It was a year of fortune for blockchain in India. In the run-up to the new year, distributed ledger technology has garnered much attention and has been considered a panacea for trust deficits and security threats.
At the start of 2018, however, the technology was questioned – especially in the context of cryptocurrencies or cryptocurrencies for which the blockchain is the underlying system – and this set the tone for the rest of the year.
Countries like Estonia, Georgia, United Arab Emirates, Sweden, United States and United Kingdom have already taken the lead in the pioneering blockchain applications in the public sector in 2017. According to a PwC-Ficci report, Dubai, which recently undertook to pass to all the governments blockchain operations by 2020, have estimated that, using the technology, you could save about 100 million pages of documents generated in documents every year, 25.1 million hours of production time and almost 411 million kilometers of travel time for its citizens.
Encouraged by the global success of governance led by blockchain and public sector programs, the Indian government's think tank, Niti Aayog, had already begun to study blockchain applications in India.
Some states in the country were also studying state-level public programs based on technology. Andhra Pradesh, for example, has announced a partnership with Swedish company ChromaWay11 to protect citizens' data on a blockchain, as well as explore the use of blockchains in various other fields such as smart cities and transport.
The Institute for Development and Research in Banking Technology (IDRBT), set up by the Reserve Bank of India, has published a white paper on the application of blockchain technology in the banking and financial sectors of the country.
However, on 1 February, the comments of the Minister of Finance of the Union Arun Jaitley during his annual budget speech sparked mixed reactions from developers, customers and sellers of technology.
"The government does not consider the cryptocurrency legal currency or currency and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system", he said in his speech on the budget in Parliament .
But Jaitley also said that the government would explore the use of blockchain technology proactively to usher in a digital economy.
If the finance minister's comments on cryptocurrencies were not enough, the Indian banking regulator, the Reserve Bank of India, announced a couple of months later that it would penalize any bank that worked with cryptocurrency companies.
This not only created struggles for crypto-exchanges, but also blocked many public blockchain projects that were piloted because most of them needed to assign a cryptocurrency value to validate a transaction.
According to a global study conducted by the EY auditing firm in the first half of 2018, 86% of the principal initial coin offerings (ICO) listed on a cryptocurrency exchange in 2017 were below their initial listing price.
The study found that 30% of ICOs lost almost all their value, although the value of the ICOs collected in 2018 saw a dramatic increase of $ 15 billion in 2018 from only $ 4 billion in 2017.
Brody also pointed out that only 29% (25) of the 2017 ICO projects evaluated by EY have progressed towards prototypes or working products – an increase of just 13% from December 2017. The remaining 71% did not offer on the market, added.
Even the Indian crypto-exchanges have seen their fair share of challenges, with one of the major exchanges, Zebpay, which has halted commercial operations, due to the restrictions of the Reserve Bank of India on cryptocurrencies. Other exchanges have moved the court and are awaiting hearings.
Kashi Reddy, head of the India division of the US technology consulting firm ThoughtWorks, said: "The blockchain or any other peer-to-peer network technology is not widespread due to socio-economic rather than technological reasons. current policies and regulations are not oriented towards the decentralization of data, power and control that technology offers ".
He added: "Given the recent ban on cryptocurrency in India, technologists and companies are alert to how administrative measures evolve to embrace, report or compromise."
But it was not just India in which the cryptocurrencies were facing a difficult period.
The most important of them, bitcoin, has lost more than 80% of its value in the last year, rising from a peak of $ 18,972 to a minimum of $ 3,513, according to data provided by the news portal on the Cointelegraph cryptocurrency. It is currently trading around the $ 4000 mark. Characters such as Ethereum and Ripple have also suffered a similar fate due to a crackdown in several countries on virtual currencies and persistent questions about their legitimacy.
Public blockchains leave room for private blockchains
Because of the uncertainty of policies and regulations in the country, analysts and experts believe that private blockchains, mostly corporate blockchains, will gain more importance rather than public blockchains.
"India will follow the global example to see the blockchains of big companies that make real progress in areas such as finance, insurance and government in the short term," said Pandurang Kamat, chief technologist and associate technical chief of the company technology services of Pune, Persistent Systems.
"The public blockchain space is rapidly improving both on the infrastructure and on the user experience side, however, its adoption and traction will take place on a longer curve," he added.
Mahesh Makhija, partner and leader of EY's digital and emerging technology division, also said that corporate or private blockchains will emerge faster.
"I think it is essential to delimit crypts and blockchains from the hype point of view.While cryptocurrencies have contributed enormously to buzz, either because of their meteoric rise in 2017 or crypto-calyspe in 2018, we must remember that cryptocurrency is only one of the blockchain technology applications, "Makhija told TechCircle.
Explaining further, he said that the broader blockchain applications will do business networks and enterprise ecosystems for what has made corporate resource planning for the individual company.
However, Sanjeev Narsipur, chief executive, blockchain, Accenture Advanced Technology Centers, said that in the long run, the key to the adoption of the blockchain will be interoperability between multiple public and private blockchains.
Accenture has worked extensively on interoperability and has filed a patent on this, he added.
In terms of technology adopted, Makhija said that Indian companies have moved from an understanding of technology to an initial realization.
"Financial services, consumer products / retail and the public sector are the first to move in. Blockchain is an ecosystem game and these sectors have had more influence on the ecosystem to push for adoption", added.
According to a research and market report, almost 56% of Indian companies are moving towards blockchain technology, making it part of their core business.
The report states that Indian banks should increasingly adopt the blockchain.
The key areas in which technology is expected to have maximum impact are payment and transfer of funds, post-trade agreements and digital identity, he added.
Private sector lenders such as ICICI Bank and HDFC Bank have already started running pilot programs using technology. The ICICI bank, in fact, has used the technology to regulate the payments of foreign trade, which otherwise required longer times.
Narsipur said that India was seeing a lot of blockchain traction in areas such as government, financial services, land registry, agriculture, food security, identity and supply chain.
"The first Nasscom Industry Partnership Blockchain Challenge, one of the biggest challenges for the country's idea and hackathons for corporate blockchain solutions, was also presented this year, demonstrating the growing interest in this technology," he added .
Kamat also said that 2019 will see many improvements in technology.
"In the private blockchain space, we will have more consortia not only to drive, but to manage stable business processes and obtain tangible value from blockchains," he added.
IBM is already collaborating with banks, financial institutions and other technology companies in India to create a private information sharing blockchain.