IndiaChain: Inside GoI’s blockchain network

On Feb 1, during the 2018 Union Budget speech, Finance Minister Arun Jaitley quashed the hopes of cryptocurrency enthusiasts in the country by declaring that the government doesn’t consider cryptocurrency as a “legal tender.”

However, if you were closely watching, he also mentioned that the Indian government will explore the use of blockchain in governance.

In a subsequent tweet, NITI Aayog’s CEO Amitabh Kant stated that the government thinktank will run pilots on electronic health records, land records and digital certifications. “Wherever people need to establish a trusted, shared and unique record, blockchain technology can help by simplifying processes and removing intermediaries,” he tweeted. 

One of the first implementations is already in the works. To tackle the problem of fake degrees, the central government plans to issue blockchain-based digital certificates to IIT-Bombay and Delhi University students from 2019.

According to reports, the government is also mulling over the use of blockchain in maintaining land records, health data, and linking it to IndiaStack – a set of code developed around India’s unique identity project Aadhaar.

While these blockchain ambitions are only in the proof of concept phase right now, there needs to be more clarity on how “open” and “public” this network will be, and which parties will be involved in the maintenance and verification of the nodes.

Cryptocurrency bad, blockchain good?

Government’s stand on cryptocurrency is clear, but Ajeet Khurana, ‎Head, Blockchain and Cryptocurrency Committee – ‎Internet and Mobile Association of India, believes that when people say tokens are bad while the network is good, they lack an understanding of what blockchain is.

“Tomorrow, if you have a public blockchain, there has to be some incentive for independent parties to run it as it needs computational power and resources,” he mentions. The incentive could be a token, a bitcoin or a new cryptocurrency. The only exception to this could be if the government decides to have a private blockchain network.

But this defeats the purpose of building a blockchain, he says. Blockchain’s beauty is that it is a secure, distributed, and transparent ledger system, which involves an innumerable number of participants authenticating each and every transaction.

“If it’s private, the purpose of blockchain is lost. I feel that when somebody has a problem with the token and not with the chain, they don’t realize that they go hand in hand,” he points out.

Whose responsibility is it anyway?

Suppose the entire land records of the country are stored on the network, he says. The land ownership or asset ownership certificate will be created by one entity, whereas the retrieval and authentication will happen on the blockchain network. “Just because you have a widely distributed blockchain network does not mean anybody can create the certificate. There can be one entity who is creating it and other entities who are doing the rest.”

The problem, Khurana explains, arises when there’s a man in the middle. “If the Aadhaar data is on blockchain and an individual is keeping a copy of it, this doesn’t mean he can access everybody’s private data.” The user will not be storing the encrypted data anyway, but just the hash function.

But inspite of the transparency and security, there lurks the danger of the 51 percent attack. If more than half the number of nodes in a network act in consort with each other – they can basically change anything. So the key is, Khurana reiterates, you do not use blockchain in a way that actually defeats the purpose of transparency.

If there are 100 nodes, then 51 of them need to act in consort to take control, but if there are a million nodes –the probability of 51 percent acting in consensus becomes low.

In a cloud architecture, Khurana points out, “the more nodes you add to a cloud setup, more vulnerable it becomes. Whereas in the blockchain, the more the merrier.

“I’d like IndiaChain to be open to all citizens, but if that is not possible and there’s a need for a closed user group, this group should be quite wide. It is a very good initiative but the only worry is that it should be rightly implemented.”

If the government wants IndiaChain to have the same remarkable journey as IndiaStack, it needs to avoid the loopholes that are plaguing its Aadhaar story.

The very concept of blockchain is based on the distribution of the ledger, Khurana adds.  “If an adequate amount of copies are not made, then few people acting in consort can impact the security of the system. Without widespread usage,  blockchain won’t be a success.”