EEA and cryptocurrency adoption in India

By | 25th July 2017

Suggested musical pairing: The Final Speech (Original Mix) – Thomas Jack ft. Adrian Symes

EEA and Andhra Pradesh

Earlier this month when EEA [The Enterprise Ethereum Alliance] announced EEA3 (the third round of companies joining the EEA), the Ethereum community rejoiced as EEA became the world’s largest open-source blockchain initiative, adding an impressive array of corporate big-hitters to the membership roster.

EEA 3 Key Partners

EEA 3 Key Partners include the Government of Andhra Pradesh, Mastercard, Cisco and Scotiabank (amongst many others)

Those partners given pride of placement in the header of the press release include payment processing behemoth Mastercard, technology conglomerate Cisco and Canadian mega-bank Scotiabank. But what about the first partner, the less-known Government of Andhra Pradesh? For those outside of India (or geographically proximate countries) this inclusion fell on relatively deaf ears. In my opinion, however, it may well be one of the most important partners that will ever be included in EEA.

So first things first, what is the Government of Andhra Pradesh? AP is currently the tenth most populated of India’s 29 states (49.3M inhabitants), contributes approximately $110B in GSDP [Global State Domestic Product], and has typically been one of the technological pioneering states of the country – leading the nation in solar power generation and home to India’s primary satellite orbital launch site.

AP has also demonstrated a blockchain-positive attitude in the past, aiming to create a Blockchain Institute of Technology in the financial state-capital Visakhapatnam.

“Blockchain is a technology for a new generation of transactional applications that establishes trust, accountability and transparency while streamlining business processes. It is a design pattern made famous by bitcoin, but its uses go far beyond. With it, we can re-imagine the world’s most fundamental business interactions and open the door to invent new styles of digital interactions. It has the potential to vastly reduce the cost and complexity of cross-enterprise business process,” stated an explanation on global IT giant IBM’s website. It further said, “The application of this emerging technology is showing great promise across a broad range of business applications.”

According to AP advisor JA Chowdary, the ultimate aim is to brand Vizag as a financial technology capital of India by creating manpower and training people in blockchain technology.

I can understand why skepticism may naturally arise when the country with 179.6M people below the poverty line [World Bank, May 2014] claims plans to create a fin-tech powerhouse. However, when we consider the situation of India in greater depth, my conclusion is that they are probably perfectly positioned to lead a blockchain-based financial technology boom.

GDP India, Russia, UK

Make no mistake. India is a rapidly growing economy, defying recent economic downturns that have impacted several other major world powers [GDP India, Russia, UK]

One thing I’d just like to quickly mention at this point, is that in the cryptospace a rising tide lifts all ships. Increased adoption of any cryptocurrency is generally good for all cryptocurrency. Increased adoption of BTC would have a positive effect on ETH (and vice versa), and similarly great success of any alt-coin would have positive effects for the entire cryptospace. While I will make some specific points addressing Ethereum, the majority of my sentiment can be applied to all cryptocurrency and b-tech [blockchain technology], and is therefore decoupled from any coin-maximalist agenda and claims of superiority.

In addition, while the EEA3 announcement only focuses on AP as a partner member, it seems reasonable to assume that success on their part would spur the introduction and adoption of cryptocurrency and b-tech by the Indian nation on a whole.

To backtrack a little, it’s also worth noting that I feel India is one of relatively few nations in the simultaneous position of generating notable economic output on a global scale while simultaneously being impacted significantly by poverty – a schrodinger’s economy, if you will. Whether their current growth trajectory is sustainable is different question for another article, but these factors put India in a unique position to capitalize on emerging technology of the blockchain while also having tremendous amounts to gain from positive blockchain attributes (eg, incredibly low transaction fees on cryptocurrency, transparency, etc).

Cross-border Transactions and International Trade

Due to the lack of cross-border transaction fees, large-scale adoption of cryptocurrency by any nation state carries significant benefits not just for the nation state, but for corporations and individuals in residence.

For corporations, significantly lowered cross border transaction fees offer a unique opportunity for India to position itself as a hub of international trade, bringing currency into a borderless world with Andhra Pradesh as the ‘central’ hub. Undoubtedly, this would involve various regulatory hurdles, but the potential upside here is of world economy shifting magnitudes.

On a personal level, India is the global leader in remittance (recipient) [World Bank Report, 2017] with a staggering$62.7B USD equivalent flowing into India from natives abroad back to family or friends in the country, with a collective $22B coming from the UAE and United States alone. Nationwide implementation of cryptocurrency, or some form of blockchain-based transaction system, would be dramatically advantageous to the numerous Indian citizens receiving remittance payments from abroad.

In addition, all parties involved would benefit from the comparatively lightning-fast transactions in contrast to typical waiting time on international transfers. Instant and cheap currency transfers to and from the nation would position India uniquely in the international stage and it is hard to overstate the potential gains.

Transaction Transparency and Provable Contracts

In a country relatively synonymous with corruption (ranked =79 in the Corruption Perceptions Index, tied with China, Brazil and Belarus), India has a tremendous amount to gain from the transparency and open-provability of b-tech (specifically wrt open contracts published in the Ethereum blockchain). While I’m aware that 99%+ of the population will not be able to understand b-tech, an important factor here is that experts and independent auditors will.

Leveraging cryptocurrency for large-scale corporate and/or government transactions would allow India to make dramatic leaps forward in anti-corruption, essentially improving transparency exponentially through the use of b-tech. Removing one of the opportunities for corruption directly would renew international investor confidence in the country, help remove barriers for growth, and encourage international integration.

Universal Access

India’s population-proportional Internet penetration is increasing rapidly, up to 29.55% in 2016 versus just 7.5% in 2010. While these statistics may seem low in comparison to countries like the United States or China, India is already the second-largest online market worldwide, and this growth shows no sign of stopping imminently.

Internet Penetration, India

Internet penetration of use in India has increased significantly year-over-year since the dawn of the millennium. [Source: Statista]

Decentralized mobile money transfers offer a universal form of financing to India’s citizens, many of whom may have significantly easier access to online services than they ever would a physical bank branch. Large scale adoption of cryptocurrency on a national level would bring real, tangible, benefits to the huge growing proportion of Internet-using citizens. Furthermore, since the current trend in smart-phone adoption continues to drive Internet adoption in general, it seems highly likely that by 2025 the vast majority of Indian citizens will have some form of Internet access.

The Role of Andhra Pradesh

I’m aware a significant amount of the reasoning above is conjecture (albeit postulation based in some level of statistical fact and inductive reason), much of which assumes a nationwide adoption of cryptocurrencies. As with any emerging technology, it is incredibly difficult to accurately predict a 10-year view, and while I firmly believe there is the potential for this to lead to a nationwide adoption of cryptocurrency, it is also of vital importance to consider the short term effects and gains of endorsement by AP.

With numerous regulatory hurdles currently affecting investment and use in the crypto-space, AP has the potential to act as a catalytic testing ground for ‘official‘ national, regulation, and international adoption. By becoming a hub of innovation (the ‘crypto beach‘, if you will) AP has the opportunity to draw significant investment, and most importantly, the expertise and talent which will, in turn, drive the growth of the cryptospace ecosystem.

Mastercard, Cisco, Scotiabank et al all bring tremendous value to the EEA, but it is also vital to not to underestimate the potential impact of Andhra Pradesh (and, indeed, the other lesser-known EEA partners).

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If you’d like to spread a little cryptocurrency love (or buy me a beer), my donation wallet for Ethereum is 0xDc19F056c7d0dc99F30207b19B644ef1D2Ae3387.


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