Our comments to the government of Karnataka’s blockchain roadmap

TRA provided the following inputs to the Government of Karnataka on its (Draft) Roadmap for Use of Blockchain in Karnataka Government

1. In our view, regulation while explicitly enabling blockchain adoption should remain technology-neutral. In other words, the regulation should not be tied to blockchain technology, and should not require amendments to adapt to new technology that may replace blockchain technology. Regulation and policy will need to keep evolving as technology evolves.
2. We agree with the key elements of a DLT process (Page 4) identified. Like the Government of Karnataka (GoK) rightly notes, blockchain cannot be the solution to every problem.
   1. A first principles evaluation is key while evaluating blockchain use cases – blockchain is best suited for scenarios that need immutability of data, where there are intermediaries (which can be eliminated), where there is a trust deficit, and a need to bring about transparency and accountability.
   2. This article suggests additional evaluating criteria including the existence of B2B workflows, an industrial utility, and a risk of centralization.
   3. This article might also be a useful read. One key takeaway from this article is that a blockchain should not be used to meet those requirements which can be met using a database.
   4. It should also be evaluated whether a public blockchain or a private blockchain is best suited to solve a particular problem.
3. We recommend that the GoK study the ethical and social implications, and conduct a risk assessment for potential threats in addition to the financial costs, feasibility and scalability of proposed use cases.
4. We recommend that the GoK may consider demonstrations of potential use cases at the city level, across the state. As this report from the UK notes, it may lead to opportunities for conducting trials as well as in the implantation of blockchain technologies.
5. In our view, the GoK may work closely with members of industry and academia and develop standards that will ensure that the contents on distributed ledgers as well as ledgers themselves are secure, and privacy is maintained.
6. We recommend that the GoK focus on the “use case selection” and “use case design” stages.
   1. Given the highly evolving nature of the blockchain, some innovators may be ahead of the curve as compared to the rest. But, we will only know this as adoption grows and the market adopts the best possible, scalable model.
   2. Therefore, in the meanwhile, we recommend that the GoK support as many small projects as possible, innovating in many different sectors. This will give the GoK an edge over those that may invest heavily in only a few projects.
   3. GoK’s support could take many forms – giving platforms test government data that they could use, facilitating connections and networks with companies and implementation partners, and financial aid to name a few.
7. In our view, the GoK should ensure maximum transparency in choosing startups, IT companies and others that will be involved in this process.
8. We suggest that the GoK look at examples of sectors from other countries to help identify use cases, in particular for the PoCs sought to be implemented in the first six months.
9. In our view, the GoK also needs to evaluate how liability will be distributed if a public blockchain system fails.

[This post is authored by Nehaa Chaudhari & Anirudh Rastogi]