The Cabinet Wednesday approved an agreement on collaborative research on distributed ledger and blockchain in context of the development of digital economy by Exim Bank with the participating member banks under BRICS Interbank Cooperation Mechanism, an official release said.
The Xiamen Declaration signed in China on digital economy by the BRICS leaders had highlighted the importance of the digital economy and how the BRICS nations could leverage the thriving and dynamic digital economy that will foster global economic development and benefit everyone. Accordingly, a Memorandum of Understanding (MoU) on Collaborative Research on Distributed Ledger and Blockchain Technology in the Context of the Development of the Digital Economy was suggested to be inked by all member banks.
In order to develop and strengthen economic ties and investment cooperation between BRICS countries, in 2010 state financial institutions for development and export support of the BRICS nations entered into a Memorandum on cooperation, thus creating the BRICS interbank cooperation mechanism.
One of the main purposes of cooperation is to set up a scheme designed to provide financing and banking services for future investment projects that could be beneficial for the economic development of the BRICS countries.
On the basis of agreements that have been signed within the framework of the BRICS interbank cooperation mechanism, the member banks have taken steps towards developing multilateral financial cooperation within the BRICS countries and created basic mechanisms for settling payments and financing investment projects in local currencies.
Blockchains are a new data structure that is secure, cryptography-based, and distributed across a network. The technology supports cryptocurrencies such as Bitcoin and the transfer of any data or digital asset. Spearheaded by Bitcoin, blockchains achieve consensus among distributed nodes, allowing the transfer of digital goods without the need for centralized authorization of transactions. The present blockchain ecosystem is like the early Internet, a permissionless innovation environment in which email, the World Wide Web, Napster, Skype, and Uber were built.
The technology allows transactions to be simultaneously anonymous and secure, peer-to-peer, instant and frictionless. It does this by distributing trust from powerful intermediaries to a large global network, which through mass collaboration, clever code, and cryptography, enables a tamper-proof public ledger of every transaction that’s ever happened on the network.
A block is the “current” part of a blockchain which records some or all of the recent transactions, and once completed, goes into the blockchain as a permanent database. Each time a block gets completed, a new block is generated. Blocks are linked to each other (like a chain) in proper linear, chronological order with every block containing a hash of the previous block.
As a public ledger system, blockchain records and validate each and every transaction made, which makes it secure and reliable.
All the transactions made are authorized by miners, which makes the transactions immutable and prevent it from the threat of hacking.
Blockchain technology discards the need for any third-party or central authority for peer-to-peer transactions.
It allows decentralization of the technology.