Article describes what is block chain, its characteristics, Use Cases and recent developments

1. Blockchain and its use cases
From a Chartered Accountant’s perspective
Basic of Blockchain
Firstof all,blockchainisnotcryptocurrencythoughits primaryapplicationswhereincryptocurrency.
Blockchainismore of a conceptthan a technology,its inceptionwasfromthe conceptof Accounting
and Auditing (Ledger System, Logs or trail of data), Information technology (Information Systems,
Information Portals), Security and Identity management (Cryptography),Mathematics (Hashing and
Algorithm).
This gives a clear indication that CA must be prepared with the concept of blockchain because who
knows accounting and auditing more than what we Chartered Accountants. We may not know the
technology or algorithm but we know what is the business processes, accounting, and auditing.
Definition
Blockchain is a decentralized computation and information sharing platform which enables multiple
authoritative domains which do not trust each other to cooperate, coordinate and collaborate in a
rational decision-making process.
Blockchainis a cryptography-basedsoftware technologywhichfunctionsasa distributedledgerthat
isheavilysecureddue toitsattributesof peertopeerverificationandauthentication.Leveragingthis
technology to apply it in real world situations where a secured record is required for transactions,
documents or any other sensitive information will lead to higher productivity and security.
Blockchain System:
The Blockchain system’s task is to ensure that all these individual copies are consistent with each
other,that the local copieswhicheverynode has are identical,andthese copiesare alwaysupdated
basedon the global informationi.e.,if thisnode wantsto enter some informationtothisblockchain
thensuch informationwill getupdatedtoall the copyof the blockchainthateverynode possess. The
architectural platform of blockchain supports a strong consistency among the local replica local
information that every node has.
Key Components of blockchain
 Decentralized Computing
 Cryptography (hashing)
 Chronological Ledger
 User Access (restricted / unrestricted)

2.  Security
 Trust building tool (Consensus)
 Cooperate,coordinateandcollaboratetool betweenParticipants. (ProtocolforCommitment)
Public vs Private Blockchain
A PublicBlockchainisa permissionlessblockchain.Anyone canjointhe blockchainnetwork,theycan
read, write, or participate witha public blockchain. Public blockchains are decentralised and no one
has control over the network. They are secure in that the data can’t be changed once validatedon
the blockchain.
On the other hand, a Private Blockchain is a permissioned/federation blockchain. Permissioned
networksplace restrictionsonwhoisallowedtoparticipate inthe networkandinwhattransactions.
Whenpeople getintoblockchain,there’sanatural discussionaboutwhat kindof blockchain,because
blockchain comes in many different varieties.
We mustbe more concernedaboutprivate blockchainasacharteredaccountantbecause thisiswhere
the bigger role of our expertise is required.
Let’s understand what is Smart
Contracts
A smart contract allows individuals and
enterprises to exchange data in a trusted,
conflict-free manner without relying on a
third party like a bank, lawyer or notary.
It isa self-automatedcomputerprogramthat
can carry out the terms of any contract.
Mostly based on objective conditions
precedent “If, then” criteria
Let’s see where Blockchain Good For?
Blockchainisa solutionwhichislookingforproblems.Blockchainmaybe usedformanythingswhere
there are many people involved and they don’t trust each other.
• Cryptocurrencies/Store of value - What is my account balance?
• Digital Identity - Who are you and how have you changed over time?
• Digital representation of a property/Tokenization – Who owned this car over time?
• Tracking provenance offood or drugs – Whatcountry & postal code didthischickencome from?
In the real world the choice for the business leaders regarding the technologywill not be clear, but
the potential forthe technologyisimmense.Companiesneedtoproceeddeliberatelybutcautiously,
in the context of a through cost benefit analysis. There is no magic formula which fits all purpose.

3. Blockchain – Applications in Industries and Use Cases
Blockchain in Finance
o Payments and Remittance
Transactions can occur directly between two parties on a frictionless P2P basis. The
technology’s application for overseas transactions has the potential to reduce risk,
transaction costs and to improve speed, efficiency and transparency.
o Issuance, Ownership and Transfer of Financial Instruments
A blockchain-basedsecurities market allows traders to buy or sell stocks directlyon
exchanges or directly to other market participants in a P2P manner without the
intermediation services provide by a broker or clearing house.
o Clearing and Settlement Latency
On the blockchain,the entire lifecycleof atrade,includingitsexecution,clearingand
settlement can occur at trade level, lowering post-trade latency and reducing
counterparty
Blockchain in Healthcare
o Cost Containment
The blockchaincanbe filteredtoidentifyandalertaboutspecificactivityonthe chain,
monitoring, using patterns, can include data that represents a doctor, consumer,
drugs, procedures, all can to tokenized and added to the chain.

