2018 would be the tenth birthday of what is turning out to be the most hyped technology of 2017. It was in the wreckage of the Lehman crash, and the hope of the Obama era, ten years ago, that Satoshi Nakamoto conceived of this technology. Today Blockchain is being touted as the one technology, which will change the world pretty much in the same scale as the Internet did.
As 2017 gathers its belongings to leave us, you would perhaps be inundated with articles, commentaries and even some rants on how Blockchain, and its more glamorous child, Bitcoin has become mainstream globally. However, it would be good to sort through the hype and see what happened with Blockchain and Crypto in 2017, with an India lens.
So, here is my two BTC worth:
1. Bitcoin became mainstream, and this not necessarily a good thing
Bitcoin became mainstream in India this year. Before 2017, there were a handful of traders and techies who knew what it was, and were buying this crypto currency, mostly for kicks. However, the astonishing rise in value hooked the masses, with ‘Bitcoin’ reportedly breaking into the top 10 Google searches this year. It took two years for India’s largest crypto wallet, Zebpay, to notch half a million users by May 2017. It took them another four months to add another half a million. Now, they are projected to be adding half a million every month! While it is good to have millions of Indians starting to dip its toe into the global crypto currency hurricane, it is not necessarily a good thing because several of them will lose their money, in the crash which is inevitably going to happen.
2. Its prices went all over the place
If Disney were to open their newest, most-terrifying roller coaster, I recommend they christen it ‘The Bitcoin’. Bitcoin started 2017 at $1000, almost touched $20000, before exiting the year at around $14000. However, in this journey, it fluctuated violently all over the place, and one wintry Sunday it dropped 36% on a single day! It has the makings of a classic bubble, though there are soothsayers who are saying that a coin could be worth $60,000 to 100,000 in the medium term; some, in fact, are prophesising $1mn per Bitcoin. Other crypto-currencies, like Ether, BTC Cash, LiteCoin, however hardly created a ripple in our country.
3. …And they might be regulated soon
RBI and other government bodies have started making noises on how Bitcoin and other crypto assets need to be regulated and/or taxed. So far, the Government has taken a cautious hands-off approach, with the RBI limiting itself to periodic warnings on how people should be careful of dabbling in crypto trading, and that it did not recognise these as currency. This has been good for the fledgling new technology. But the government has started becoming wary of the dark side of Crypto – money laundering, tax evasion, and more seriously, possible funding of terror and other nefarious activities. Over the fag end of this year, multiple government bodies have started looking at the records of India’s larger crypto wallets and exchanges, and there are reports of half a million notices sent out to the larger traders. Expect some regulation and clamp-down on this in 2018, and if done in the right way, it is not a bad thing. The SEC in the US, and a few other governments have already done so, and some like China and S Korea, have gone to the other extreme and banned trading in crypto
4. Blockchain got noticed by governments, and that is a good thing
While crypto and Bitcoin stole the limelight, the real story of 2017 to me was the emergence of the ‘underlying technology’- Blockchain. Even better was the news that multiple state governments in India, along with the Central Govt., have started realising the potential of this technology in governance. The lead, predictably, was taken by Andhra Pradesh, with the Govt. setting up a Blockchain Centre of Excellence and inviting start-ups and experts to set up India’s first Blockchain State. Many other state governments have also stepped up – Maharashtra, Karnataka, Kerala, Rajashtan – and we have started seeing blockchain experiments and CoEs in many states.
Blockchain has the potential to solve massive problems that governments have in land records, asset registries, auto records, voting fraud, national identity and KYC, financial transaction records and traceability among others. In fact, at a philosophical level, Blockchain has the potential to eliminate corruption in Government! Of late, news broke on Niti Aayog led IndiaChain: the government’s plan to implement a full-fledged blockchain infrastructure that will complement IndiaStack, and might leverage Aadhaar. This could have a major impact on subsidy distribution, provenance, regulating land records, KYC in banking, SME-financing, energy distribution, court cases etc.
5. Large enterprises started getting interested, though most of it was FOMO
2017 was also the year that large, traditional enterprises in India started getting interested in Blockchain. Admittedly, a lot of it was because of FOMO or Fear Of Missing Out, but there was a genuine interest in experimenting with the technology across multiple use cases. BFSI was the first sector to experiment, with virtually every bank and financial services company undertaking PoCs in remittances, bill discounting, supply chain finance, etc. However, there was interest beyond BFSI also in Food, Agri, Supply Chain, Manufacturing and even large conglomerates like the Mahindra Group taking leadership positions in this technology. Interestingly, the Top 5 IT Services Players in India started investing in people and products around Blockchain and started positioning themselves as blockchain services providers. 2018 will see a burgeoning of activity in this space.
6. Blockchain POCs sprouted up all over the place
Despite all the enterprise excitement in this space, most activity was restricted to PoCs, and hundreds of PoCs were executed across multiple use cases. Many of them, as expected, were done just as ‘tick-mark PoCs’, so as to accomplish one of the KRAs of the resident CIO or CTO. A few of them, however, will hopefully go into production next year. We must remember, though, that Blockchain as a technology is still work in progress and there will still be PoCs done in 2018, perhaps even more than in 2017.
7. Entrepreneurial activity started up in Blockchain, though just a couple of start-ups got funded
Globally, blockchain start-ups have attracted close to $2bn in VC financing this year excluding the ICO money raised. However, both the number and investment in Blockchain start-ups in India has been severely disappointing. Besides Unocoin and Zebpay, attracting VC interest, there has really been no deal of note, I can think of. Angel investors have been very moderately active in the space, since the number of start-ups have underwhelmed. However, just the sheer numbers of start-ups, meetups, actual events, online and offline groups that I have started seeing over the second half of this year has been encouraging. Angel interest has perked up, and one hears of multiple start up teams in this space. Frankly, 2017 has been disappointing, but 2018 looks very encouraging.
Even as we bid goodbye to 2017, we must remember that Blockchain, as a technology, is in its very early stages; perhaps in the same stage as the Internet was in the early 1990s. The Internet solved many major problems for us: the information problem with Search, the connectivity problem with Email and Chat, and the distribution problem with digitization and ecommerce. However, there are two problems it was supposed to solve, but did not: the disintermediation problem and the trust problem. In fact, the Internet has created far more powerful intermediaries than ever – think Google, Facebook, Amazon, Uber. And it has created massive distrust and security problems. The Blockchain is supposed to solve these two massive problems, and therefore we believe it will be as big as the Internet…
(This article appeared in Your Story on Dec 31, 2017 at https://yourstory.com/2017/12/blockchain-2017-rule-2018/ )