Blockchain and Digital India: How it may reduce corruption in politics

Did you miss the bitcoin ride?  Bitcoin started in 2009 and in 2010, it's value never crossed $1! and now at the time of writing this article, a single bitcoin is worth more than 15000 dollars.

What is bitcoin? How does it work? Why blockchain in politics? How can it reduce corruption?

Okay, let's start. I will focus more on Blockchain (the technology on which bitcoin works) rather than bitcoin itself and how this technology can help fulfill our PM's dream of corruption free politics. (Oh, I just remembered, Modi spent 5000 crores of black money on campaigns to win elections and his dream is congress mukt Bharat, not corruption mukt).

What is Bitcoin?

Bitcoin is a 'digital currency'. Just like a paper currency, you can exchange it for goods or anything (for this anything, you might want to google bitcoin and dark web). You can also mine bitcoins or generate bitcoins from your own computer in exchange for nothing. Then how does it amount to a  currency as it does not meet its definition. Well, this is a debate for another time.

The reason you can mine or generate bitcoin is because of Blockchain, the technology that it is built on and your computer, Android and iPhone play a major part.There are many other cryptocurrencies (currencies that use blockchain technology), most popular of them being bitcoin and ethereum.

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What is Blockchain?

So how does Bitcoin work? You can send your money to a stranger without an intermediary securely.

Before we look at how does bitcoin or Blockchain work, have a look at the following diagram 

Noticed something? The blocks are connected by a chain. 

Ok, first you need to answer, how does a transaction take place? You buy something and give money directly to the retailer (no intermediary) or send money online. Now focus on the latter part. When you send money online you always need a third party you can trust(your bank in this case). The debit/credit card companies are also involved which charge a certain amount of the transaction.

When you send money through blockchain, there are two benefits:

• There is no third party (as it is digital, you always send it through internet)
• There are no transaction costs.

If there is no third party, how can you send money securely to a stranger?

Now comes the interesting part, how does a transaction take place over blockchain?

Imagine a cube as a block. It has 6 faces. A block of blockchain usually uses 3 such faces to store data. What type of data?

• Monetary information (In case of bitcoins and other cryptocurrencies used to send money. There are many cryptocurrencies available and not all are used only for monetary purposes. Monetary information like sender's address, receiver's address and an amount is written.)                                                                                                                                                            
• Hash - It is a unique id for every transaction like your aadhar card or fingerprint.                                                                          
• Hash of the previous block. Remember, block chain is a chain of blocks.

So now we know what actually is inside a blockchain, let us make a transaction using blockchain.

Honey wants to send RS 500 to Bunny ( Now we will not use bitcoin here. Remember, bitcoin is just a currency.) using blockchain  technology. Honey is currently on a blockchain network and is currently connected with all the members of the network (which includes Bunny) using a technology known as Peer to Peer network, the one you use while downloading torrents.

Take a note a term in accountancy know as ledger. A ledger is typically a book or a document that is used to show transactions of a particular account and its final balance.

In a blockchain or especially a distributed blockchain, Honey and Bunny will have a copy of such ledger of all the accounts (members) of the blockchain. So if Honey has currently Rs 400 in his account, his transaction will not be validated until it is accepted by all other members.So he will not be able to send RS 500 because everybody knows he does not have sufficient balance.

Ok now he has RS 500, he can send it to Bunny. When he places his transaction, the block checks the previous has or previous transaction (this is how blockchain calculates final balance, by checking all previous inflows and outflows) and sends money to Bunny's account with the help of Public and private Keys (google public and private key if you want to know more about them). What so special is that this transaction is recorded permanently and sent to all other members. If you try to tamper with a block or data, its hash will change and the transaction will be invalid.Even if you change all the hashes to validate your transaction, it will take 10 minutes for a single block and you need to change that for more than half of the chain. This makes it secure. 

Applications of Blockchain

• Digital identity (Better than Aadhar)
• Digital Voting (Why doesn't Modi links aadhar to voter card?)
• Decentralised Notary
• Financial services
• Smart contracts ( A very important use of blockchain. You must know it, this is how you will contract in future)

Where does Politics come in?

A system so secure, it is the future for monetary transactions. Most scams are done in the allocation of money and manipulation of contracts and this becomes easier as fewer people know about it.

Where does the 5000 crores Modiji spent on elections come from?, fodder scam, 2g scam, 4g scam, Ganga funds allocation scam, scam hi scam!.

The blockchain technology will create accountability as information is permanently stored. I don't say it will end corruption (there is always a loophole - Bitcoins can't be traced if you want). 

The Institute for Development & Research in Banking Technology (IDRBT), the research arm of RBI, released a report which said that the time is ripe for blockchain technology adoption in India and it has tested the technology for core banking processes in the country source (http://www.moneycontrol.com/news/business/economy/rbi-bullishblockchain-embracesideadigital-rupee-940737.html)

Since RBI has also said that it is now the right time to benefit from this technology, it is more likely to implemented soon, may be next year.

Here is how it can reduce corruption:

• Digital identity and Digital voting would help reduce duplicate votes.
• Allocation of money under different schemes and usage of money under that scheme can be easily accessed by anyone in the country.
• Smart contracts will enable the government to detect frauds.
• Stop illegal procurement of property as data regarding ownership will be permanently stored.

When govt money transfers are accessed by everyone, chances of fraud are less. Rest we will see when it is implemented.

As an architect, you design for the present, with an awareness of the past, for a future which is essentially unknown

                                                                                                             . Norman Foster