By Muqbil Ahmar
The blockchain technology has been hailed by the World Economic Forum as Technology Pioneer, with many financial experts terming it as “the next best thing after the Internet.” The impact of the new accounting technology is being considered by industry leaders to be as significant as the introduction of double entry in more than 500 years ago. Apart from being faster and more agile than existing systems, blockchains allow transparency in accounting as every transaction is captured in real time. Governments are looking at blockchains as a platform of choice for eGovernance.
Corruption rampant in India
India is low placed in the ease-of-doing-business world rankings, published by World Bank. According to its report 2016, India is placed 130 out of 189 countries. While China is placed at no. 90, Nepal and Sri Lanka have been placed at 99 and 107 rankings, respectively. Moreover, India is ranked 76 out of 175 countries in Transparency International's Corruption Perceptions Index, 2015. The data indicates that systemic corrupt practices are striking at the root of India’s development trajectory and preventing it from realizing its true potential. Ways to devise graft will have to be found if India wants to become the #1 destination for businesses and investment and a safe haven for budding enterprises.
How do blockchains work?
A Blockchain is a decentralized distributed ledger maintained by a distributed network of computers that requires no central authority or third party intermediaries. In the blockchain technology, each block references the previous block, not by ‘block number’, but by the block’s fingerprint (hash) which is decided by the block’s content. This makes the content completely incontrovertible, with no tampering or revision allowed. While blockchains can be public or private, all blocks are encrypted and can only be read by using the correct decryption key. With its inherently decentralized nature and inbuilt resistance to tampering, blockchains are perfect for recording and retrieving financial data and thus becoming the single source of truth for any organization.
Using blockchains an organization can obviate the need for maintaining multiple local centralized databases; at the same time it can ensure real-time, sequential flow of information seamlessly across an organization.
“An organization stands to benefit in myriad ways. Data is processed faster as it does not have to go through multiple layers. Plus, there is no chance of data corruption or breach of data integrity. Our organization is also moving to a decentralized system. This will enable our software to overcome bottlenecks created by legacy installations. Thus, we can allow unlocking capabilities for cumulative predictive intelligence and dynamic supply management with multiparty memberships among other things, leading to truly multi-dimensional online B2B and B2C ecosystems,” said Shashank Dixit, CEO, Deskera, a cloud-based business software provider in the Asia-Pacific region.
Auditors stand to gain too
By capturing each transaction in real time, auditors can avail of real-time access to relevant financial information, which can be retrieved anytime in a matter of seconds. This is vastly different from the current scenario wherein the auditor only gets access to the client data at the end of the financial year, leading to delays in closing of accounts.
Governments can leverage blockchain technology for eGovernance
Blockchains can make greater social impact if governments implement it. Honduras is considered to be one of the most corrupt countries of the world. The Honduran government started a pilot project using blockchains to eliminate corruption from the property market as the country’s old system was unable to prevent government officials from hacking into land records and allocating prime real estate to themselves. The transparency afforded by the blockchain technology would prevent officials from abusing power, at the same time encouraging unofficial land owners to register their property. Using blockchains, every ledger becomes accessible to the public as well as police, journalists, common and people, making manipulation impossible. Blockchains can result in a completely open and global database.
With millions of copies distributed across the web, it is impossible to forge or destroy data. Blockchains are a remarkable financial innovation that could be a lethal weapon in our fight against graft and corruption.
With over 10 years of experience in the field of journalism, the author is a technology evangelist and avid blogger.
Updated Date: Sep 29, 2016 13:15 PM