In episode 6 of Fintech-X podcast, Madhuri Arora is in conversation with Mr Devang Mundhra, CTPO, KredX, on the topic- Decrypting The Potential Of Blockchain Technology

Madhuri- Welcome back to another episode of FinTech x and today’s topic is decripting the potential of blockchain technology. Today, we have a very special guest with us, Mr. Devang Mundhra, the CTO of KredX. India’s leading cash flow solution provider, a Stanford University alumnus he has over a decade of experience and has worked in companies like Oracle, lattice engines, among others. Thank you Devang for taking out the time for this podcast. Before we start, if you could tell a little more about yourself.

Devang Mundhra- I think you’ve covered a lot about me already. I’m trained as an engineer, I’ve done masters in electrical engineering, you know, worked a lot on mathematical problems, and software systems and distributed systems in particular, and at KredX I work on the engineering and product side to figure out how we can use technology to make cash flow solutions better for all the customers.

Madhuri- So you’re a problem solver?

Devang Mundhra- Yeah. i try to be that.

Madhuri- So, what is blockchain as an if you could give us a little detail information because everybody’s not familiar how blockchain works or what are the key components of blockchain technology, okay.

Devang Mundhra- So blockchain, at its most basic level, is a way to store data. So data has been and can be stored in many ways, starting from as simple as writing it in a book to getting a little more modern and technical with storing data in file systems that then kind of went to storing data in databases. I mean, the databases came within multiple types like relational non-relational etc and then blockchain is another way to store data, which has some very nice properties. So, one is that it guarantees immutability that So, what that means is that if you have stored data on the blockchain it is guaranteed that data cannot be changed later. So, that has you know this is very important because when you want to trust something or when you want to make something more trustable. Because of if I am building an application and if I want to change data, because everything is in my control, I can change the data and change the data in any way I want to. But with blockchain That is not possible. The second property of blockchain which is interesting is that it is decentralized. Which means that no single entity has control. So, it can you know, basic blockchain needs a group of nodes to be able to serve, you know, work as points where all the data is stored in a decentralized manner. And these nodes work together to make sure that the correct provenance of data is maintained, which means that the correct timeline of data is maintained. And the third property is that blockchains are timestamped by default So, I mean that helps even in a decentralized manner. So, that helps, again in trying to see what data how the data has changed when some record was updated. Who updated it on these kind of things. So these properties is what makes blockchain interesting. Without these properties, blockchain is just like any other place where you can store data. But these properties is what makes blockchain Blockchain and the reason it is called blockchain is because every data point is termed as a block. And as the as you store more and more data, it gets stored as a chain of blocks. That’s why it’s called blockchain. It came into mainstream with the advent of cryptocurrencies so that is what got blockchains in the mainstream media, and people started to talk about it but given the The properties of blockchain it is, it can definitely be used apart from cryptocurrencies.

Madhuri- There’s a lot of potential not just within that, not just in cryptocurrency, but otherwise. So, these blocks have each got a unique identification or in layman’s term a fingerprint. So, if you can explain it as an What is it? How does it affect the blockchain if somebody tries to change it? What are the features for a particular block?

Devang Mundhra- So, blockchain will consist of a lot of the information and blockchain you know, hashes which are computed by mathematical assumptions, and that is also what gives the guarantee of immutability. So, the way it works is that lets say There’s no information in the system as I told right .The chain is of size 08. And you come and say I want to store this information that you gave 10 rupees to me. And you want to store this information, so that nobody can change it, right? So you store this information saying, you know, at this point I have given 10 rupees to Devang. Now the next person comes in, let’s say I come in, and I’ve given 10 rupees to somebody else. So I will use the previous chain, so I will use the hash in the previous chain. And I will use that information, add a little bit of my information and store it in my chain/ my block. And so, the information that I got from you is I can only get it if the data in your chain is in the form that you have stored. So let’s say you know, just to make it simpler, let’s say, I say that the information that I will get from you is the amount that you’ve put in plus the name of the person you have given it today. So, I will get 10 Devang from you, I used 10 Devang and I will add my own information that 10 Devang in fact I have given 20 rupees to person A. So, I store 10 Devang 20 A in my chain and this is how the chain will go. This is a very simplistic example, the actually the information that is stored is you know this is computed through a mathematical function so, that it cannot be changed, it cannot be edited. It cannot I cannot do something like I change, like the two nodes previous to it, so that again I get the previous value. You cannot change the previous previous nodes or the combination of previous notes to get the value that it takes, so those functions are different, but more simplistic manner these chains, so, this value key is added. So, tomorrow somebody goes and tries to change your know this I go and change your node itselfthat instead of 10 I change it to five. So, if I change your node to say that you gave five rupees to devang. When somebody else is adding you know another node, he will track the hash in his block. So, in his block he would have seen ten Devang, but then if he compares it with what value is stored in the content actually and he will say okay you know there is some so you know that there is some Damping and that is how the chain grows and how you store information at the blockchain?

