What is IndiaChain: a blockchain system that could soon be the heart of governance in India?

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  • The Indian government is planning a major blockchain project for the country.
  • The Aadhaar database will also be part of this platform.
The Indian government is planning to launch IndiaChain - a colossal blockchain project. The initiative was first proposed by the country’s think tank NITI Aayog, which announced a blockchain system meant for India's public records in November last year.

This project is the first step to a larger system of record keeping and public good disbursement. As of now, this project will have similar features to the unified payment interface (UPI), a software application that facilitates easy and secure transfer of money in real time. UPI is a payment API that can be used by private companies to build payment apps. Currently, Amazon Pay, Google’s Tez, Paytm, PhonePe and Reliance Jio are built on UPI, while WhatsApp is beta-testing payments through UPI.

What is the purpose of IndiaChain?

Through IndiaChainm the government aims to enforce contracts quicker, prevent fraudulent transactions, and help farmers through the efficient disbursement of subsidies. It will also link the IndiaChain project with IndiaStack - its unique identification database for the Aadhar initiative. The new system architecture could also help the government track taxes that come from all around India through a unified and secure system network (i.e. no more tax evasions).

According to reports, the government will use the blockchain system for the following purposes:-

  • Land records
  • Supply chain management
  • Identity management
  • Benefit distribution
  • Educational certificates
  • Power distribution
  • Cross-border finance

While it sounds good on theory, the ultimate success of the IndiaChain initiative depends on how well it is implemented and adopted.

According to a Factor Daily report, Niti Aayog plans to bring out a “blockchain policy paper” next month. Once ready, the government will hope that IndiaChain sees the same kind of adoption that UPI has received so far.

What is Blockchain?

Blockchain is a decentralised and distributed record keeping system that is maintained across a network of computers, called nodes. A blockchain consists of units called blocks, which keep the record of a transaction and is secured using cryptography.

A block also contains a cryptographic key(hash) alongside a timestamp, representing the transaction. A blockchain is monitored and managed by a peer-to-peer network by using standardised protocols.
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