My thoughts in the aftermath of PNB scam
Cryptocurrencies and its bad boy Bitcoin did one good thing, it introduced us to blockchain.
Blockchain is a database, and most database applications can be built using blockchain, applications that require stakeholders to work under trust deficit environment are better off using blockchain, all stakeholders have a role within the system. It is a means to bring authenticity and accountability.
Blockchain or other distributed ledgers can be used to de-materialize a variety of stuff into tokens; these tokens can be broadly categorized into
The distinct feature of blockchain is its potential to maintain immutable records. As blocks are generated, each block is embedded with the previous block’s hash, making a chain of blocks. The chain grows as new transactions are made, because all stakeholders can maintain a copy of blockchain, unilateral changes to a blockchain will affect
its integrity, thus making it difficult to make changes to past transactions.
Tokens can represent mangoes or minerals, permits or licenses or time and money resources. Chain code does the book-keeping for the tokens and keeps a record of all the transactions and construct a blockchain, Smart contracts record or validate proofs of work, usage or events. By using blockchain, mangoes can be traced to their farms, permits and licenses can be validated for their allocated quotas and minerals can be traced all the way back to their origin.
Was it possible to avoid a PNB style scam using blockchain? Mostly likely yes, however we must bear in mind that blockchain is not a panacea to all our systemic problems, for example: it may not help us avoid a Kingfisher like situation, which was the result of bad business decisions.
Adapting blockchain would bring about a colossal change to the structure of banking and governance systems that were built over a period of hundreds of years, and will most likely eliminate the asymmetry in information flow between all the parties, and possibly bring these establishments closer to their ideals. The transformation won’t be easy for everyone, but the metamorphosis could be worthwhile.
Let the blockchain disrupt our banking, unless we are waiting for a larger scam, which nobody wants.