DOING BUSINESS OF BLOCKCHAIN IN INDIA.

Transcription

1 DOING BUSINESS OF BLOCKCHAIN IN INDIA

2 WHAT IS BLOCKCHAIN TECHNOLOGY? The business world has been abuzz about blockchain technology across many industries, ranging from finance to healthcare. Blockchain appears to have significant potential to add a new element to the revered double-entry accounting method on which the accounting industry is based. Bitcoin/cryptocurrency is one of the application of broader blockchain technology or the blockchain. Blockchain is an online register or a ledger of digitally recorded transactions which is encrypted in the form of blocks where each block is connected by a network of computers which store these blocks, together forming the Blockchain. In normal business transactions, a physical ledger is maintained by a central authority and not by participants. In physical ledger, any update or correction has to be done in all the ledgers maintained separately by everyone, which increase the possibility of human error or fraud along with frequent delays and potential losses for all stakeholders. The blockchain, however, is a distributed ledger which resides on each participant s device. The device of each participant or user is usually referred to as a node, which forms part of a network nodes. Every node must authenticate every transaction in the network, which is a unique feature of blockchain. In blockchain, there is no requisite for any trust on third party, as the blockchain ensures transparency and integrity of transactions purely through mathematics.

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4 1.TECHNOLOGY Backend database that maintains a distributed ledger openly 2. BUSINESS Exchange network for moving value between peers 3. LEGAL A transaction validation mechanism not requiring intermediary assistance

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6 1. Platforms- Ethereum, etc. Sphere of Blockchain Technology 2. Blockchain Solutions- Azure Blockchain as a Service, Eris etc. 3. Applications- Financial Services/Fintech, Real Estate, Legal Services, Government Services, Platforms Smart Contract is the ability of Healthcare, Insurance, Energy, etc. Blockchain Solutions blockchain technology to attach Smart Contract s business logic to the transactions. For executing smart contracts, computer protocols with terms & Applications conditions of a contract are embedded in blockchain database, where the terms are made partial or full self-executing, self- enforcing or both. Are Smart Contracts enforceable under Indian Contract Law,1872? In larger sense, it can be argued that Smart Contracts fulfill the necessary criteria of traditional contracts such as offer, acceptance, free consent & valid consideration. Moreover, Smart Contracts prohibits unilateral non-performance or non-payment which can be additional layer of protection under Smart Contracts in comparison to traditional contracts.

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8 Business Model Analysis Bitcoin was the first blockchain technology created in 2009, as a kind of virtual currency database, where all the transactions could be stored without any banks or governments involved. And at present, several corporates, startups, government and other agencies are looking for similar databases-often independent of virtual/crypto currency to solve some of the most intractable issues facing society. Many sectors such as finance, mobile app, healthcare, real estate, fintech, regulatory, insurance and others have a huge market potential for blockchain technology.

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15 Legal Framework & Blockchain Technology 1. Bitcoin/Cryptocurrency one of the many outcome of Blockchain Technology had already stirred up regulatory & legal enforcement in several countries including India. Some of the countries had put blanket prohibition like Bolivia etc. Whereas some country structured it under its legal framework like USA, Japan etc. and there are few countries which are still yet to decide the fate such as India etc. 2. At present, Reserve Bank of India had shown positive response and had already in process of coming up with framework, as Reserve Bank of India had already realized that Bitcoin/crypto currency may or may not be allowed, but they can t ignore the blockchain technology and its usage which can be business & consumer friendly. However, there are some serious legal issues, which might be consider before venture into Business of Blockchain: i. Pseudonymity, KYC & Legal Enforcement; ii. Privacy & Cybersecurity; iii.accountability of the parties involved in transactions; iv. Irreversibility which can be cause of problem for fraudulent transactions once done and can t be reversed by any single or central party; v. Jurisdictional issues, Regulatory Authority and applicable laws vi. Consolidation of the present traditional legal system and blockchain technology along with uncertainty in regulatory framework mandates to be extra judicious and compliant.

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