The tension caused by the regulatory vacuum is evident among cryptocurrency exchanges in India. This has led many to question the future of blockchain technology, which is the backbone of digital currency technology.
In this context, some of the words of Reserve Bank of India Governor Shaktikanta Das seem very relevant. “Blockchain technology has been around for 10 years and can grow without crypto,” the RBI governor recently said. Stakeholders working in the ecosystem have similar views.
At the moment, the challenge comes from the regulatory uncertainty of cryptocurrencies. But, the blockchain as a technology is likely to thrive as there are different use cases. From smart contracts to trade finance, the uses of blockchain technology are many. Moreover, the government itself is promoting this technology as evidenced by the fact that IIT Kanpur in collaboration with the Ministry of Electronics and Information Technology (MeitY) has launched a blockchain training course,” said Barek Jain, IT Outsourcing Consultant and Founder of Parekh Advisor.
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The use cases of blockchain technology are many. Trade finance and smart contracts have emerged as vivid examples in recent years. Increasingly, digital assets — which are not limited to virtual currencies but include stocks, bonds, and digital gold — are being discussed for storage in blockchain ledgers.
Apart from financial services, players operating in retail, hospitality, mobility and healthcare among others are actively seeking diverse solutions powered by blockchain technology for implementation across the globe. India is also part of this broader trend.
In the past year, major banks including State Bank of India (SBI), ICICI Bank, Kotak Mahindra, Axis Bank and 11 others have formed a new company called Blockchain Infrastructure Company Private Limited (IBBIC) of Indian banks. This new entity has a mandate to leverage blockchain technology to solve a central problem in traditional banking – processing letters of credit (LCs), GST invoices and electronic payment invoices.
Interestingly, this system will be based on Finacle Connect from Infosys, a blockchain-based platform that enables the digitization and automation of trade-related financial processes. Not only traditional banks, but India’s burgeoning fintech ecosystem has also been driving blockchain adoption in recent years.
While Indian IT service companies are creating many innovative solutions based on blockchain, the startup ecosystem is also doing its part. Companies like Oropocket and GoSats. OpenXcell, SoluLab, and many other startups offer blockchain-powered solutions for enterprises across the spectrum.
Against this backdrop, many feel that India could be at the epicenter of blockchain innovation rather than coming up with crippling regulations on cryptocurrencies – its biggest use case to date.
“Blockchain startups, which are very similar to service providers, will not face any regulatory heat but those who are designing completely decentralized applications where having token for their ecosystem is a good idea will unfortunately be affected by this,” said Yash Mishra. , co-founder of social media VoxWeb and Vollar cryptocurrency.
“In this context, pivoting is undesirable when your current offering is good. Government intervention in Web3 on the pretext of regulation would harm India’s prospects to be at the forefront of such a massive transformation,” he added.
3.0 Web to act as a catalyst
There is a heated debate regarding Web 3.0 at the moment. The controversy was so intense that tech giants Elon Musk and Jack Dorsey had different views on this emerging topic. While Web1 was all about static web pages in the 1990s, Web2 saw the rise of social networking and mobile apps.
In Web 3.0, the third generation of the Internet is built on the concept of edge computing and uses platforms built on blockchain, cryptocurrencies, NFTs (non-fungible tokens) and many more.
Experts see the advent of Web 3.0 as a catalyst for the blockchain ecosystem as a whole.
This is mainly due to the concept of “decentralization” used in Web 3.0. According to a report by the US-India Strategic Partnership Forum (USISPF), Web 3.0 could help India contribute an additional $1.1 trillion to GDP over the next 11 years.
Investors’ interest is growing
No wonder investors are aggressively pumping capital into blockchain-based startups in India. Last year was the best year for local cryptocurrency, as blockchain startups made a huge leap in fundraising.
Total risk funding in Indian crypto and blockchain startups has increased more than 15 times to nearly $600 million, from just $37 million in 2020.
Although the lion’s share of this funding went to crypto exchanges such as CoinDCX and Coinswitch Kuber – the two new cryptocurrency exchanges in India, other startups have recently caught the attention of investors.
As more and more blockchain-based solutions are implemented, the pace of fundraising by these fledgling companies is likely to increase in the coming years.
“Recently, we’re seeing a lot of interest in the B2B space. With regards to deep tech startups like the blockchain technology space, V Balakrishnan, co-founder and chairman of Exfinity Venture Partners and former CFO of Infosys, said that the capital required is lower compared to other companies in the B2B space. B2C emerging and higher returns.
Therefore, regardless of the proposed regulations regarding cryptocurrencies, the Indian blockchain ecosystem is ready to grow.
The government, through its policy making, can certainly lend a helping hand for its healthy and sustainable growth.
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