Blockchain is technology of tomorrow; Bitcoin euphoria may not last a few years. However, it is essential that entrepreneurs should begin to adopt and build on the new technology.
Maj. Sunil Shetty, SM (retd), Founder & CEO AskMentor
Trust! is the most expensive commodity in all spheres of life because it is in short supply- we all agree on that? Correct?!
Now imagine if an emerging technology was offering TRUST as its underlying currency - what impact do you think it would create- I say the noise it will generate will be deafening.
In the past two months, not a single day has passed for me when I have not read or heard about Blockchain and Bitcoin.
Be it business channels, investment newsletters, webinars, TEDx talks, Youtube videos, just name a platform and both blockchain and bitcoin have occupied every possible media space.
The relationship between blockchain and bitcoin is same as internet and email - if blockchain is the internet and bitcoin the email.
"Bitcoin has been built using the underlying technology-the blockchain," says Devi Prasad Choudhury, a Bangalore based Blockchain Futurist.
Till a few weeks ago, I like many were unaware of what blockchain technology meant and or how it would impact lives and businesses of the future.
Furthermore, the followers, promoters, and enthusiasts of this new technology mention blockchain and bitcoin in the same breath.
When I started researching on the two terms- I started with an assumption that the technology was the domain of savvy investors and its application was just limited to the financial world.
Well, this kind of assumption was understandable given the fact that bitcoin has risen over 2100% in valuation over the last 12 months and making it a rich man's game.
However, I was in for a big surprise!
My excitement knew no boundary when I learned how blockchain technology could revolutionize lives of ordinary people; exactly the way Internet did or is doing today.
Let us understand what blockchain technology is and how entrepreneurs can spin out ventures using this platform.
Land records and Blockchain
Before I get into explaining the technology and its application - let me share the story of Captain Ananda Prasada Rao, a 61 years old veteran of the Indian army, who has spent past seven years running around government departments and the local court to prove the owner of his ancestral property.
Captain Ananda's Hyderabad based prime estate, now worth Rs 12 crore, was grabbed by a local "land shark."
The goon could pull this off by taking advantage of a weak land record-keeping practice at the provincial revenue department-which is the custodian of property ownership records.
For many who are not aware; Hyderabad city is "notorious for land grabbing cases"; "there are thousands of cases pending in local courts where genuine owners are fighting against land mafias," says Anand Kumar, a leading real estate developer with over 20 years of experience in real estate sector.
He further explains, in most cases the owners' loss rights over their property because their estate documents either go missing or get tampered at a custodian's office.
Now, why am I talking about this case? Let me explain. Think for a moment - the revenue department in question had all its records on a decentralised platform built using blockchain technology.
So, every time a corrupt official in nexus with a land mafia deleted or tampered a property record for personal gain- the anomaly would be spotted and more importantly fixed by punching a set of commands.
Captain Rao would have never landed in his current situation in the first place.
Instead, he would have been enjoying the fruits of his labour by monetising his property.
Today, the only known technology that has this kind of power to prevent deletion or modification of a land record without authorisation is 'blockchain'.
The technology makes information stored on its ledger immutable- thereby building trust between its users.
While speaking at a TEDx talk, Richie Etwaru, New York-based Blockchain Futurist, says "blockchain is going to change the way we trust" not just how we trust each other but more specifically how we trust in business."
According to Richie, we are “on the ground floor of the blockchain technology," meaning as people make sense of the new technology and its application; new startups will emerge offering revolutionary products and services- like what Internet did in the past decade by way of Facebook, WhatsApp, Uber and Google.
Let us see a few use case scenario where future startups could apply blockchain technology:
1. "Real Estate Chains": The prominent challenge Indian real estate developers face is finding a land with clear titles or ownership record.
"In any property deal, there are over a dozen documents that need to be scrutinised" by a legal team.
In most cases, "documents are either missing or incomplete" due to manual record keeping, lack of knowledge among owners and corruption at a custodian's office, and “this leads to litigation and dispute," says Anand.
In the new technology, information gets recorded in multiple blocks over a period, and blocks are linked together like a chain.
Each block has its unique key or the password.
