India’s Blockchain Revolution
The social philosopher Slavoj Zizek thought money was a problem with most modern markets: not the lack of it, but that we have to use it at all. Zizek thought coins and cash, what economists call “fiat currencies”, were undermining social engagement between buyers and sellers, relieving them of the burden of setting their own terms without recourse to an intermediary (including cash). And if that all sounds a bit far fetched, just call to mind the toe curling reticence of your average European tourist who is driven to negotiate face to face with a Levantine carpet salesman or the same tourist trying to buy petrol abroad when the pump is worked by an attendant: how much easier to have a clear price tag attached to a reliably defined product. Then we wouldn’t have to talk together at all. Of course that’s an extreme position and we’ll all have our own views on the strength or otherwise of Professor Zizek’s argument, but at heart it neatly exemplifies the key challenge confronting the Blockchain revolution. Fiat currencies and commercial intermediaries of all kinds will have little or no part to play in a Blockchain World, and that will fundamentally change the way that we all do business.
Blockchain technologies have a unique and broadly unparalleled potential to remove all economic intermediaries from economic transactions. In theory sovereign based monetary systems (fiat currencies in other words) will give way to more adaptable and universally acceptable crypto currencies; banks won’t be required to clear funds so will play little part in completing transactions, and a whole slew of internet intermediaries from price comparison websites to international brokerages will simply cease to exist. Instead Blockchain will enable the supplier and consumer to be placed in direct touch with each other: talking together over the Internet.
So how is that all going to work?
Well, imagine a (hypothetical) spreadsheet, an enormous spreadsheet that records a near infinite number of transactions and is endlessly getting bigger across a chain of individual computers across the world. This ledger is not designed to “close off” data in the hands of any single user (like a bank) or to store the data as it grows: its function is to keep the data open to all, update the data series and ensure its overall integrity. That, in essence, is what Blockchain is all about: a universally shared store of constantly evolving data that can be updated and reconciled. Nothing is stored in any central location; everything is public, easily verifiable and available.
So in any commercial transaction conducted on a Blockchain platform, there will never be a central intermediary like a Bank or a Government agency (or at least there is no need for one) because nobody controls the data except for the parties to the transaction themselves. Blockchain enables full end-to-end implementation of transactions (including validation and authorisation of counterparties). No wonder then that former US Treasury Secretary Larry Summers was enthusiastic about its future:
“Is Blockchain technology going to be fundamental? I think the answer is overwhelmingly likely to be yes”.
Identifying a sufficiently resilient platform is obviously of crucial importance in all of this, given Blockchain is a decentralised system with no regulating agency having control over all of the material data. The market has not been slow to react with several platforms that tick all those boxes and as you might expect from the fastest growing large economy in the world, India is at the forefront of the process.
Thirty Banks on the subcontinent have already launched projects for exploring and implementing segmented platform solutions based on Blockchain technology all of which are proving robust and verifiable: including platforms for public sharing of KYC data, streamlining loan syndication procedures and securing real time trade finance. Yes Bank has launched a Blockchain platform to digitize vendor-financing issues on behalf of Bajaj Electricals and ICICI Bank has also introduced international trade finance and remittance platforms using Blockchain. And as a good example of what can be achieved in terms of transactional speed, look no further than the platform recently launched by Kotak Mahindra Bank that reduces the time taken to issue a letter of credit from 30 days to 2 hours.
Whilst other developed economies, and particularly the Federal Exchange in Washington seem to hesitate in embracing Blockchain as part of the new economic order, it would seem that India is already grasping the opportunities it offers with both hands.
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I watched with interest earlier this year when apparently throwaway comments made by India’s Finance Minister in a debate on the Union Budget caused the value of Bitcoin to soar on international exchanges. It seemed to me then that whatever the virtues or otherwise of Bitcoin, and we all have our own views on that, the global reaction sent a strong message of support for India as a future powerhouse of the Blockchain Revolution.
I have no doubt but that the innovations Blockchain has to offer will fundamentally change the way that we do business and I’m very proud that Red Ribbon will now play a part in that process. As the article rightly says, India is now at the forefront of key developments in the Blockchain and Crypto Currency sectors and I want our investors to be able to share in the exciting opportunity that offers.
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