Why Government of India should have a blockchain ledger?
Recently there have been some news articles stating that the Indian Government is mulling it’s own cryptocurrency called Lakshmi.
While few at RBI have expressed their discomfort with the same, some proponents of cryptocurrency also have expressed their reservations to a “government” managed cryptocurrency. One of the concerns has been whether a “legal” cryptocurrency means rest of cryptocurrencies being declared as “illegal”.
My take on the same is that India is in dire need of a public blockchain ledger. Mark the difference. While the need of a cryptocurrency backed by Government could be a good step further down the line (assuming it does not mean an attempt to curb down on non-government cryptocurrencies), a distributed blockchain ledger would change the existing fiat world as we know it today. And for all, it would not even be the first country to do so. Singapore has already started work on the same.
Let’s look at some pretty simplified examples:
A big fat government contract
A typical government contract is always laden with a huge set of paperwork and to find out the exact trail of money flow needs much more than a bunch of RTIs and perseverance.
Once the setup moves to a distributed public ledger, all the transactions are always visible to everyone. So if a contract has been paid without the roads actually been paved, it will be visible to everyone.
Public development schemes
Aadhar has been touted as the scheme to curb wastage and ensure that the money goes to the rightful owners. A public distributed ledger takes it to the next level where each and every transaction is automatically visible in the public records.
To enable usage by the common man, this public ledger backed respective cryptocurrency wallet can be deemed as the passbook equivalent of fiat bank accounts. There should be provisions which allows the common man to withdraw regular fiat currency from his cryptocurrency account using the standard fiat banking methods (ATM or over the counter withdrawals etc). But eventually a complete adoption of this cryptocurrency should completely eliminate the need of physical fiats.
Cryptocurrency exchanges even today have a stringent set of KYC requirements. Following the same, and even further building on top of it, it can be easily ensured that there are no proxy accounts. No more “fake” fiats. No more hidden transaction, no more benaami properties.
When it comes to foreign transactions, there are already exchanges which convert one cryptocurrency to another. Similar setup can be done for fiat cryptocurrencies to other fiat currencies.
There will of-course be challenges in terms of security, privacy, adoption and more, but if the Government of India puts it mind to it and ensures that the public concerns have been answered and taken care of, it could be the biggest revolution led by any Government in the world.