India’s National Institute for Smart Government (NISG) has published its draft National Strategy on Blockchain. It makes ambitious suggestions, including both a central bank digital currency (CBDC) and a national blockchain.
A Central Bank Digital Rupee (CBDR) is proposed on a public permissioned blockchain. India has a track record of rolling out large scale projects with almost 1.2 billion people enrolled in its national digital identity project (Aadhaar). But it has just 582 million bank accounts compared to 1.21 billion mobile connections. So one can see the potential for a digital currency for financial inclusion alone.
However, a significant rationale for the CBDR provided in the document is the ability to monetize Internet of Things (IoT) data and other personal data. Hence people could be compensated for sharing health, telecoms and financial data. “Unlocking the value of the data in the hands of citizens in a secure manner could give a big boost to citizens’ disposable incomes,” the NISG said.
The NISG envisions Indian blockchain developers and firms creating decentralized applications, similar to Ethereum and EOS, but instead on a regulated blockchain with consumer protection.
Hence a National Permissioned Blockchain is proposed, where government departments and industry associations run the validator nodes. It proposes running a private version of Ethereum, perhaps Quorum or a private version of Hashgraph using Proof of Authority. Hedera Hashgraph’s technology is not open source, so that may prove expensive.
This National Blockchain Platform could offer Trust as a Service. It points to some enterprise blockchain solutions that add fingerprint-like hashes to public blockchains. This anchors the current status of a block, making a private blockchain even more tamperproof.
But most of all, it wants the Government of India to signal its intention to use blockchain technology itself and to encourage a vibrant sector.
Apart from these two major suggestions, the document also explores the government and legislative aspects. In particular, India has restrictions on cryptocurrencies. The NISG suggests any legislation around digital currencies should be address functionality as opposed to a specific technology.
The draft document was drawn up following consultations, and now the NISG intends to have further stakeholder discussions and receive suggestions.