Madhuri- Yes. So how can you benefit the users in the current scenario as an Lets just pick one example? And how in one domain or one company one product and how will it benefit the users using blockchain as a technology?

Devang Mundhra- So yeah, you know, I think since the last three, four years pick any domain and you would find multiple used cases in how blockchain can work because at the end of the day, what blockchain is kind of guaranteeing is trust. And in today’s day and age, trust is difficult to come back from whether it’s news or whether it’s you know, transactions or anything like that. There are attempts, you know, given the media environment nowadays, fake news has become a big problems and there are some Attempts to you know, make sure that every news article has provenance which is every news article, the source can be guaranteed and blockchain is an interesting or you know, serves this purpose very well andyou know, everything that came in for that news article can be stored in the chain when the end product is the news article name. If anybody who is reading the article and he wants to see the chain through which the data has come with the sources of content, they can look at the end of the chain and you know have the guarantee that, you know, nothing has been tampered with. And these are the actual sequence of events that led to the publishing of this news article. Like similarly in the food industry. Today you don’t know the fruits and vegetables you are eating, where it is coming from. How long has it been in the warehouse, which farmer which you may get, like, oranges from Nagpur, and you pay a premium for that, but are you sure that the oranges is actually coming from Nagpur? You don’t know that they just relying on somebody who’s relying on somebody but this kind of technology can help you kind of guarantee that kind of transmission. So oranges actually coming from Nagpur from this field, which was harvested at this time. Right? So these sequences of events that needs to be traced, which needs to be traceable at blockchain. You know, there’s a wonderful technology for that.

Madhuri- So with current data breaches, so I mean, it’s so in these days that this data has been reset. Don’t you that blockchain can be a solution for it that people are not able to tamper with the data or as how much of a scope blockchain Holds or Let’s just say I have a company. Everything stored, on initially I was not storing it on blockchain. So before that the Chances data breaches are more or blockchain reduces the chances of Data breaches.

Devang Mundhra- For a little bit. So data breaches happen because of multiple reasons. Like, for example, like, what is kind of alleged in the adhaar data page was that the credentials itself was being sold. In the US there was equinox data breach where the username password was admin-admin, which is kind of the most basic password again, anybody’s first guesses that , so the these kind of things will be difficult to defend even attempting that on blockchain. Where blockchain can help is if you know every access to data is kind of also stored in a blockchain. So, that might help after a data breach has happened, it might help okay what were the sequence of events that kind of got this you know, that got the breach on what is the extent of breach? How much damage is done? So that it cannot stop it, but it can kind of at least help contain damage control, that is where it might be more useful. Otherwise, you know, the current technologies like if talking about protecting against data breaches. Then encrypting data at rest, you know, making sure that your secrets and encryption in a well managed so those things are much better way to prevent or at least stop data breaches than using blockchain. Where it can help is so then Nowadays, there are these blockchain based databases which AWS launched one recently as your Microsoft’s and Google’s clouds are also launching soon. So these are databases built on blockchain. And what they help is again, you know, kind of give the same guarantee that once the data is put in, it cannot be changed, it cannot be muted. And so, if I’m storing data in that kind of data with every stakeholder that I work with, whether it’s our customers, regulators, internal stakeholders, they will have the confidence that you know the data, they will have the confidence for the sanctity of data. These kind of databases is called legit database and they will just come into market. So hopefully we’ll see some traction.

Madhuri- So, are there any disadvantages of using blockchain?

Devang Mundhra- So, there are some disadvantages. One is and this is still in the recent technology. This was introduced. This has been around for decades, but it kind of caught in the mainstream with Bitcoin which is around 2008. And, you know, it came mainstream media maybe in the last four or five years. This is when a lot of the blockchain companies and so the technologies is still in the nascent stage. There are a lot of different attempts to solve the same problems that every big company is trying to do from its own way. Whether it’s IBM and there are health consultants been formed to standardize it but there is no kind of clear winners and yet in this market, so for a company like us, you know, we don’t want to take a bet on who the winner will be. So that, and there are many companies, you know, with a small and they don’t have the technical capability to it by themselves. So they, you know, they kind of go with the, you know, the technology with the technologies, which are of standard today, so they will store data in databases I mean, distributed databases, but not un blockchain. There is no what is known as a killer app for blockchain yet. A lot of people are trying out I’m sure it will come up very soon. And that one killer app will probably drive a lot of things. But it is not there yet. Given in terms of technology only recently have blockchains kind of IO Basically the way the speed at which it can store and deliver data that has improved earlier it used to be like few thousand transactions every second. So, you have a company that has a b2c company that is getting millions of transactions in a minute This for example, Visa, MasterCard, they that this limitation of a few hundred few thousand transactions, every second will not fly it will make the system very slow. So, there are some technical improvements advancements being done on that has been that will probably also help in making it more mainstream. But then these are kind of these some of the challenges or disadvantages as of today.

