India’s attempt at blockchain | Financial Express

By Rajagopal Menon

Crypto, or cryptocurrency, has been a polarizing topic for years. Its evangelists believe that cryptos are the future – the value of the internet – while its opponents see them as speculation with no real underlying value or even as a scam. A lot also has to do with the times we live in, where everything is binary: for or against. Some of that comes from a lack of understanding — many people don’t understand how cryptocurrencies work or what they’re used for. The fact that cryptos are extremely volatile, with prices fluctuating wildly over short periods of time, attracts unwanted attention. This young industry is also dealing with its own set of problems, such as bad actors, bankruptcies, and numerous scams.

While the debate rages, the really smart people have understood what this technology can really do and have quietly gone about their business, be it investing, building or leveraging crypto in their business. In this article, we will look at what is happening in the space from an investor’s point of view and how some companies are using crypto.

The Indian government’s stance on cryptocurrency has been somewhat mixed; The Reserve Bank of India’s position is well known. The government has taken a hands-on approach to crypto. They don’t want to roll out the red carpet, but at the same time they don’t want to kill the industry. The aggressive tax laws announced in the previous budget remain unchanged, although data shows they have been instrumental in driving trading volumes to foreign exchanges.

Trading volume on India’s largest crypto exchange was 48 billion last year; after the new tax laws, the volumes have fallen to 10 billion. Hopefully the government will change the tax laws to level the playing field for Indian exchanges.

There are several Indian blockchain startups entering the market, such as Signzy, which uses AI and blockchain to create user-friendly digital banking infrastructure. Polygon is another well-known example. It offers a fast, low-cost platform for blockchain transactions. The Indian blockchain market is expected to continue growing, with the global blockchain market projected to reach a market size of $69 billion by 2027. Crypto entrepreneur Nischal Shetty, the co-founder of WazirX, has already raised $18 million in seed funding for his new project, Shardeum . Foreign investors are also interested in Indian crypto and blockchain startups, although local investors remain wary of the industry.

Although the RBI is very tough on crypto, it was one of the first central banks to start CBDC pilot programs. India is a world leader in digital payments and the government and the RBI seem determined to leave no stone unturned to maintain this lead. The use of CBDCs has advantages over other payment methods, including a reduction in operating costs associated with physical cash handling, promoting financial inclusion, bringing resilience, efficiency and innovation to the payment system, improving settlement system efficiency and promoting innovation in cross-border payments.

The Indian industry also seems to have taken a shine to blockchain. Enterprise blockchains, also known as private blockchains, use distributed ledger technology to produce and manage digital assets in a secure and decentralized manner. Enterprise blockchain is often a permissioned blockchain system, with access limited to authorized parties. Validators monitor the blockchain ledger to ensure data quality and consistency. The system is fast and scalable for high volume transactional organizations. It can be used in a variety of industries such as financial services, supply chain management, manufacturing and many more.

Here are some examples of Indian companies using blockchain technology:

Kotak Mahindra Bank: Kotak Mahindra Bank is India’s largest private sector bank and is known for using blockchain technology in various ways. One of the most notable uses of blockchain by the bank is in trade finance transactions, where it leverages Enterprise to expedite, secure and clarify trade finance transactions between importers, exporters and others.

Hindustan Unilever: Hindustan Unilever is India’s largest consumer goods company and has used blockchain technology to track and manage its supply chain. With Enterprise, the company can track goods and supplies in real time, eliminate fraud and ensure compliance.

Tech Mahindra, an Indian IT services company, has used blockchain technology to build a next-generation supply chain platform that provides full visibility and control over all supply chain operations. The platform leverages blockchain to enable real-time tracking, visibility and traceability of goods and transactions, as well as automated payment processing.

State Bank of India (SBI), India’s largest public sector bank, is part of a consortium of banks that has formed a new company called Indian Banks’ Blockchain Infrastructure Company (IBBIC). The company aims to use blockchain technology to operate letters of credit, a move that could be a boon for MSMEs.

NSEIT: NSEIT, an Indian IT services firm, created an enterprise blockchain system for employee credentials. The technology decentralises and manipulates personnel credentials such as degrees and certifications.

Overall, Indian companies and investors are increasingly looking at opportunities in crypto and blockchain technology. This is shown by the growing number of startups, funding rounds and companies incorporating blockchain. However, the regulatory environment and uncertainty remain a concern for some investors and companies.

The author is Vice President, WazirX

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