Now that crypto regulations are imminent in India, it is vital to explore a few key issues that could make a difference to the growth of blockchain technologies in the country
Now that crypto regulations are imminent in India, it is vital to explore a few key issues that could make a difference to the growth of blockchain technologies in the country
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Renowned Austrian School economist and historian, Ludwig von Mises, once famously said, “Progress is precisely that which rules and regulations did not foresee.” This observation explains the dilemma faced by countries that have attempted to rein in the rapidly progressing world of cryptocurrencies run on blockchain technologies.
Three years ago, in these columns, I had underlined the urgency of addressing the dark web activities connected with cryptomoney (‘Coopting the misunderstood – India’s Cryptocoin Moment’ – Forbes India, Dec 19). However, I was not (and am still not) for a blanket ban on crypto money in India, given its tremendous potential to solve some of the pressing problems faced by our rural and urban poor**.
In the preceding thirty-six months since I wrote my article, the blockchain revolution has attained new peaks—with Ethereum Blockchains leading the path. DeFI or decentralised financial products, that owe their origins to the famed Ethereum platform, have managed to garner astounding amounts of investments even during pandemic times. Equally impressive has been the emergence of new genres of smart contract blockchains (like Solana) that have given up on the energy-intensive, climate unfriendly, ’proof of work’ protocols of Ethereum Blockchains. This, in turn, has triggered the launch of Ethereum 2.0, which promises to be sustainable, scalable, and capable of supporting a variety of unusually programmed smart contracts.
Some of the new-gen smart contracts have re-calibrated the mix between automation and human interventions in interesting ways (NFTs being a case in point). These developments would have been unthinkable without ICOs and crypto-tokens. Tokenisation has indeed been one of the most stellar contributions of second-generation blockchains.e first major effect of these rapid changes in the blockchain space is that it has the potential to dump the era of centralised financial institutions and top-down public governance systems. The second major effect of the revolution is the window of opportunity it opens to ‘commoners’ to access public goods.
[This article has been published with permission from IIM Bangalore. www.iimb.ac.in Views expressed are personal.]