Blockchain is that the thing that is sometimes called Bitcoin which is used by hackers that want ransoms? Was it not also something to do with the Silk road where you could buy drugs, weapons and counterfeit goods, and that the FBI closed down and sized 140,000 Bitcoins making them one of the largest holders on Bitcoins in the world?
Why would I care or want to know anything more about such a dubious topic?
WELL. If I told you that some of the largest banks in the world had invested in a company called Ripple that was trying to create a competitor to Swift, which is the way many banks transfer $Billions a day between them that could be 50% cheaper now you can start to see why you may want to carry on reading. Ripple is now being used by American Express as it too can see how it can reduce their costs of moving money. But how does this effect you?
According to The World Bank, in 2015 over $575 Billion was sent from one country to another, with India having the highest amount sent to it by typically workers overseas — a massive $67.2 Billion. The cost of sending money home to India is not cheap often ranging from 7% to 12%. However, by using an ALL INDIAN company like Cassha the costs could be reduced substantially. Cassha are currently raising capital using a process called an Initial Coin Offering (ICO) to create a Crypto currency (CC) and uses Blockchain technology which could reduce your costs by 3% to 6%.This equates to over $2 Billion less profits for the banks, but $2Billion of extra money to those that need the money the most.
So what is Blockchain and why is the Indian government worried about ICOs and Crypto currencies. Blockchain is a technology that has been around since the 1970s and simply allows people to do business peer to peer remotely i.e. over the internet in a trusted secure manner. It was the technology that allowed one to share music via Napster, so it has been tried and tested. It uses military grade cryptographic security and creates a record of a transaction which is then held on a multitude of computers around the world which means that there is no central data base that can be hacked and a transaction once finalised cannot be altered.
In 2008 Bitcoin was created and launched at $0.01 as a currency that was to have a maximum of 23 million coins, unlike a central bank who can print unlimited amounts of Euros, GBP pounds, Dollars, Ruppes etc. Bitcoins can now be used to buy almost anything: a cinema ticket, a house, food, it is even possible to have a credit card linked to your Bitcoins meaning the spending possibilities are almost limitless. It took until 2015 for another crypto currency called Etherum to come along and develop another type of Blockchain and using this Blockchain it became very easy to raise capital doing an ICO thereby creating new coins. These ICOs in the last year have raised over $3Billion and the size of the Crypto currency market has risen from $12Billion to over $200Billion.
Driven by fear and greed i.e. fear of missing out and greed, finding a Cryptocurrency will hopefully rise in value by over 3000% (which is what Ripple has done in the last year) in the future. Unfortunately these ICOs are not regulated and they have attracted some questionable characters promoting dubious businesses.
Reserve Bank of India (RBI) are looking to ban the use of cryptocurrencies as a form of payment, but are supportive of Blockchain. As a proof of Blockchain’s great promise, several banks in India such as ICICI Bank, Kotak Mahindra Bank and Axis Bank are already using Blockchain in such applications as overseas transactions and international remittances. However the regulators are concerned by the number of Indians that are getting involved in Crypto currencies. To curb the use of cryptocurrencies in India, a government panel is said to have advised closing cryptocurrency dealers in India meanwhile Zepay a Crypto Currency trading App is adding 200,000 new users a month!
Munish Sharma, consultant at the Institute for Defence Studies and Analyses in New Delhi, discussed the ongoing dilemma that most regulators often struggle with the nascent technology especially in such highly regulated space:
“Widely seen as a disruption for the traditional banking and financial institutions, cryptocurrencies have gained significant traction over the last half a decade, at the same time creating a regulatory nightmare for banking regulators across the globe. Governments and their regulatory bodies have been brainstorming for measures to either regulate the growth of cryptocurrencies, as against just letting them proliferate without regulation and interference.”
No need for full ban, instead the Finance Ministry needs to work on ways to regulate Cryptos. he key issues being consumer protection, taxation and money laundering,
India is by far the largest English-speaking population in the world, making it ideal recruiting grounds. It is also a free-market country where thinking and innovation lead to success and are encouraged.
Indian secondary education (high school) is focused primarily on a very few subjects. Science or Commerce are two primary streams, Maths/CompSc/Economics being optional subjects.
These three factors help explain why some of the brightest Indian brains are running companies like Microsoft, whose CEO Satya Nadella is Indian. Indians are seen to have some of the most mathematical skilful minds and are being recruited to build new businesses that are harnessing the power of Blockchain in many different sectors. These organisations are developing ways to reduce costs, cut fraud and open new markets for the impoverished rural, as well and the sophisticated wealthy city dwellers all across India and indeed the world.
the CEO of IBM, as a powerful technology that has the ability to change the way we do business. It is a technology that the Indian economy and regulators need to embrace and use it to drive the economy forward. Yes, there are challenges especially with ICOs, but these two are helping to raise capital, create jobs, and develop new solutions for today’s problems. The process of an ICO also offers governments and global brands a fantastic opportunity NOT to raise capital but to run their organisations more efficiently build stronger relationships with their citizens, clients, suppliers and staff….but that is for another day.
This article first appeared in The Sunday Guardian 3/12/17