While the regulations surrounding cryptocurrencies, remain in a gray area, there is some good news on the blockchain in India front. The National Payment Corporation of India (NPCI) announced the launch of permissioned blockchain, Vajra.
It was co-developed by the banking regulator Reserve Bank of India (RBI), following the release of a whitepaper on November 19 this year. The research paper said, “After an initial assessment, the DLT based system has been designed for automating payment clearing and settlement processes of NPCI products. The platform is named as ‘Vajra Platform’. A permissioned network will be set up so that only the parties who have been approved by the Network Administrator can be a part of the network. Since Vajra is being developed for a payment processing industry, permissionless blockchain systems were not considered.”
NPCI developed the distributed ledger for providing tamper-proof and secure database for supporting several payment procedures. Since the blockchain, is a permissioned one, there are registered parties under a network administration, that can be a part of the blockchain network. Three nodes of the Vajra platform include:
- Notary Node: A transaction is validated only if the Aadhar biometric is used for authentication
- Clearing House Node: The NPCI will have the admin rights for this node. It will provide a root authority signed TLS certificate from the permissions service of the network to participant nodes.
- Participant Node: These nodes will be represented by banks who can receive and view details of the transaction.
There are several benefits to Vajra in payment, clearance and settlement such as transparency, information storage, time sensitivity and manual processing, among others.
Sumit Gupta, the founder of CoinDCX told a news portal, “Starting this journey on a permissioned blockchain makes eminent sense to test the network operations of different types of nodes and the transactional activities conducted by the customers. At the time when China, Uruguay, Turkey, Thailand, Sweden, France etc. are have already started working on their pilot projects to bring their own Center Backed Digital Currencies (CBDCs), NPCI coming up with an entire payments platform which is secure, tamper-evident, and versatile is exemplary.”
Full Disclosure: The author is currently working at CoinDCX