THE GIST of Editorial for UPSC Exams : 20 February 2020 (Applications of Blockchain (Mint))

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 manner.
  • 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.

Government Services:

  • 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.

Health Sector:

  • 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.

Digital Identities:

  • 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 scrutiny.
  • 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 person(Peer-to-peer) environment.

Real Estate:

  • 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.

Supply Chain:

  • Managing the modern, often global, supply chain is a series of intensive processes that require perfect orchestration between many moving parts and actors.

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 inclusion.
  • 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.

Land Disputes:

  • 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.

Signature verification:

  • 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 target node.
  • 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.

Attaining consensus:

  • In a decentralized technology like blockchain, every transaction made must ensure that every block in the blockchain network must reach a common consensus.
  • 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 network.

Storage issues:

  • 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.

Computing Power:

  • 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.

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Prelims Questions:

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

Ans: A
Mains Questions:

Q.1) Describe the application and limitations of the blockchain technology.