Blockchain, widely known as the technology driving digital currency bitcoins, is a distributed database technology for storing continuously growing records. Blockchains are secure by design as data is kept in `blocks’ that cannot be tampered with.
New and updated records are stored in new blocks that are linked to the previous ones through a hashing technology, creating an unbroken chain where old records are preserved forever and new data is added irreversibly .
While several state governments, including Karnataka, Gujarat and Maharashtra, have started evaluating the technology for purposes of e-governance, according to people ET spoke to, Telangana and Andhra Pradesh are leading the race with both looking to move government data to blockchains within a few months.
The two states are seeking assistance from blockchain startups as they evaluate the distributed ledger system to protect data from cyber hacking. Telangana has begun a pilot programme in parts of Hyderabad to use blockchain technology for land registration and integration with the state revenue department in association with Centre for Development of Advanced Computing (C-DAC).
“Simply put, it’s going to be an open platform where anyone can see who holds the land and since it’s encrypted, people wouldn’t be able to tamper with the data,” said E Magesh, director of C-DAC, Hyderabad. “It brings in more transparency and the integrity of the information is maintained.”
Complete rollout of this programme across Hyderabad and some of the surrounding semi-urban areas is expected in the next 612 months, Magesh said.
Similarly, Andhra Pradesh government will start moving some of its departmental data onto blockchain technology within 8-12 months. It has already launched pilots for adoption of blockchain technology in two of its departments – civil supplies and land records.
“The civil supplies department handles data on subsidies, etc., that a common citizen depends on, while the land registration department holds land records, which can often be targeted by scamsters,” said JA Chowdary, IT adviser to chief minister Chandrababu Naidu.
For this, the Andhra government has already started discussions with global communications and financial technology service provider Broadridge Financial Solutions, which has set up a centre of excellence for blockchain in the state, as well as startups such as SimplyFi and Snapper Technologies.
The novelty of this technology in the country has proved to be of advantage to startups in bagging these government projects. Sandeep Singh, cofounder of Snapper Technologies, said that the two-year-old startup already works with over 10 clients including banks, this is their first state government project.
“Within 6-8 months, land records for Andhra Pradesh can go on blockchain to prevent any kind of duplication or forgery, while the revenue department’s data on pensions, etc., can also be moved to blockchain by next year,” he said.
Andhra has initiated moves to set up an R&D centre for cryptocurrency in association with RC Bose Centre for Cryptology and Security of the Indian Statistical Institute, Kolkata, and is also holding discussions with Microsoft India, IT advisor Chowdary said.
The focus on cryptocurrency and blockchain is in line with Andhra’s aim to become the financial technology capital of the country and is backed by concerns over cybersecurity. The state recently witnessed a few cases of WannaCry ransomware attack, when systems at some of the police stations were compromised. “Though we were able to withstand the attacks, thanks to data backup, these attacks are bound to happen in the future,” Chowdary said.
“All our sensitive data is in digital format. With blockchain, even if someone hacks, our data will be safe,” he said. In neighbouring Karnataka, the state government started discussions with blockchain companies last month to evaluate the technology and see how it can be used for commercial purposes and the government, state IT minister Priyank Kharge said. “We will leverage any kind of technology that will help us with our database,” he said.
“We have asked these startups to come back to us with how blockchain is being used outside the country and what policies are in place there.” Blockchain experts have hailed the move by these governments to adopt the technology, but have also highlighted some limitations.
“There are limitations on the kind of data you can store on blockchain and the industry is trying to figure out on how to increase the size of the chain to store higher amounts of data,” said Saurabh Agarwal, cofounder of bitcoin wallet service provider Zebpay.
“Another challenge would be with respect to public blockchain as opposed to the private one. In public blockchain, government or any other authority cannot control any changes in the network,“ said Agarwal who also heads Digital Assets and Blockchain Foundation of India, an industry group of startups in the bitcoin and blockchain space. “Startups like Zebpay have had discussions with the Gujarat government (on blockchain), while some startups have also talked to other state governments such as Maharashtra,” he said.