Governments and Blockchain — Is adoption inevitable?
The trustless economy of blockchain is a game-changer. Blockchain technology can act as a confidence-building machine for governments. In the past few years, the rising acceptance of a decentralized ecosystem is witness to this fact.
Adopters have hailed the “trustless” nature of blockchain transactions, but there remains some fear about its technology, which is preventing traditional investors like Warren Buffet and leaders such as Bill Gates from betting big.
Blockchain is an open-source and decentralised technology. Lack of trust in such technological advancement is baseless and unfounded. Compare this with the typical system, it’s easily changeable and hacker-friendly, unlike blockchain. This tech is successful for the fact that it guarantees security and zero reliability or involvement of a central authority vis-a-vis a traditional financial system.
The question is of adoption & the ongoing resistance and doubt :
Blockchain technology’s ability to record transactions on distributed ledgers opens up new possibilities for governments to promote transparency, combat fraud, and build trust in the public sector full of discrepancies.
Proof of existence (PoE) based framework of blockchain will help in creating PoE for digital artifacts such as academic degrees, sale deeds, MoUs, and so on.
During the Coronavirus outbreak, the Chinese government employed blockchain technology to preserve medical data, track the supply of virus preventative products, and consult the public. There are 20 blockchain-based applications aimed to assist fight the Virus, according to the People’s Daily Online, with the majority of the apps being used to manage people’s personal data.
Yes, doubts and barriers do exist. These hurdles are primarily technological in nature. Questions arise around scalability, adaptability, and security among others. Adoption of this technology relies heavily on its acceptability. As an organisation, governments will have to remodel themselves. Furthermore, legal and regulatory assistance adds to the problem. Yet, all of these are easily solvable if the intent is right and governments start considering blockchain seriously.
Financial Institutions and power in the hands of a few :
The commencement of the global financial crisis in 2008, which was widely linked to the failure of trusted organisations such as banks and other financial institutions, has reignited interest in the concept of trust throughout the last decade.
What makes blockchain so disruptive to the financial industry?
Why is it expected that this technology will revolutionise the way banks operate today?
These questions can be answered by blockchain itself.
1. Decentralisation — Not controlled by any central authority
2. Immutability — Information stored can’t be changed. Each block of data, such as transaction details, is protected by a cryptographic principle or a hash value.
3. Distribute Ecosystem — Reduces inefficiencies in operations which saves your money. Add to that decentralised nature and immutability of the ledgers, providing additional security.
It oversees all these activities just like a bank, still not like a bank. Thus eliminating the middleman, returning control to the asset owner in the form of data or tokens with monetary value
One can say, banks and other synonymous financial institutions may feel threatened by a self-managing trustless society. That’s why the slow adoption?
Cryptocurrencies are ruling both imagination and the markets :
No one is selling bitcoin!
People who still doubt the ‘supply dynamic’ of Bitcoin price rise and feel it’s a scam, should take a note of this graph posted by Will Clemente; 93% of bitcoin is not being sold. Huge disappointment for skeptics.
It would be unfair to say that such a bullish future is only limited to Bitcoin. Many companies out there are taking blockchain technology to a more futuristic level and ruling the market in an equally powerful manner.
It would be unfair to say that such a bullish future is only limited to Bitcoin. Many companies out there are taking blockchain technology to a more futuristic level and ruling the market in an equally powerful manner.
The emergence of CBDC :
Effective financial systems are bound to overtake and make obsolete the inefficient ones. Blockchain when put in the context of cashless economies, is bound to overtake the slower systems. Yes, the current digital transactions will be put to test.
Central Bank Digital Currency (CBDC) has begun to gather traction and interest among central banks, as well as financial and technology aficionados.
A CBDC is a digital form of legal money issued by a bank. A CBDC, also known as digital base money or digital fiat currencies, is similar to real cash except that it is held in a digital or virtual form.
Countries like El Salvador and Ukraine are leading the momentum, while initiatives are underway in the United States, China, New Zealand, and many other countries.
CBDCs can help governments better control illicit money and tax havens. They can provide an additional safety net to retail payments. Misuse of finances for terror funding and money laundering can be prevented.
When faced with a crisis, digital currencies can aid governments in the speedy transfer of public funds or emergency subsidies, a live example being Covid 19 outbreak. All these facilities at the least amount of risk.
Adoption is inevitable, mindset would be the key :
With major ups and downs in the past century, the current financial system is yet to figure out the path to repair the domination of the few.
It may seem that the lack of a comparable user base, blockchain applications do not wield economic and political power with the same bravado as giant IT companies. Adoption on a large scale has been a prerequisite for acquiring power.
I must say the youth has overpowered the traditional money managing dynamic by investing heavily in crypto and blockchain. This investment is not just financial, it’s also educational and emotional. The future of a free and decentralised economic structure is very inspiring for the young and they are scrutinising every bit of it. The governments will not be able to ignore that and sooner or later, adoption will follow.
Instead of falling in line, governments can rather lead the future and help this new emerging disruption vitalize to its full potential for a better economically connected world. We must avoid a forceful adoption and aim for an environment driven by a blockchain-friendly world.