4. • Buildinga rule base usingbestpractices,ICD codes, medical proceduresand
other costs can be monitored and audited using blockchain.
o Smart Contracts
Smart contracts would automatically pay providers when conditions of service are
established such as:
• Validation that a service was received by a registered Medicaid patient
• Service was provided by a properly registered doctor & provider
• Neither party is on a known list of past participants in any fraud
Blockchain in Government
o Asset registration
A blockchain framework enables government agencies to increase the accuracy and
efficiencyof publiclyheldrecordsbylinkingownershipof anassetto a single,shared
ledger without disrupting existing registry data.
o Identity services
Blockchainenablesgovernmentagenciestocreate a single,trustworthycollectionof
digital identitydocuments.These documentsmake it easierforgovernmentofficials
to reconcile dataconflictsandprovide citizenswith control over their own identity.
o Fraud prevention and compliance
Blockchain creates a shared and trusted ledger that sequentially appends
cryptographically secure data. The ledger is only accessible to trusted parties, giving
government administrators the assurance that they’re working with data that’s up-
to-date, accurate and nearly impossible to manipulate.
o Supply Chain
Blockchainmakesthe precise locationof an object — andits accompanyingdigitized
documentation — part of a traceable permanent record giving government full
visibility of the supply chain.
Recent Developments in Blockchain
Blockchain as a service (BaaS) using the cloud
Blockchain as a Service (BaaS) is required because enterprises are working on their own blockchain
solution,itisnotalwaysfeasible tocreate,maintainandmanage an individual blockchainsolution.A
cloud-basedservice providermanagesall the necessarytasksandactivitiestokeepthe infrastructure
agile and operational.
Interoperability between blockchains
There are newblockchainnetworksshowingup,whichleadstonew chainsthatofferdifferentspeeds,
networkprocessing,use-cases.Blockchaininteroperabilityaimstoimproveinformationsharingacross
diverse blockchain networks.These cross-chainservicesimprove blockchaininteroperabilityandalso
make them more practical for day-to-day usage.
Government blockchains
We expect to witness a rise in the use of federated blockchain by the government and semi
governmentbodies asBlockchaingivesmore customizable,Transparency,Agility,andimmutabilityto

5. the transactions. Federated blockchains are similar to private blockchains, but with a simple twist:
insteadof one organizationcontrollingit,manyauthoritiescancontrol the blockchainand pre-select
nodes. Some of the use cases of federated blockchain by government include insurance claims,
financial services, Revenue Records, Allocation of land and supply chain management.
Enterprise Blockchain
Enterprise blockchain isevolvingtobe a scalable anddevelopable solution.The growthof blockchain
will happen in different phases in whichthe captivating use cases will be explored, discovered,then
implementedonamore massivescale.Despiteearlystages,blockchainwillbe adisruptivetechnology
that will fundamentally transform various industries in the next 5–10 years, bringing $3 trillion of
market value for enterprise blockchain worldwide by 2030.
Blockchain and the Internet of Things
IoT adoptionis increasingthe numberof devicesandsensorsthat gather data, and many partiesare
typicallyinvolvedinabusinesstransactionbasedonthatdata.Blockchainenablessafe record-keeping
throughanimmutable ledger,andpermitsdecentralizedoperationsandtransactionswhilepreserving
trust between all players in the value chain.
The Transactional Capabilitiesamongthe IOTenabledintelligentdevicescanfacilitatethe emergence
of newerbusinessmodels,usingIOTwithblockchaininvariousEnterpriseorGovernmentblockchain
may result in huge data compilation and its authenticity.
Hybrid blockchains
The hybrid blockchain works by providing the better features and functionality of both public and
private blockchain.Hybridblockchainsstandoutby offeringacustomizable solutionandalsomaking
proper use of what blockchain has to offer – characteristics such as transparency, integrity and
security. To name several use-cases of hybrid blockchain: Internet of Things (IoT), banking, supply
chain, enterprise services.
Blockchain is the future.
Let’s be ready to leverage this technology!
By,
CA Abhishek Jain - B.com, ACA, ISA, FAFD, and CBE
Partner
V C A N & Co.
Chartered Accountants