As a thumb rule, an individual block apart from storing its unique information it also carries information and key from the previous block.
Thus, deleting or tampering data in one block alone will not help the cause.
This kind of immutable security is the fundamental difference between blockchain technology and others.
Richie calls such an arrangement as "real estate chain." Thus, entrepreneurs can build similar chains to support different sectors such as pharma, healthcare, automobile, fintech the list is endless.
2. Fintech Chain: Letter of Credit (LC) is a popular financial instrument that is used globally by business to carry out a trade.
Let us explore how an LC works in a business transaction involving two parties- a buyer and seller.
When a buyer places an order for goods or services, she/he must deposit up to 100 percent of the cost with a bank.
The bank in return issues an LC after charging a fee from the buyer.
The seller receives her/his payment from the bank only when the goods or services reach the buyer's Port of destination.
So, both the parties use the third entity as a guarantor, which is usually a bank.
Now, this is where "blockchain can be a liberation technology."
Devi says using blockchain, in conjunction with IoT, the transacting parties can create "smart contracts," that will eliminate the need for a third party as a guarantor.
It will facilitate peer-to-peer transaction thereby saving additional cost (LC fee) and time.
Is it time for Indian entrepreneurs to adopt the technology:
According to Devi, Indian startup ecosystem is already late in adopting the technology.
It is high time entrepreneurs "begin to understand the fundamental nuance of this powerful technology" and start "to think about innovations around it"
He further adds, various stakes holders especially governments need to create an "enabling environment for the technology to reach its full potential."
The early adopter of Blockchain technology in India
The Andhra Pradesh (AP) government organised a mega blockchain conference in October this year.
The differentiating factor from other official events was; the state government hired a startup to conducted a series of workshops and hackathons at 18 state engineering colleges as a precursor to the mega blockchain event.
"Over 2000 engineering students took part in workshop and hackathons, and participating teams developed nearly 300 ideas based on blockchain technology," says Rajat Shahi, organiser of the event.
According to Opinder Preet Singh, India Subcontinent Head, Ethlend, who was a mentor to teams and students during the blockchain event, "though there was amazing enthusiasm among students, the lack of a basic understanding of the technology and more importantly its application" was evident.
Five facts entrepreneurs should remember about blockchain:
1. The platform of future: Blockchain is the platform of tomorrow- so learn it, adopted and build on it.
Remember it is an "enabling and open source technology" -that requires imagination and innovation beyond the usual.
2. Evolving Technology: According to Devi, the technology is still in its nascent stage thus it is changing with each passing day.
As blockchain enthusiast, Choudhury, finds "each new day is more interesting than yesterday."
He further adds, its definition is also evolving, and it is getting appended to its meaning.
Thus, approach the technology and its application with an open mind only then you too will grow with the technology.
3. Risk of failure: Like in any other field; the startup build on blockchain will have the same odds of success or failure.
As the use of internet technology does not guarantee success to startups neither can blockchain.
4 Builds Peer-to-Peer relationship: Blockchain will drive peer-to-peer interaction as no technology has done before.
According to Choudhury, there is going to be a "paradigm shift" in the way we interact with others.
Thus, entrepreneurs should start investing quality time in learning human behaviour as that may become the currency of trade.
5. Bitcoin Vs Blockchain: As I write this article, bitcoin has crossed $16,700 per coin in valuation.
Experts are warning that the "FOMO-Fear of Missing Out" is driving the steep price rise.
India's central bank too issued a caution to people on the bitcoin.
Entrepreneurs should remember that bitcoin has emerged out of blockchain technology. It is a product, and demand drives its value.
Though the new technology has grabbed the world's attention, there is still an uneasy among discussion makers globally in adopting the technology.
Devi says, there is a lack of trust among common man when it comes to bitcoin there are not sure what it is
Isn't it an irony that the technology that is expected to build Trust - is struggling to gain the trust of people?
The blockchain technology is here to stay; startups such as Bitcoin may or may not survive the grind of the market- However, what is essential is that entrepreneurs should begin to learn, adopted and build on the new technology.(The author is Founder & CEO of Hyderabad based AskMentor. Views are personal.)