Budget 2018: Bitcoins, crypto-currencies illegal, but govt to explore Blockchain

However, Jaitley also added that the government would try and explore the blockchain technology, which drives bitcoin and other crypto-currencies. “Distributed ledger system or the block chain technology allows organization of any chain of records or transactions without the need of intermediaries. The Government will explore use of block chain technology proactively for ushering in digital economy,” he said.

The recognition of blockchain technology for future use in the digital economy has received positive reactions from the industry. Though the budget does not specifically talk about how blockchain will be explored, it should be noted that in digital economy the major use for this has been around crypto-currencies like Bitcoins.

Blockchain technology is what powers bitcoins. How it works is that each transaction on the network can be verified by all the nodes (computers) on the Bitcoin network. All records, be it of sales, transfer of ownership of the Bitcoin are recorded on this Blockchain. Reversing a transaction record requires brute force and for that someone or some organisation would need control of more than 51 per cent of the network.

A new block is effectively added every time a transaction is made and every single Bitcoin transaction that has taken place since the first one was created in 2009 is on record on this network. Additionally anyone who joins the Bitcoin network can crosscheck the transactions and help maintain these blocks. The key to understanding blockchain is that there is no one central network managing any this and it is supposed to be a peer-to-peer network. Maintaining the Blockchain requires considerable CPU power and electricity as well.

Analysts said that the government’s decision to focus on newer technologies was a positive step. “It is heartening to notice that the Budget 2018 has put spotlight on cyber technologies and focused on creating CoEs (Center of Excellences) for emerging technologies such as Artificial Intelligence, Machine Learning, IoT, Big Data and Blockchain, etc. In addition, the move to dispel the ambiguity around the use of cryptocurrencies in India will help to contain cybercrime and cyber terrorism,” said Sivarama Krishnan, Partner and Leader Cyber Security, PwC India.