Funding prospects for Blockchain Start ups in India
Blockchain, brainchild of the Anonymous founder/s of the World’s first
crypto-currency, Bitcoin, Satoshi Nakamoto is often referred to as “The
Backbone of the new Internet”. Initially conceptualised in 2008 for Bitcoin, blockchain
has found its use in several other fields.
WHAT IS BLOCKCHAIN?
Blockchain is an open and distributed ledger, which can record
transactions between two parties in a verifiable and permanent way. Once
recorded, the transaction data cannot be modified retroactively, without
alteration of all subsequent blocks. This also allows users to verify and audit
transactions without much cost.
Blockchain is a continuously growing list of records, linked and
secured using cryptography (secret codes which prevent third parties or the
public from reading the transaction data), wherein each Block contains a
timestamp and transaction data, managed by a Peer-to-Peer, P2P (User to user)
network.
Person
A requests a transaction involving crypto-currency, records, contracts, or
other information
|
→
|
The
requested transaction is broadcast to a P2P network consisting of computers,
known as Nodes
|
→
|
The
network of Nodes validates the transaction and the user's status, using known
Algorithms
|
↓
|
||||
The
transaction is complete
|
←
|
The
new block is then added to the existing blockchain, in a way that is
permanent and unalterable
|
←
|
The
verified transaction is combined with other transactions to create a new
block or data for the ledger
|
Point to remember here is that
the transaction data has no physical form, existing only on the network, and
has no intrinsic value to third parties.
Quite simply, blockchain is an autonomously managed and regularly
reconciled digital ledger, which can record not just financial transactions,
but everything of value. Blockchain enables the exchange of value without any
centralised intermediation by arbiters of money and information. It is a kind
of a self-auditing ledger which reconciles itself every 10 minutes.
ADVANTAGE OVER CENTRALISED DATABASES:
Centralised data is controllable and hence the data is prone to
manipulations and theft. On the other hand, in a blockchain, there are no
centralised points of vulnerability for the information to be hacked and
corrupted. Because of storing blocks of identical information across the
network of the blockchain, it cannot be controlled by a single entity, has no
single point of failure, and hence cannot be modified retroactively. Anything
that happens on a blockchain is a function of the network as a whole.
Further, blockchain reduces the TAT of processes, and because of being
distributed, it makes data transparent for everyone involved. Blockchain
technology can help make even the traditional processes faster, more accurate,
and secured, while drastically reducing the costs involved in Database
Management.
The only reported problems in the blockchain technology have been due
to human errors and bad intentions, and not because of any flaws in the
technology.
APPLICATIONS OF BLOCKCHAIN IN
INDIA:
The distributed nature of blockchain makes anything based on it more
cost-effective, efficient, and secured. It can be used to upgrade many economic
and social systems, like:
i.
Banking:
Most, if not all, Banking
systems are built around Centralised Databases. The costs, labour, time, and
risks of frauds involved in reconciliation and processing of billions of
transactions is a challenge that the Banking Industry, even after so many up-gradations,
has not been able to address. The global success of Bitcoins and other
crypto-currency has shown the Banking system how advantageous blockchain
technology can be, when it comes to reducing online banking frauds.
Blockchain can provide
the ultimate solution for solving the costs involved in KYC Verification, Due
Diligence, and Credit Underwriting, by allowing the independent KYC
verification, due diligence reporting, and credit history of an individual or a
company done by one entity to be accessed by every other organisation. This can
also be used for countering Money Laundering.
Blockchain can also
make clearing and settlements faster, less expensive, and even more secured
than it already is.
Many Banks have
already invested a large amount in research related to migration of their
Banking Systems on to Blockchain Network.
ii.
Record
keeping at Registrar of Properties:
Committing
property frauds and use of black money for sale-purchase of properties can be
drastically reduced if the existing system is upgraded to blockchain or a
similar technology. Andhra Pradesh government has tied up with a Swedish
start-up, Chromaway, to build a blockchain based Land ownership system, to
eliminate land fraud and corruption.
iii.
