Can blockchain be the accelerator for the India stack?


Over the years as a blockchain business process expert, I have spent a lot of time explaining the power of decentralization to my audience. Decentralization to me is providing social justice; a means for everyone to have a voice. Businesses are inherently designed to compete in an oligopolistic market at the very onset and eventually grow such that they become monopolies. A strategic positioning of differentiation, cost leadership or response has slowly shifted to one of analytics and artificial intelligence. Companies that have more data can make better decisions and, in this process, companies have almost become monopolies because of the sheer size of data that they own. As consumers of technology or products we have become a data point which these companies grind through plastic algorithms to segment, target and focus or dare I say manipulate us.

Very recently, I had a heated argument with someone who was trying to sell me an extended warranty for my car. This person knew the year, make and VIN of my car; scary but I was not surprised. Another call that really riled me up was from a company marketing programming for kids and they knew the name of my child. Where is all this leading to, will someone call and remind me that it is going to be my birthday and I need to take some time off work and relax, and hence they create a holiday package specifically for that. Companies have become more and more intrusive and I wonder whether the analytics based business transformation that I teach in the classroom is something that is actually causing all this. Big institutions with their infinite resources have access to lots of data and this is probably creating the pseudo-monopolies in an oligopolistic world. An e-commerce giant can easily decipher what you have been looking for and can accurately predict what your buying power is. So how is all this a level playing field? Should smaller organizations cease to exist? Is it going to be on an arrogant billionaire (maybe trillionaire) who will eventually control telecom, transportation, retail, healthcare, hospitality and or other segments? Are we going to have a world where a handful of people control everything? What about governments? Will policies be drafted for the people, or will it be for the few who are more powerful than the government?

I started looking at the India stack which is an interesting initiative adopted by various governmental bodies under the umbrella of the government of India. The key problem is to reach the next billion customers in India. These customers are regionally diverse and also diverse in their understanding and savviness of technology especially the smartphone. Financial Inclusion was identified as a key area to be solved and for this the cost of customer acquisition had to come down drastically. Key aspect of this is completing the procedures involved with KYC. This process was completely based on paper and needed wet signatures; with this problem statement initially Aadhaar was conceptualized and eventually other aspects / layers of the India Stack. India saw the success of this where bank account penetration significantly increased since Aadhaar was used for eKYC. The problem after this was to bring down the cost of transactions and for this to happen payments had to be unbundled with banking. Thus came UPI. This mission continues and India stack is expanding to credit for MSMEs using their digital footprints, healthcare, logistics and so on.

A digital infrastructure of open APIs and digital public goods that aim to unlock the economic primitives of identity, data, and payments at population scale. The underlying philosophy is to provide all this information that can be used to build applications that would serve the population and help in balancing the digital landscape evenly. This has allowed private innovators to innovate on top of India Stack and create many use cases helping businesses to access the next billion customers.

Decentralization works best when it has a soul, a person with a decentralized identity is very much a nomad. Providing a soul is what the India stack does. Some detesters have questioned that there is too much power for the government and there could always be a kill switch that the government can enforce on its citizens. My argument is that a government that is selected by the people and working for the people is highly unlikely to enforce anything like that. How about turning the tables and positioning an arrogant billionaire (trillionaire) who eventually will have access to the kill switch if we continue doing business the way it is set up now. I would always lean towards the government.

So how can we reconcile between the centralized India stack and the decentralized world that is setup on the promise of inclusion and social justice? A blockchain platform provides an infrastructure for technology mediated trustless interactions. That is too complex for a simple person to understand, so let’s break it down. Suppose two citizens want to engage in an economic transaction related to buying and selling of property. The digital infrastructure provides identity to the citizens and maybe a digital record of the ownership of land with the identity. The two people need to undertake a lot of precautions to ensure that they are compliant with the local and country regulations. Often this is facilitated by legal engagement to act on behalf of both parties and ensure all transactions are completed legally. This is a friction point, there are several places where errors and omissions can occur. A blockchain based system that would automatically generate a set of smart contracts based on the local regulations could help eliminate such problems. The seller’s identity and property ownership details could have a seamless flow through from the India stack, likewise the buyer’s identity and funding details. The smart contract finite state machine would ensure that the transaction finality would only occur if everything were in order. With the changing (also evolving) local and federal regulations such transactions could be compliant up to the very second that they were executed. The smart contract would validate the purchase and ensure if the seller is compliant with the tax laws and if applicable the tax is withheld until a tax filing smart contract provides the clearance. This would be an ideal frictionless digital governance.

Some of you would wonder or question the need for Blockchain here; can’t we just write simple applications that could do this? The problem comes back to where we started, the India stack provides a set of open APIs and digital public goods that aim to unlock the economic primitives of identity, data, and payments at population scale; applications must operationalize these. Centralized applications would again create a powerful entity who will start marketing things because of the amount of data they would control. Decentralized it is that will hence mobilize this great initiative and would provide a better quality of life to the citizens.