Finance Minister Nirmala Sitharaman has flagged anonymity as an “inherent risk” in blockchain technology
Bombay:
Finance Minister Nirmala Sitharaman on Saturday flagged anonymity as an “inherent risk” in blockchain technology and called for precautions to be taken going forward with an increase in the use of this technology.
The finance minister made it clear that the use of the distributed ledger technology (DLT), also known as blockchain, is “absolutely necessary” and the government also supports its use.
The minister’s comments anticipate the launch of the central bank’s digital currency (CBDC) budget announcement, which is based on the blockchain technology itself and billed as similar to the paper currency in our wallets.
“The anonymity is what…an unknown element in this whole thing. The anonymity of the person or who or the robot is the one we absolutely need to prepare as… a future challenge,” said Ms Sitharaman, addressing an NSDL event here.
Ms. Sitharaman said the DLT is a wonderful technology that will help democratization, but called anonymity an “inherent risk” that we must protect ourselves from.
Sitharaman called anonymity a “powerful insurmountable” throughout the equation, saying, “unless we can arm ourselves against that anonymous element which in itself can pose an inherent risk, we’ll probably be exposing ourselves a lot more than we ever imagined.” Ms Sitharaman praised Madhabi Puri Buch, head of the capital markets regulator, Securities and Exchange Board of India (SEBI), who spoke for her at the same event, for “correctly” warning of the risk of anonymity, as well as advocating for DLTs.
Ms Buch said we do not want anonymity in the CBDC, which should be introduced by the banking regulator RBI during the fiscal period.
According to the central bank, significant progress has been made with the implementation of the CBDC.
Meanwhile, Ms. Sitharaman said private cryptocurrency assets such as Bitcoins are “fairly well-distributed” in India.
Ms. Buch said the strengths of DLT’s transparency, real-time, infinite divisibility and being a cost-effective medium.
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