Applications of Blockchain (Mint)
Mains Paper 3: Science and Tech
Prelims level: Distributed Ledger Technology
Mains level: Application of Blockchain technology in India
- Blockchain Technology (also called Distributed Ledger Technology (DLT))
allows for the entire financial services industry to dramatically optimize
business processes by sharing data in an efficient, secure, and transparent
- The existing capital markets infrastructure is slow, expensive, and
often requires several intermediaries. The bureaucratic nature makes
performing and receiving financial services difficult.
- Many new blockchain capital market inventions are entering the market
and improving work flow and helping to cut overhead dramatically, while
allowing entities to deliver better, more secure and private services to
businesses and individuals.
- Blockchain Technology is a potential vehicle to improve government
services and foster more transparent government-citizen relations. It
creates a trustless environment for regulatory activity and works to combat
slow, expensive multistep processes that require several intermediaries.
- Through blockchain technology, governments can improve the way they
deliver services, prevent tax fraud, eliminate bureaucracy, and reduce
waste. Digital cash transactions can help reshape financial transactions
between the government and its citizens. Decentralized tech offers hope that
governments can achieve more streamlined operations and pare
down back-office operations.
- Patient Record Management Blockchain based record management system can
enable companies to simplify claim processing, secure medical records,
monitor the pharma supply chain and collaborate with network stakeholders.
- Blockchain technology provides the ideal engine to power digital
identities. While digital identities are emerging as an inevitable part of
the connected world, securing online information is coming under intense
- Blockchains based identity systems can provide a solution to this issue
with hardened cryptography and distributed ledgers.
- Blockchain can be used in tracking billions of connected devices, enable
the processing of transactions and coordination between devices, allow for
significant savings for IoT industry manufacturers.
- This decentralized approach would eliminate single points of failure,
creating a more resilient ecosystem for devices to run on.
- The cryptographic algorithms used by blockchains would help to make
consumer data more private.
- Cryptocurrencies provide people across the globe with instant, secure,
and frictionless money and blockchains provide the permanent record storage
for their transactions.
- Prior systems required users to trust a central authority that the
monetary supply and payment transfer will not be tampered with.
- Blockchain technologies obsolete this method of payment transfer by
providing a trustless environment so that there is no longer a need to rely
on a third-party to ensure payment transfers, thus creating a Person-to
- Blockchain technology will inevitably become a foundational pillar of
the real estate industry. In a mostly paper-record based industry, block
chain real estate allows for an unparalleled upgrade in how records are
stored and recorded.
- Utilizing blockchain applications in essential functions such as
payment, escrow, and title can also reduce fraud, increase financial
privacy, speed up transactions, and internationalize markets.
- Managing the modern, often global, supply chain is a series of intensive
processes that require perfect orchestration between many moving parts and
Applications of Blockchain in India:
- Ayushman Bharat scheme extends a healthcare cover of Rs 5 lakh to up to
10 crore financially poor people and families. As the government is making
huge investments in making healthcare available to all, blockchain tech can
further help with this imperative initiative.
- The healthcare industry in India lacks a definitive system that is quick
in recording the extensive data, in addition to making the same easily and
securely shareable. Often, a large amount of time is consumed in obtaining
the same data that may otherwise be invested in extending the best of care
to the patients.
- The data thus stored via blockchain tech can further be linked with a
global information network, without compromising on security and also making
it available to healthcare providers across the network.
- Banking is one amongst the foremost sectors that stands poised to be
disrupted with blockchain technology. It will not only offer accuracy and
security, but will also aid the government in expediting financial
- With blockchain, the government can establish online identities of
individuals and their family associations, and allow individuals to operate
bank accounts, transfer money, apply for loans, and more, thereby taking
financial inclusion to a whole new level.
- Blockchain will not only be helpful in keeping the voter’s information
and identity a secret but also present a pragmatic way for casting votes,
and keeping a track and count of the same.
- When adopted, blockchain tech would completely weed out any chances of
fraud or foul play, hence ensuring no hiccups in the victory of democracy.
- The food supply chain is one characterized by asymmetry of information.
The complex network comprises farmers, brokers, distributors, processors,
retailers, regulators and consumers. Improved data sharing will result in
stakeholders getting their dues (particularly poor farmers with small land
holdings) and consumers having control on food quality.
- Two-thirds of pending civil court cases pertain to disputed land
records, title dispute is central to the mess.
- Information on land records, exist in silos and in no uniform format
which makes retrieval and sharing so very time-consuming.
- Abysmal land records necessitate that foremost, there be a common
consensus on ownership.
- Blockchain can play a large role in resolving these issues.
Limitations of Blockchain:
- Although the technology itself is revolutionary, there are certain
blockchain limitations that have cropped up. These blockchain limitations
don’t make the technology less revolutionary, but they have raised questions
about its efficiency and reliability.
- Every blockchain transaction must be digitally signed and verified using
a public or private key cryptography scheme. This signature verification
process is very complex to compute and this consumes time.
- In a blockchain network, for every node to be processed, it has to
traverse and process every intermediate node independently to reach the
- In contrast, a centralized database system can processe nodes in
parallel without any dependencies from the other nodes. Thus, the redundancy
involved in blockchain technology affects its performance.
- In a decentralized technology like blockchain, every transaction made
must ensure that every block in the blockchain network must reach a common
- Depending on the network size and the number of blocks or nodes involved
in a blockchain, the backand-forth communications involved to attain a
consensus can consume a considerable amount of time and resources.
- Like all other distributed systems, blockchain is not 100 percent
resistant against bad actors who can corrupt the network.
- For the blockchain to remain stable and to avoid corruption in a
network, it needs a huge set of users and nodes connected with a robust
- Because a blockchain is an immutable distributed chain of blocks, the
size of the blockchain grows at a very rapid pace, and this can cause
serious storage concerns.
- Blockchain relies on encryption to provide its security as well as
establish consensus over a distributed network.
- This essentially means that, in order to “prove” that a user has
permission to write to the chain, complex algorithms must be run, which in
turn require large amounts of computing power.
- First proposed as a research project in 1991, blockchain has seen its
fair share of public scrutiny over the last two decades, with businesses
around the world speculating about what the technology is capable of and
where it’s headed in the years to come.
- But with many practical applications for the technology already being
implemented and explored, blockchain is finally making a name for itself and
as a buzzword on the tongue of investors in various nations, it stands to
change the world we are living in, in a significant way by making operations
in various domains more accurate, efficient, and secure.
Q.1) With reference to the Integrated Air Defence Weapon System (IADWS),
consider the following statements:
1. The U.S. Department of State has recently approved the potential sale of
Integrated Air Defence Weapon System (IADWS) to India.
2. It includes only advanced medium-range air-to-air missile (AMRAAM).
Which of the statements given above are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above
Q.1) Describe the application and limitations of the blockchain technology.