Key Terms & Concepts — UPSC Mains
Blockchain Technology
"A decentralized, distributed ledger technology that records transactions in an immutable chain of blocks, eliminating the need for a central trusted authority."
Blockchain is a type of distributed ledger technology (DLT) where records (blocks) are linked together in a chain using cryptographic hashes, with each block containing a timestamp, transaction data, and the hash of the previous block. Once recorded, data in any block cannot be altered without altering all subsequent blocks — making it tamper-proof. Blockchain operates on a peer-to-peer network where all participants maintain a copy of the ledger and validate transactions through consensus mechanisms (Proof of Work, Proof of Stake). This eliminates the need for a central intermediary like a bank or registry. Public blockchains (Bitcoin, Ethereum) are open to anyone; private/permissioned blockchains are restricted to authorised participants, making them more suitable for government applications. Smart contracts — self-executing programs stored on the blockchain — automatically execute predefined terms when conditions are met, enabling trustless automation of complex transactions. Applications in India include land registry (Andhra Pradesh, Telangana pilots), supply chain management, digital credentials, and the Reserve Bank of India's e-Rupee (Central Bank Digital Currency or CBDC).
Relevant for UPSC GS3 Science and Technology, and GS3 Economy. Questions on blockchain appear in Mains on digital governance, fintech regulation, and India's Digital Public Infrastructure (DPI) strategy. Key distinctions for Prelims: blockchain vs database (decentralised vs centralised), cryptocurrency vs CBDC (private vs state-issued). India's e-Rupee pilot was launched by RBI in 2022. ONDC (Open Network for Digital Commerce) draws on DPI principles related to open protocols. The National Blockchain Strategy (MeitY, 2021) outlines India's approach to blockchain adoption in governance.
- 1 Distributed Ledger Technology (DLT): no central authority; all nodes hold a copy of the ledger
- 2 Immutability: altering one block requires recalculating all subsequent blocks — computationally infeasible
- 3 Consensus mechanisms: Proof of Work (energy-intensive), Proof of Stake (energy-efficient)
- 4 Smart contracts: self-executing code on blockchain — eliminates intermediaries
- 5 Public vs Private blockchain: Bitcoin is public; government applications use permissioned (private) blockchains
- 6 RBI e-Rupee (CBDC): blockchain-based digital currency issued by RBI — pilot launched November 2022
- 7 MeitY National Blockchain Strategy (2021): roadmap for blockchain in land records, pharma supply chain, education certificates
- 8 Cryptocurrency vs CBDC: crypto is private, decentralised; CBDC is state-issued, centralised
Andhra Pradesh's blockchain-based land registry pilot aimed to eliminate fraudulent property transactions by making ownership records immutable and publicly verifiable, addressing a problem that accounts for a large share of civil litigation in India.