Madhuri- So, speaking on a global level, so where are different countries, major countries Right now or are they using blockchain, whether they are interested in blockchain, whether they see some potential in it.

Devang Mundhra- So, every major country has some something going on blockchain. And there will be a different kind of levels. So, US China they’re putting in a lot of effort and not only blockchain but also in crypto currencies. And the managing cryptocurrency to do anything with cryptocurrency you need products which are built on blockchain. So that’s why there’s a lot of advancements and work being done in these countries. Even other countries like Canada, France have some of the other efforts projects going on in blockchains. Even in India RBI has come up with the sandbox environment and that even though RBI is kind of not so gung ho about cryptocurrency. But thankfully they can differentiate between the hype of cryptocurrency and the potential of blockchains. They they have provided a sandbox environment that helps in building products for blockchain. And then we’ll see how those efforts go. Even recently. blockchain was in news because Facebook announced its libra currency which was again built on blockchain. And it has seen a lot of pushback from different countries. Because, you know, countries like Facebook, sorry company like Facebook, you know, going into currency kind of turns into Global Economy. So while libra might not have gone with a flying star, but what it does show is that lot of countries are familiar with regulators and lawmakers are familiar with what blockchain is regulate it, and how to think about it. France Germany, all these came up with comments about the interest in Facebook’s project. So that does show how you know how the regulators have come a long way in understanding what this technology is born of and how to use it for the benefit of their constituencies.

Madhuri- So speaking from invoice discounting point of view or what is it scope in invoice discounting or digital lending how can blockchain probably make it optimize these Technology or this invoice discounting or digital lending.

Devang Mundhra- So, yeah, so lending is all about trust. In the early days of this, you know, you get people to trust you and then slowly but more technologies and people started to trust data. So that’s how the credit bureaus and bank statements do with all these data collections that we do to, you know, make, to be able to trust a person, a company, an entity. And what blockchains brings in as another layer of trusted line that the data that you’re getting is actually trustworthy. Today, you rely on regulated companies like credit bureaus like banks to get data but that gives you data only to a limited extent that you only get like the credit Scores of bank statements etc. But, you know, what people have realized is these are not the only data that is useful to make data decisions today, there’s a lot more things that we can use to, you know, to make decisions about lending. And so all that, either, you know, you kind of regulate every other data point that might be useful. Or you start to use technologies like blockchain that is inherently trustworthy. It’s any data that you see on blockchain. You know, where the data has come from, and then you can make your own judgment whether we want to use that data to make them similarly expressively for invoice discounting, we have blockchain be used as invoices discounting in a year. Fundamentally invoices an asset that somebody selling to get funded. And in any transaction, sale of asset mindset of seller said you know, that there is always the worry that what if somebody else has bought this asset like if I’m fraudster I can, you know, sell invoice to somebody and then I can sell the same invoice to somebody. So Today there is no good means to stop that. So blockchain can help in that way. So if I bought an invoice and that transaction can be recorded on blockchain. And anybody in the country on the world who’s interested to see what is the status of this invoice can see of when the transaction happened and so, that really helps in making sure that the whole system is more trustworthy. So that’s what I think.

Madhuri- So if left to you and you have to use blockchain for some personal use or in your personal life, where would you think you would implement it.

Devang Mundhra- Where would I implement it? So I think every day, if I have to think about this problem will be more like, Where do I worry, that the information I’m getting is correct or not and it can be something as simple as screening or interviewing candidate. Now candidates will write a lot about themselves that they worked in certain companies, they worked on certain projects, but know how it might be difficult to trust, whether it’s getting candidates here or whether you know, even if you kind of trying to hire a driver, like where was the driver before. So all that information is captured on Blockchain would be useful. I have spoken to people for me personally. And there are attempts going on. India is in state today where all ideas are being released. And but, you know, again, given that blockchains is not mainstream yet, and there is not a lot of work happening in India, it might take some time, but personally for me and if I could get information about a person, or at least you know what a person is saying. That will help me make decisions much more faster. That’s where I would love to see some blockchain action happening.

Madhuri- As I feel like you would want to work on this technology. Like you would want to understand it like building this technology optimizing it.

Devang Mundhra- It is definitely an interesting engineering problem about how to increase the throughput of Blockchain. How can I use more number of time that I can add more number of transactions? How can I make it more user friendly, so that any other company can use it? So these are definitely interesting engineering problems. And every technical solving problem. So Yeah I would love that. But there are so many problems to solve. You have to pick your battles. If I had the time then probably but that’s wishful thinking on my part.

Madhuri- So thank you Devang, this one is very knowledgeable and people would understand now what exactly BlockChain is and how this technology works. I’m hoping we can capture for another podcast where we can cover some specific technology and how it works.

Devang Mundhra- I will be happy to help you. Thank you.