q-blockchain-technology-is-upcoming-niche-technology-and-adoption-of-the-same-can-lead-to-some-breakthroughs-in-some-major-sectors-critically-analyse

 

Q) Blockchain technology is upcoming & niche technology and adoption of the same can lead to some breakthroughs in some major sectors. Critically analyse.

Why this Question

Important part of GS paper- III. 

Key Demand of the Question:

Give a detailed account of the benefits of using blockchain technology in India across different sectors and the challenges associated with it. 

Directive:

Critically analyse - The key to tackling this question is providing ample evidence to support the claims. Ensure that the analysis is balanced by shedding light on, and presenting a critique of, and alternative perspectives. Present extensive evidence taken from a varying range of sources.

Introduction:

Give an overview of blockchain technology and its mechanism.

Body:

In the first part, highlight the multi sectoral advantages- health, education, etc. of using blockchain technology in India.

In the next part, highlight the challenges associated with the use of blockchain technology. 

Conclusion:

Conclude with a way forward.

Model Answer 

A blockchain is a consequential list of blocks linked using cryptography where each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. It works on the peer to peer mechanism. It is an anonymous online ledger that uses a data structure to simplify the way we transact online.

Advantages of Using Blockchain 

  1. Decentralization- A transaction in the blockchain network, it is conducted between two peers without authentication from the central agency. This significantly reduces server costs and mitigates performance bottlenecks.
  2. Persistency- Since every transaction in blockchain is recorded, it is nearly impossible to tamper it and any falsification can be detected easily.
  3. Anonymity- this mechanism ensures users the highest privacy during the transactions.
  4. Auditability- since every transaction is recorded and validated, it is easy to verify and trace previous records. it does improve the transparency and auditability of transactions.

Sectors in which Blockchain can be used 

  1. Banking- it disrupts the commercial banking system by providing a peer-to-peer payment system with high security and low fees. Also, with blockchain, cryptocurrency can be a thing of immense use.
  2. Cybersecurity- it can secure our data against unauthorized access and tampering. All the information stored on the blockchain network is verified and encrypted using a cryptographic algorithm – which leads to no single point of entry for a wide-scale attack.
  3. Supply Chain Management- it can trace all the steps of a supply chain. This provides permanent transparency and validation of transactions shared by multiple supply chain partners.
  4. Healthcare- it eliminates the need for a central authority and enables rapid access to data. Each block is connected to another block and distributed across the blockchain nodes. This makes it easy to store and  retrieve healthcare data of persons, treatments they have received, etc.
  5. Governance- most importantly, using blockchain can end voter frauds. The voters can vote online by revealing their identities. Using blockchain, officials can count votes with absolute accuracy, knowing that each ID can be attributed to only one vote. Other governance applications include digital asset registries, notary services and taxes.

However, user blockchain certainly have some drawbacks that Include complex mechanisms, Use for illegal purposes, difficulty in tracing the user, etc. But it definitely has the potential to bring a revolution just like the dot com revolution and facilitate the growth of industries, businesses and efficient government services.