Disclaimer:-(View expressed in this blog are completely unbiased and are not motivated by my investment in cryptocurrency as an asset class)
Blockchain technology is most simply defined as a decentralized, distributed ledger that records the provenance of a digital asset.
Because of its decentralized and distributed ledger, This technology is considered a major disruptor for payments, cyber security, and health care, etc. To delete a single copy one has to simultaneously delete it from million of computers present on a blockchain. So it is impossible to do it from available technologies that are available to date. However, it may be done in the technologies from future like quantum computing which is also going to be another disruptor.
This technology is often known as web 3.0. In web 1.0, One just only sees what is just happening and is not able to interact with the things available over there. In web 2.0, One can also interact on many websites and apps like Facebook, Instagram, etc. But there is a shortcoming up to web 2.0 where you are interacting with a server like youtube, Facebook, Instagram which has its monopoly in showing the data. To remove this monopoly, the Concept of decentralized, distributed ledger came into existence which has given birth to web 3.0(blockchain technology).
The first use case of blockchain technology which is now day prevailing in the market is cryptocurrency. To understand why cryptocurrency as a use case has evolved we first need to understand the background of payment that was present till now.
In earlier times, People use to carry gold, silver, bronze coins to purchase the things that they need for daily use. These precious metals hold a good value because their quality doesn't deteriorate with time. However, It was difficult to carry them. So central bank of every country came with the concept of nationalized currency where they will issue the currency based on equivalent forex reserves, gold for the same available at their disposal. To defeat deficit demand, Many central banks also issued currency without keeping equivalent forex reserves and gold. That's why we have also seen gold has never lost its value. Because of its very nature of usability anywhere across the globe and its ornamental value.
Now, The existing system has also certain limitations like the value of the rupee or any currency is controlled by a single central entity. And it cannot be used outside your country. To use it outside their country, One has to do the exchange and pay hefty exchange charges.
So here is the concept of blockchain used for creating cryptocurrency whose price is not going to be decided by govt and which can be used anywhere in the world and is also easy to carry. Therefore the use of this technology removes limitations of precious metals as well as nationalized currency.
However, Issues related to terror funding which is present now too can also be tackled using stringent KYC norms.
Second use case, Decentralized apps where you will be able to create a decentralized app using solidity programming language on Ethereum blockchain platform or any other blockchain platform. This will be the future of app development in the world. I am an investor and user of 1 Inch, Uniswap, pancakeswap was which are decentralized trading apps in nature.
The third Use case, NFT A non-fungible token (NFT), is a unique and non-interchangeable unit of data stored on a digital ledger(blockchain). NFTs can be associated with easily-reproducible items such as photos, videos, audio, and other types of digital files as unique items (analogous to a certificate of authenticity), Use of blockchain technology to give NFT a public proof of ownership. It has its use case in digital art, the virtual world(metaverse), music, film, etc.
Fourth use case, Defi is an umbrella term for a variety of applications and projects in the public blockchain space geared toward disrupting the traditional finance world. Inspired by blockchain technology. In the existing setup, the bank does the only job of taking money from one person and giving money to the needy in that process bank earns brokerage. However, NPA issues arise which lead banks to bankruptcy. Defi provides decentralized platforms using decentralized apps where borrowers and sellers meet in a very transparent way and a smart contract is generated b/w them. On a lighter note, This use case might remove political cases like Vijay Mallya, Nirav Modi.
Now coming to the stand of the Indian govt on it, In 2017 our finance minister has said that they ban cryptocurrency but they encourage the underlying blockchain technology. This statement is a complete paradox where someone says that they support oranges but don't allow them to drink the juice made from them.
There are no indigenous blockchain platforms that are available in India as of 2021 also even after words of encouragement from our honorable finance minister. However, the Ethereum blockchain platform is coming with Ethereum 2.0 which will remove issues of higher transaction fees and speed, and other blockchain platforms have emerged like Sloana, etc.
In the next 5 years, most of the apps are going to be shifted to the decentralized environment where we may have to purchase Ethereum virtual machines on the Ethereum blockchain platform just like we purchase windows, red hat, and VM ware cloud from other countries.
It is high time govt should show a progressive mindset and not only promote these technologies but also build a conducive environment and infrastructure for the same. So we may not lag behind the world.
Jai Hind
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