Does India as a country need crypto and if yes why?
Obviously the answer is yes. We definitely need crypto. In internet 1.0, companies like Google, Microsoft, Amazon created amazing value and even today a lot of our businesses are dependent on those values which were created early in the internet. What crypto is trying to do or what Blockchain is trying to do is create a new internet.
There is immense potential in India to be forming these companies for the new crypto or the Web3 world. These companies would dominate the world for the next 10 to 20 years. India definitely needs crypto and there are a few real problems in India that crypto can solve – like a pilot programme in Maharashtra to tokenise car documents for a fast and transparent verification. A government official could verify the certificate by scanning the QR code which does not even have to be connected to the internet and can be recorded on the Blockchain.
A similar recording of land ownership on Blockchain can enable transparent loans and mitigate disputes. E-governance is another major use case of Blockchain. So, Blockchain and crypto technology is creating a new way for the internet to function and India could definitely lead the way and be one of the major superpowers in forming and owning Web3.
It goes beyond this whole myopic conversation of crypto and basically what you are saying is that if you want to stay ahead in terms of technology evolution in India, then crypto and the relevant technology is required. What is the underlying value of crypto and how do we arrive at that?
The underlying value of crypto lies in the use case that crypto and Blockchain network is solvent. For example, to simplify the entire thing, 15 years ago if we were to launch a business online, one would probably buy servers, set up your office and in two months, connect to the internet and launch our business online. Then Amazon came along and launched AWS saying that one does not have to buy hardwares, One can launch any business on their servers for a price.
Crypto is trying to create a network of computers which could help host the new age businesses online and this is just one of the use cases. How is it different from AWS? Everyone who is part of this Blockchain or the ecosystem benefits as more and more businesses become part of this ecosystem.
So, here AWS or Amazon is not the only winner which is earning from all these businesses posting online but in the Blockchain and the crypto world, everyone of the participant are getting the value as this system grows. That is where the value of crypto lies in the adoption of the underlying technology which is Blockchain. Crypto act as an incentivisation for all the community to be part of this network and grow this network.
The Blockchain technology and the evolution of crypto are interlinked. Can there be development or further progress of Blockchain technology without crypto?
I think that is a very important question and let me take a few minutes to answer that Blockchain cannot exist without crypto. Why? A Blockchain is a network on which any transaction gets verified by a lot of participants of that ecosystem. Now those participants waste resources, time, energy, to verify transactions of that Blockchain because there is an incentivisation on the Blockchain called crypto. If there is no incentivisation, then there is no participant and no incentive for any participant to be part of that Blockchain.
Then the verification would go in the hands of a few players who benefit from that ecosystem and then we move back to the system that exists today as Amazon verifies transactions on Amazon network while Google verifies their own transactions. We will go towards a centralised transaction whereby the Blockchain eventually becomes a database itself. It will lose all meaning of being a public Blockchain where transactions are verified by all the participants and the power lies in the hands of the people, the community which is building that ecosystem.
Without crypto, a Blockchain becomes another database and that is why crypto is so essential to the entire ecosystem of Blockchain and Web3.
India is considered a superpower when it comes to IT and technology and software. Do we have the potential and the wherewithal to be a leader in the Web3 universe and the Blockchain technology? If not, how do we get there?
To the first part of the question, definitely India can lead this revolution from the front. India has a reservoir of talent. We already have the second largest number of Blockchain developers in the world. These talented software developers are major contributors to hackathons of the programmes and some of them are building start-ups in solving real world problems in India. One can take the example of Polygon which is now creating a layer two solution on Ethereum.
Further, India has a lead in world-class public infrastructures like UPI, Aadhaar that are ahead of even developed countries. That gives us a path ahead in forming these technologies in India. What could enable us to do better in this space is regulations. Firstly, there is a broad understanding that crypto is the future, the adoptions are only going to grow, millions of Indians have come as early adopters of this tech.
Over $6 billion have been invested in this promising asset class and how we protect them is the need of the hour for this industry as regulators, government, and industry need to come together to create an enabling framework that would allow users to continue to benefit from their investment and start-ups to continue to innovate. The industry stands committed to work with the government to help allay the scepticism and apprehensions that currently exist in the space and put together a robust ecosystem that is a win-win for all key stakeholders. Definitely India has the potential but with the right regulations, we can lead the way.
How do we balance this because typically regulation is not necessarily pro-innovation? We need to create a regulatory framework which can foster innovation but at the same time protect investors and create enough checks and balances to prevent any wrongdoing.
We have to understand that there are three key stakeholders in the crypto ecosystem and users are at the centre of it. So, users, innovators and the government need to work together to form the right next steps for this growing asset class.
According to change analysis, the India crypto market has expanded 650% in 2021. It is therefore imperative that India puts in place standards and guidelines to protect the users in absence of policy frameworks with leading exchanges following strict self regulation. But India needs a comprehensive Crypto Bill that will help standardise best practices as stakeholders of system in the industry are looking forward to working with the government to take advantage of this cutting edge tech and protect users.
I think the regulations and the right policies are the need of the hour in making sure that the users are protected in the entire ecosystem and this new ecosystem in this new world of crypto and help take this forward and be the leaders in the space.
You rightly mentioned that there are early adopters who have adopted crypto and the Blockchain technology. Do you see the future shaping up when it comes to crypto and the Blockchain technology in India?
I am really hopeful that companies like Truebill and Microsoft, Facebook which today dominates most of the internet – in the new Web3 world – would be built on Blockchain and that would hopefully come from India. It would not only create value in India but dominate the world also. India has the right talent, the right position which we did not have in internet 1.0. But today we have all that. What we need today is the right set of regulations to motivate innovators to innovate in this space within India, build solutions from India which would dominate the world. I am very very hopeful that in the next 10 years, we would see major companies being built on Blockchain and that would come hopefully from India itself.
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