain brings in transparency by creating cheap, fast and secured public records of transactions. This concept can be applied to other forms of government functions like it can be in banking. For e.g. in elections in a democratic country it can be used or in real estate. Blockchain is useful where an audit trail of ownership needs to be established. Nowhere this is needed more than real estate market in India. Many states including Andhra Pradesh in India have started adopting blockchain technology.
There are many other applications for blockchain in governance as well. Blockchain decentralizes control from the central authority and distributes it among users thus making it transparent. However, such a high level of transparency can be difficult to implement for sensitive information like bank balances. Although transactions can be secured using encryption, it is still not acceptable for users to have their bank balances being decrypted by users who are what is generally known as a ‘miner’ in blockchain technology. A ‘miner’ is a typically a person who owns or manages one or more computers to solve a mathematical problem to confirm a transaction within a blockchain. Miners receive a reward for mining in terms of transaction fees or other means for e.g. bitcoins if a miner successfully mines a bitcoin transaction.
In short, especially in a world that is increasingly adopting a democratic system of governance, it does make sense to adopt blockchain technology which brings in a great level of democracy in transaction handling, without expecting it to solve each and every problem right away.