Government agencies should move beyond viewing blockchain technology as a basic term for overuse, or simply as a data storage mechanism. Cryptocurrencies based on blockchain technology can be a threat to sovereign government control over the money supply and monetary policy, but there are many advantages with the technology that can be used creatively by the state to solve some of its problems.
NFTs (Fungible Tokens) represent a diversity of cryptocurrencies in the sense that they are not swappable. For example, bitcoins are fungible tokens, i.e. one bitcoin is indistinguishable from another bitcoin and is interchangeable. But NFTs are uniquely identified. This is why digital artifacts are now sold as NFTs on the blockchain, which guarantees their authenticity. In simple words, one can have a digital copy of the Mona Lisa, but the original and authentic Mona Lisa will be with the owner of its NFTs. This amazing capability of NFTs is being used by many private entities to ensure authenticity. In August, Coca-Cola raised more than $570,000 in its first NFT collectible auction. People have spent more than $230 million trading NBA Highlights’ digital collectibles. In India too, it won’t take much to watch Cricket NFT and Bollywood NFT, which can monetize, such as a clip of Mahendra Singh Dhoni’s winning shot in an IPL match, or a particularly suspenseful scene from a film, such as Katappa. murder of amarendra bahubali Bahubali-1. It is the monetization potential of NFTs that presents the first opportunity for the government.
NFTs for funding museums: Creating NFTs for artifacts in museums can be an important source of funding for museums in the country. To put things in perspective, the budget overlay for museums in 2021-22 was ₹108 crore and others ₹293 million through support autonomous bodies, while the global NFT market saw sales volume of over $2.5 billion within the first half of this year.
Each museum has its own treasure trove of artifacts, the digital identity of which can be created through NFTs. Each digitized artifact may be put up for sale in the museum without any rights over the actual artifact. What the buyer will receive is an authentic NFT of the museum’s artwork. For example, if an NFT of Mohenjodaro Dancing Girl is created and sold on a blockchain medium, it is bound to attract interest from history fans.
The ownership of the NFTs is kept on the blockchain so that no disputes arise, and even better, every time the NFT changes hands, the government can receive a platform commission on the sale price, making it a constant stream of funds. To be clear, the government is not losing ownership of the physical artifact, it is only the digital NFT version of it that is changing hands.
NFTs for Municipal Finance: Various municipalities in India have raised funds through municipal bonds (or munis), but many have faced varying amounts of interest from the public. Lack of credit rating, and doubts over repayment capacity are some of the issues that result in low investor confidence. NFTs present an opportunity here. Municipal corporations may not have credibility, but this may be offset by the cultural value of property and historic buildings. They can create a collection of NFTs for historical sites and put it up for auction on the blockchain. Each buyer will have a piece of the city’s history. Not only landmarks, infrastructure projects such as parks or flyovers can also be represented digitally and made in NFTs for local citizens to bid on. Such auctions would not only increase the resources of the state, but would also create a more participatory governance where citizens feel that they own part of the city.
While there are differing views on the regulation of cryptocurrencies, the underlying technology of blockchain appears to be acceptable, as evident in the RBI Bulletin and the recommendations of the Inter-Disciplinary Committee. Various government agencies have identified use cases for blockchain. The Ministry of Electronics and Information Technology had released the draft of a National Strategy on Blockchain. Government think tank NITI Aayog also released a report, Blockchain: India’s StrategyDisplaying use cases ranging from land records to chit funds.
One thing is clear: Blockchain, being a revolutionary technology, cannot be stopped. An application of this technology like NFT, which presents a huge opportunity to unlock value, should be readily welcomed by the government and used creatively.
Mahesh Singrapu is an Indian Revenue Service officer and Deputy Director in the Enforcement Directorate. Thoughts are personal.
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