By Shehnaz Ahmed & Swarna Sengupta
India’s G20 presidency has been marked by an emphasis on leveraging digital public infrastructure (DPI) for inclusive progress and growth. The give attention to DPI is no surprise as India has emerged as a world chief in constructing DPIs similar to Aadhaar, Unified Funds Interface, and the Open Community for Digital Commerce. As India leads the dialog on DPIs and digital transformation on the G20, it’s an opportune second to discover the innovation potential of rising decentralised applied sciences like blockchain in designing such DPIs.
Blockchain expertise permits sharing ledgers throughout a number of events for recording info or transactions in a verifiable and everlasting method. For the reason that transactions are recorded and verified via a peer-to-peer consensus mechanism, there isn’t a reliance on centralised intermediaries. The decentralised nature of blockchain eliminates the danger of a single level of failure, thereby making a safer ledger. The ledger will also be programmed to set off transactions robotically via sensible contracts. This creates huge alternatives for blockchain to supply new companies and revamp current legacy techniques of recording transactions and knowledge. The distinctive traits of blockchain similar to immutability, auditability, and distributed verifiability promotes better transparency and accountability and may help in lowering cases of fraud, reduce down prices, and thereby unlock newer efficiencies.
There are various international locations which might be exploring the innovation potential of the decentralised and distributed nature of blockchain-based ledgers for public sector use. As per estimates, as of 2018, at the very least 46 international locations had launched or have been planning to launch over 200 blockchain initiatives. It’s predicted that by 2025, blockchain would account for 10% of the worldwide GDP. Blockchain experimentation for public sector use revolves round areas similar to land registries, well being registries, and the creation of digital identification. As an illustration, Estonia is a number one instance of blockchain-based e-governance companies. Blockchain types the idea of choose state registries in Estonia together with the property registry, healthcare registry, and enterprise registry. Turkey has additionally introduced its plan to launch blockchain-based digital identities for residents. Singapore can be exploring the potential of blockchain to revamp its fee infrastructure. Colombia has examined a blockchain-based public procurement system to extend transparency and accountability within the public procurement processes, thereby lowering corruption.
Earlier than deploying blockchain for DPI, policymakers should contemplate if blockchain is essentially the most viable possibility for such a service. If that’s the case, the precise deployment and scaling of such blockchain tasks have to be backed by strong governance and technical requirements. Blockchain networks include a number of events similar to builders, community operators, end-users, miners, and exterior gateways. The connection between such events is mostly ruled by contractual preparations. Nevertheless, for blockchain networks which type the idea of any DPI and entails a number of events and processes delicate private info, it is very important have standardised phrases of use. Authorized certainty governing blockchain use is vital for incentivising participation within the community and scaling up such options. This has additionally been emphasised by round eight out of 10 international locations which have launched a nationwide technique on blockchain, together with India’s Nationwide Technique on Blockchain. It has been discovered that in lots of international locations, the failure to account for such authorized certainty on the pilot stage has adversely impacted the scaling of such options. Current authorized and regulatory frameworks are designed round figuring out central factors of accountability and accountability which can be at odds with the decentralised nature of blockchain, thereby affecting the authorized feasibility of blockchain options. Additional, authorized recognition of blockchain-based data below nationwide legal guidelines might also want a separate examination.
In a current report, the Vidhi Centre for Authorized Coverage argues for a governance framework that units out quintessential phrases of use for the adoption and operation of any blockchain-based resolution in order that it could operate in a legally sustainable method. For international locations exploring blockchain expertise in growing DPI, these phrases of use will create an enabling surroundings for blockchain options, shield the rights of customers / contributors to the community, and shield the information saved on such techniques. Such phrases embrace the examination of authorized recognition of blockchain data below relevant home legal guidelines and the authorized construction of the entity / entities growing the answer. It is going to additionally entail setting out the authorized association to control the connection between totally different contributors within the community, and governance issues similar to eligibility standards of participation, delineation of rights and liabilities of contributors, and roles of duties of every participant, dispute decision, and willpower of possession of mental property rights within the resolution. The phrases of use must also lay down information governance requirements, danger administration methods, and the mechanism of removing and exit of contributors from the community.
The G20 presidency is a chance for India to develop a playbook for deploying blockchain applied sciences for DPI and forge a consensus on setting world requirements for rising applied sciences like blockchain.
Shehnaz Ahmed & Swarna Sengupta, respectively, fintech lead, and analysis fellow, Vidhi Centre for Authorized Coverage. Views are private.
