Ripple Labs, Inc. is an American technology company which develops the Ripple payment protocol and exchange network. Originally named Opencoin and renamed Ripple Labs in 2015, the company was founded in 2012 and is based in San Francisco, California. Indian Institute of Technology Bombay (IIT Bombay) signed a Memorandum of Understanding (MoU) with Ripple on 4th June, 2018 to create a Centre of Excellence to support academic research, technical development and innovation in Blockchain, cryptocurrency and digital payments.
The MoU was signed by Prof. Devang V. Khakhar, Director, IIT Bombay and Mr. Navin Gupta, Managing Director, Ripple. We contacted Prof. R. K. Shyamasundar of the CSE department to shed some light on the technicalities and expectations out of this collaboration.
What is Blockchain?
Blockchain is a distributed ledger, in a layman’s language. It maintains a record of all the transactions that happen on the network, which is not open to all but can be accessed anonymously for regular transactions and can be identified for auditing and legal purposes, if required. For example, an auditor can check why millions went from A to B but any non-authorised person will not know who A or B is. So, identity is concealed in regular transactions along with the content of those transactions. Every computer in the network checks (validates) the transaction against some validation rules that are set by the creators of the specific blockchain network.
Land records can be made transparent such that the network can verify the ownership to authorities and also change ownership during transactions. It can be used for micro-transactions, like say every 10 paise or so can be accumulated over a period of time and settled later. Financial Technology (FinTech) can have different protocols and efficiencies.
The Need of Blockchain
There has been a rapid increase in interest in Blockchain applications in the last couple of years. Usually, for every algorithm, we begin with a small learning environment and then get bigger. But for Blockchain, unless you’ve a large dataset, the whole thing doesn’t have any significance; meaning that only if you’re participating in a larger network of information will your learning curve improve. Not everything can be replaced by Blockchain though, as the amount of energy needed will be enormous. But the network structure can be made use of in effective ways.
There is a real need for Blockchain in large transactions to make everything transparent. There should be no illegal or erroneous transactions due to human error because they are detected much later. A distinct advantage of this being electronic is that it is possible to detect it if someone makes an introspection . Nobody can claim that the money was lost as the network guarantees transparency. After the attack on the World Trade Centre in the USA, the financial institutions came back up in about 24 hours because the databases were distributed geographically. The Blockchain too uses a distributed ledger.
IIT Bombay’s Involvement
One validator worldwide will be administered at IIT Bombay. It will participate in a majority of transactions that happen on the Ripple network. Since the Blockchain functioning is democratic, majority of the validators have to agree to a transaction. IIT Bombay faces many tasks ahead to maintain this validator, like developing a learning framework, distributed computation challenges, and calculating time time taken for a transaction to be validated by this validator. Humans can only see how much time the validator took for a transaction and how many transactions it participated in.
IIT Bombay has regular rules as far as sponsored research is concerned, be it government, private or industrial. The same would be followed for this one. So, the intellectual property developed will follow the strict guidelines which have been approved in IIT Bombay.
Strategic Guidance and Technical Resources expected
Ripple will be setting up a validator at IIT Bombay and providing the technical knowledge needed initially. There will also be an exchange of persons across the Ripple network, to see if there is any impact on the scalability of Ripple transactions, protocols and privacy by the experiments done here in IIT Bombay. With a lot of academic, scientific and also industrial users coming on one platform, hopefully lots of more experiments will be launched by private entities and government so that whenever they face more challenges, either people from academia or Ripple or other experts can try to come up with solutions and initiate more research in this field.
Global Institutions collaborating with Ripple
The 17 institutions include the University of Pennsylvania, CSAIL at the Massachusetts Institute of Technology; the Center for Information Technology Policy at Princeton University; the Haas School of Business at the University of California, Berkeley; the University of Waterloo in Ontario, Canada; University College London; the University of Oregon; the University of North Carolina at Chapel Hill; Korea University; the University of Luxembourg; Delft University of Technology (Netherlands); the University of Nicosia in Cyprus; Australian National University; Fundação Getulio Vargas (Brazil); the McCombs School of Business at the University of Texas at Austin; IIT Bombay; and the International Institute of Information Technology, Hyderabad (India).
Departments in IIT Bombay
Computer Science and Engineering and Electrical Engineering departments, along with the SJM School of Management, with a couple of faculty who have immense interest are participating in this research as of now. As other institutes are welcome to contribute, Tata Institute of Fundamental Research (TIFR) might also get a speed up on their experiment of trying to automate their whole administrative governance structure.
There’s no bar on us as an institution: it is left to us to decide whatever the modality is. So some professors from other institutions can collaborate with IIT Bombay. It will always have some restriction because everyone would like to use the facility but we’ll see oversee academically.
Implication on Financial Products Industries in India
There will be a huge impact because people get a platform along with a validator. This would provide them with an advantage to get a feedback. New projects and also even the industrial centre of IIT Bombay can get a boost. Many industries can begin experimenting on financial FinTech products. Currently, payment systems and financial technologies has a potential of lot of growth not only in business but also transparency in the government. This might pave a way where one could experiment in a real network and then see how we can go ahead.
Implications for privacy
Privacy is an important concern, especially in the context of the General Data Protection Regulation (GDPR) from the European Union as to how one can experiment on technologies to ensure privacy while maintaining transparency and fulfilling other development imperatives.
Hopefully, this collaboration will foster research and perhaps, lead to solutions to problems in diverse aspects of our lives – from financial access to data privacy, among others.
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