In August last year, an obscure startup achieved a notable feat by uploading diploma certificates of 100,000 students onto the blockchain. This move allowed students to promptly verify their skill sets for potential employers in seconds, a significant improvement from the previous timeframe of nearly a month. The entire process was automated. LegitDoc, the innovative startup behind this initiative, implemented the solution on Polygon, a public blockchain. This project has now evolved into the largest blockchain implementation globally for educational credentialing, issuing over a million verifiable diploma certificates.
Subsequently, the team collaborated with the Gadchiroli district administration in Maharashtra to issue 65,000 caste certificates for the tribal population in the Etapalli hamlet. This enabled tribals to swiftly verify their credentials for accessing social support benefits within a minute by simply scanning a QR code, all facilitated by a public blockchain.
Around the globe, startups like LegitDoc are leveraging public blockchains to automate large-scale systems and processes. Previously, files would laboriously move from one desk to another while beneficiaries waited, but now, they are being digitized—rendered accessible, verifiable, and trustworthy.
For pioneering visionaries like Neil Martis, the founder of LegitDoc, a public blockchain stands out as the ideal choice for developing solutions on a vast scale. However, skepticism persists beyond the early adopter community. The questions arise: Is a public blockchain indispensable for constructing such solutions? Can this be achieved without involving cryptocurrency?
This article aims to address these inquiries. But first, let’s delve into the distinction between a public blockchain and a private blockchain.
A blockchain serves as a database for transactional data, distributed across a network of computers where information is stored in blocks, with each block containing a reference to the previous one, making data alteration virtually impossible.
In a public blockchain, this network of computers is open, distributed, and permissionless, allowing anyone to join and operate the program maintaining the database. Ethereum, Polygon, and Cardano are examples of public blockchains. These blockchains are not governed by a single entity; rather, developers worldwide contribute to their maintenance by running specialized programs.
Conversely, in a private blockchain, the network of computers maintaining the database is predetermined by an organization or consortium, making it closed and federated. Examples include HyperLedger Fabric, R3 Corda, and Quorum.
Unlike private blockchains where an organization or consortium holds decision-making authority, public blockchains like Ethereum operate without a central governing body. The functioning of a public blockchain is sustained by cryptocurrency.
Cryptocurrency tokens incentivize rule-based participation and maintenance of the blockchain. Developers are rewarded in cryptocurrency for efficient and honest network maintenance. This incentive structure fosters synchronized operation among a diverse and distributed network of computers, showcasing a remarkable technological achievement.
So, why do startups like LegitDoc opt for public blockchains to store and verify documents? Three primary reasons stand out: accessibility, ease of use and maintenance, and flexibility. Since the programs running on public blockchains are open-source, startups can easily develop customized solutions or applications on these platforms.
By leveraging a public blockchain, startups can swiftly launch their products without the need to negotiate with third parties or decipher complex terms and conditions. This approach allows for continuous iteration without the risk of renegotiating agreements with external parties, eliminating counterparty risks associated with private blockchains managed by third-party technology firms.
Moreover, two lesser-known advantages of building on public blockchains are security and cost-efficiency.
From a security standpoint, public blockchains eliminate single points of failure by distributing responsibility for network maintenance across every computer in the network, known as nodes. Major public blockchains today rely on thousands of such nodes for security. These validators are incentivized to uphold network security through rewards earned in cryptocurrency tokens, establishing a robust, market-driven security framework.
Attempting to disrupt a network would incur substantial costs. For instance, in Ethereum, developers have staked over 29.5 million ETH to qualify as validators, amounting to over $68 billion at current prices, making Ethereum exceptionally resistant to attacks.
Next, consider the cost-effectiveness of building on a public blockchain. For instance, LegitDoc’s solution of storing diploma certificates on Polygon—a public blockchain—would cost approximately Rs. 4.4 lakh to issue and verify 1 million certifications over five years. This estimate includes the initial deployment cost and transaction expenses on Polygon. In contrast, deploying the same solution on a private blockchain like HyperLedger could cost as much as Rs. 29 lakh.
In a country as vast as India with a population exceeding 1.2 billion, opting for public blockchains is a logical choice. These platforms offer accessibility, flexibility, ease of use, maintenance, security, and cost efficiency.
Public blockchains rely on cryptocurrency-based incentive mechanisms to function. Removing this rules-based incentive structure would jeopardize the cohesion among distributed node operators.
To address the rhetorical question of whether a public blockchain is essential for such solutions and if there exists an alternative excluding cryptocurrency, the answer is affirmative. However, the alternative is prohibitively expensive and restricts control and flexibility for iterative improvements.
The decision rests with India. The country can either adopt a costly and restrictive solution, perpetuating dependence on major tech firms, or empower its innovators and startups through progressive policies, nurturing homegrown technology champions.