While clearing the apprehensions on blockchain’s scalability and interoperability, Jitan Chandanani, Blockchain Leader, IBM India and South Asia, spoke to Amit Singh on how the technology is likely to transform businesses in India
How do you think blockchain will affect businesses in India?
The approach with blockchain is little different as it connects various ecosystems and businesses where, for instance, a bank can work with other financial institutions and the industry to offer new products. This will create a completely new revenue stream.
For instance, if an organization implements a new procurement solution, it doesn’t benefit its suppliers, banks or the logistics partners, but only the organization itself. However, blockchain enables building solutions for the benefit of all the stakeholders in an ecosystem. Hence the potential for growth is across the board.
The opportunity for blockchain is gigantic as it impacts almost every sector of the economy enabling these sectors to work much closer with each other. That’s something which makes this technology quite exciting.
What are the factors driving growth in the blockchain market in India?
The biggest factor which would drive the blockchain market in India is the public sector and government. The kind of interest shown by the regulatory authorities and public sector undertakings is quite impressive. We have seven state governments trying blockchain including Andhra Pradesh, Rajasthan, Telangana, Maharashtra, and West Bengal. In addition, we have regulatory authorities like TRAI, which has mandated the use of DLT (Distributed Ledger Technology) for DND; RBI has created a new frontier unit to figure out how blockchain will benefit the banking segment; IRDA and FSSAI are evaluating blockchain. If the regulators accept the technology as a standard, it will be a stepping stone and will ease the adoption of the blockchain.
In addition, there are large tier-3 and -4 markets in India which are still untapped. Blockchains are enabling to tap these markets by building connectivity. As blockchains work over the cloud, they are independent of the underlying architecture. It can connect diverse platforms like SAP, Tally, Oracle, and a smartphone. India has seen a boom in the Internet connectivity as well as the spread of the smartphones. In this scenario, blockchain prepares a perfect setup for technology common play.
We believe that the regulatory interest and sprawling untapped markets will make India as the front-runner in the Asian subcontinent for blockchain. In fact, the diversity of the use cases that India offers has no match in other territories. In other territories, most of the use cases are on financial services and specific capital markets, however, in India, we are seeing use cases across banking, telecom, and insurance.
Many experts warn that scaling up could be a serious problem for Blockchain. How do you think that Blockchain is a viable and scalable solution?
For the real-time settlement use case like equities, blockchain is not a right technology. In fact, business case validation is crucial before opting for blockchain to replace a process. Blockchain makes sense only in the case where business case allows the latency from blockchain as the permissible business acceptable latency.
On the scalability front, Bitcoin, for instance, has about 3-5 million nodes, which is not matched by any centralized utility with so many nodes. So scalability is not an issue with blockchain.
Further, the first Bitcoin transaction happened in 2010 and till now the total size of the Bitcoin database is about 150 GB. Moreover, unlike a typical mail system, blockchain puts the document at the shared database and sends a reference or hash of the document to every participant. Hence, blockchain helps in reducing the size of storage. Most importantly, unlike Bitcoin which is a public blockchain and where everyone gets a copy, in the enterprise blockchain, only concerned persons receive a copy.
Hence, I can’t agree with the apprehensions around size and scalability of the blockchain.
However, we still see that blockchains don’t talk to each other. Don’t you think it will create a major problem in communications between various blockchains?
That is something where we as IT companies have to come and make the technology work. The current stage of blockchain can be compared with dial-up Internet era. As more adoptions happen and more problems are getting solved, we are evolving the technology.
In fact, we are collaborating with other IT organizations to establish and evolve a common standard. There is a lot of efforts going on in the back-end. Currently, we do have solutions to establish connections between different blockchains but it hasn’t reached the level of interoperability.
Do you see any convergence happening between AI and blockchain?
A lot is happening on this front. AI requires a lot of data to be fed and a lot of training of the system. Also, if we are not sure about the data authenticity, we would not like to feed that into the AI system as it would result in wrong outputs.
On the other hand, blockchains are enabling transactions to be done in a way where validation and ratification take place and only the right transactions get finalized. Hence, we can trust the information provided by the blockchain.
We are seeing many use cases where AI systems are being implemented over the blockchain. Also, IoT technology is being integrated with blockchain to make the inputs provided by the IoT devices more trustworthy. As blockchain evolves we will see a large integration of blockchain with AI and IoT.