Leveraging Blockchain Technology …

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Table 1 Technicalities, legalities, and economic aspects of smart contracts

Technical aspects

Economic aspects

Legal aspects

Auto verification

Transparent

Automated processes

Enforced execution

No central authority

Enhanced security

Immutable

Less of transaction cost

Assurance of Governance

all the participants in the network, it will be added to the existing blockchain. Since

it is validated and added to the blocks in a linear mode, earlier blocks cannot be

altered or modified by the participants. Distributed Ledger Technology (DLT) has

been related to digital currency since 2008 when the inventor of Bitcoin Satoshi

Nakamoto described it as “an electronic payments system based on cryptographic

proof instead of trust, allowing any two interested parties to transact directly with

each other without the intervention of a trusted third party” [17]. The requirement

of a trusted third party is to avoid double spending issues. Digital currency can be

spent twice by an individual well versed with the concept of blockchain. Hence

to overcome the double spending issue cryptographic elements were introduced by

enhancing security and integrity in a DL which are maintained through the network

of connected devices. Apart from the currency based blockchain there are smart

contractsbasedblockchainstoo.Smartcontractsfacilitateautomationofcompliances

in various industries including governance and provide smooth flow of operational

processes. Table1 presents the underlying aspects governing smart contracts.

Following are the steps involved in developing a smart contract:

1. Define the various processes involved in and develop Standard Operating Pro-

cedure

2. Each event to be automated with the requirement/checklist.

3. Execute and transfer the required documents with digital signatures.

4. Settlement

• On chain (Digital).

• Off chain (Physical).

4

Status of Blockchain Technology Implementation

by Commercial Banks in India

Despite the fact that blockchain technology is in its nascent stage it is capable of

revamping the existing process and exploring new services. This technology has

the potential to disrupt the banking domain, specifically cross border payments,

automated banking ledgers, and digital assets [18]. A report on “Ease of Doing

Business” by the World Bank ranked India at 63rd position (2020)from 73 (2015)

which is a phenomenal growth by leveraging technology and rationalizing regula-