How distributed ledger technology can revolutionise record keeping

October 8, 2019 1:56 AM

In India, about 50% of the states are currently involved in DLT-related initiatives. Andhra Pradesh, Telangana lead the pack.

Underlying DLT is blockchain—the technology that underlies bitcoin as well.Underlying DLT is blockchain—the technology that underlies bitcoin as well.

By Sumit Sood

Civilisation is a direct consequence of humans settling down. As Yuval Noah Harari notes in his bestseller ‘Sapiens’, what distinguishes us from animals is our ability for large-scale collaborations. The Sumerians of ancient Mesopotamia invented writing around 3,000BC. They kept records (tablets) of the number of sheep, goats, cattle and grain owned/produced. Records meant calculation and collection of taxes. These tablets were arguably the world’s first accounts and contracts.

Around 1340AD, Jewish merchants, and traders of northern Italy, devised the ‘double-entry system’. Essentially an algorithm, it created two independents, yet correlated, records of the same event. With time, ledgers became tedious paperwork, giving rise to bureaucracy—a time-consuming and costly affair. Bureaucracy made it painful to access records, and even today it is. Here, distributed ledger technology (DLT)—a digital system for recording the transaction of assets in which transactions and their details are recorded in multiple places at the same time—offers the opportunity to tackle problems of record keeping. Underlying DLT is blockchain—the technology that underlies bitcoin as well.

A distributed ledger can be described as a ledger of many transactions or contracts maintained in decentralised form across locations and people. All the information on it is securely stored using cryptography and can be accessed using keys and cryptographic signatures. Any changes or additions made to the ledger are reflected and copied to all participants. Once the information is stored, it becomes an immutable database, which the rules of the network govern, making the records resistant to malicious changes by a single party.

Now, imagine a scenario where every transaction (land records, taxes, contracts) gets recorded in a secure, accessible and widely available manner, and does not need multiple rounds of government agencies and offices to ratify, validate and approve transactions.

DLT application is incremental and can reduce bureaucracy on a broad scale. As barriers of implementation subside and the technology matures, DLT’s significance through shared ledgers of trust will accelerate current processes and become more efficient. It is the key to architecture vast amounts of secured records and address issues of transparency, accessibility and security in a pragmatic way.

In China, DLT is a national priority—it is looking to harness the power of public-private in healthcare data, supply chain and other applications. In fact, two-thirds of all DLT-related patents are Chinese. In the UK, government agency HM Land Registry is exploring how distributed ledgers and smart contracts could revolutionise land registration and property buy-sell processing. The Baltic state Estonia has been pioneering DLT since 2008. It uses DLT to register businesses and online tax payment—cutting bureaucracy and saving public money. Their blockchain, called KSI, connects all government’s services on a single digital platform. It integrates vast amounts of sensitive information from healthcare, judiciary, legislature, security and business registries.

Closer home, in India, about 50% of the states are involved in DLT-related initiatives, driving public sector adoption in the country. Telangana and Andhra Pradesh lead the pack. The top-three use-cases are land registry, farm insurance and digital certificates.

Since ancient times, ledgers have been at the heart of economic transactions—to record contracts, payments, buy-sell deals or movement of assets or property. The journey, which began with recording on clay tablets, made a big leap with the invention of paper. Over the last couple of decades, computers have provided the process of record keeping and ledger maintenance great convenience and speed. Just like the humble Sumerian tablet, DLT can potentially transform and commoditise how society agrees, trusts and transacts.

(The author is MD APAC, GlobalLogic)

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