Data
Management in Public Sector:
There has been a
huge amount of debate about the safety and security of Aadhaar Databases, and
fears of surveillance. Blockhain can eliminate these risks and also be used to
store information related to birth, death, voter registration, issuance of PAN
Card and Driving Licence, Ownership of vehicles, court cases, police complaints,
etc. Individuals and other entities will own the data that belongs them.
iv.
Stock
Market trade:
Blockchain can
reduce the risks of frauds and operational errors in Stock Market trading. Not
to forget here that the transactions would become almost instantaneous. NASDAQ
and Australian Securities Exchange are already exploring blockchain to reduce
costs and improve efficiency.
v.
Cloud
Storage:
Blockchain
provides the added security of data not getting lost or corrupted.
vi.
Supply
Chain:
Blockchain
establishes a shared, secured record of information flows for the supply chain
network. It enables faster, permissioned, and auditable B2B interactions
between buyers, sellers, and logistics providers. The shared version of events
improves supply chain efficiencies, better multi-party collaboration, and
streamlined resolutions in case of disputes.
vii.
Healthcare:
Blockchain can
help in tackling issues of counterfeit drugs, by tracing each transaction
between drug manufacturers, wholesalers, pharmacists, and patients. It can also
be used to improve and authenticate health records on sharing basis, for better
treatment.
viii.
Intellectual
property:
Blockchain can be
used to catalogue and store Intellectual Properties in a digitally secured
manner. It has the potential to solve the problem of authentication of
ownership for Intellectual Properties, and allowing owners to see who is using
their work.
ix.
Music
Distribution:
Similar to
Intellectual Property, musicians can catalogue and store their music in a
digitally secured manner, and get paid as and when the music is purchased /
played. In addition to this, collaborations and licensing will also become more
efficient. It will work on the concept of Peer to Peer Music sharing, where the
intellectual property rights of musicians are protected, and they are paid for
their hard work.
x.
Social
Networking:
Blockchain can make
social networking more private and profitable for the users. It can help users
on social networking websites and apps decide which data to be made available
for third parties to view and use, and get paid for it. Wouldn’t that be fun?
This is not a dream, but a reality with Obsidian Messenger.
xi.
Real-time
Car Pooling:
Imagine a
self-managed real-time ride sharing app, as an alternative to Ola and Uber,
where drivers get rewarded for offering a shared ride. La Zooz’, an Israel
based start-up is in its testing phase, and is expected to emerge as a cheaper
alternative to Uber globally.
The understanding of blockchain among people, to a very large extent,
is limited to bitcoins. However, in an era when India is witnessing innovative
solutions using technology for structural problems, blockchain has opened the
doors for Start-ups and Small Businesses to devise and adopt block-chain based
solutions. If you are facing systemic or structural problems in your business,
it would be wise to see if a blockchain based solution is feasible. After all,
necessity is the mother of all invention!!!
Debt (Business Loan) and Private Equity funding options are readily available for start-ups working on Blockchain concepts. Visit https://msmemitra.com to make an informed decision about the most suitable Financing options available for your blockchain startup.
If you have developed a blockchain based solution for any worldly problem, and are looking to raise funds to scale up, you can also contact us at support@msmemitra.com
If you have developed a blockchain based solution for any worldly problem, and are looking to raise funds to scale up, you can also contact us at support@msmemitra.com
Thank you for reading.
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About the Author: Samved Bharadwaj is the Managing Partner of Msmemitra.com Consultancy Services LLP. A former banker, Samved decided to start Msmemitra.com with Ashish, to educate and help small Businesses scale up.
With MSMEmitra.com, make an informed decision about the most suitable Financing Options available for your Business, and avail the benefits of the industry and need specific schemes and subsidies of the Central Government, applicable for your Business.
With MSMEmitra.com, make an informed decision about the most suitable Financing Options available for your Business, and avail the benefits of the industry and need specific schemes and subsidies of the Central Government, applicable for your Business.
General Research Sources: https://blockgeeks.com/guides/what-is-blockchain-technology/
https://en.wikipedia.org/wiki/Blockchain
Disclaimer:
This write-up has
been collated from various publicly available materials and secondary data, and
MSMEmitra.com does not have any copyrights over the content, or guarantee its
accuracy.
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