What do you understand by Blockchain? Enumerate its potential applications. (10 marks)
- Introduce to the concept of Blockchain technology
- Briefly mention how Bitcoin became as success built on this technology
- Discuss potential applications including smart contracts, land titling, governance improvement etc.
- Conclude appropriately
A blockchain is a decentralized, distributed and incorruptible digital ledger (or a database) that is used to record transactions across many computers. Its key aspects include:
- Incorruptibility – a blockchain cannot be controlled by any single entity and has no single point of failure
- Distributed – the ledger is replicated in a large number of identical databases, each hosted and maintained by an interested party
- Peer-to-peer network – There is no need for third-party intermediaries to verify or transfer ownership
The popular digital cryptocurrency, Bitcoin, was build on the foundation of the Blockchain Technology. Since then, many potential applications of this technology have been noted, with many already in the works.
- Smart contracts: Distributed ledgers enable the coding of simple contracts that will execute when specified conditions are met. It eliminates the need for middle-men. Thus automated payments and the transfer of currency or other assets can happen once negotiated conditions are met.
- Supply chain auditing: Consumers increasingly want to know that the ethical claims companies make about their products are real. Distributed ledgers provide an easy way to certify that the backstories of the things we buy are genuine. Transparency comes with blockchain-based timestamping of a date and location that corresponds to a product number.
- Land title registration: As Publicly-accessible ledgers, blockchains can make all kinds of record-keeping more efficient. Property titles are a case in point. They tend to be susceptible to fraud, as well as costly and labour intensive to administer.
- Improving Government Efficiency: For example, Blockchain can provide a novel, decentralized record management system for data sharing.
- Digital voting: Using the blockchain, a voter could check that her or his vote was successfully transmitted while remaining anonymous to the rest of the world.
Actual Blockchain-led transformation of business and government is still many years away, but it has the potential to create new foundations for our economic and social systems. In a good step, NITI Aayog is working on a position paper on blockchain technology and its applications in governance.
Subjects : Science and Technology