The Indian Challenge to Blockchains: Digital Public Goods

In my post, Blockchains and the Opportunity of the Commons, I explored the potential of blockchains to create new commons:

Blockchains and tokenization are a way to incentivize the creation of a commons. A commons is an unowned place, platform, or protocol that helps people to meet, communicate and transact. Commons underlying modern life include TCP/IP, SMTP, HTTP, GPS and the English language. We don’t see these commons clearly because they are free, ubiquitous and, like air, taken for granted. What we do see are platforms like Airbnb, Uber and the NYSE and places to meet and communicate like OkCupid, Twitter, Facebook and YouTube. What blockchain and tokenization offer is the possibility of creating commons to replace all of these services and much more.

For the most part, the potential has not been realized. But the core idea of substituting a protocol for a firm has been taken in a different direction in India. Instead of blockchains, India has been experimenting with digital public goods. A digital public good is open source software with open data and open standards–available for use or even modification and adaption by anyone. The blockchain community, for example, has long aspired to develop a blockchain-based Uber, connecting drivers and riders without a corporate intermediary. India has achieved this through digital public goods instead.

Namma Yatri is an open-source, open-data Uber-like protocol with 100% of the commission flowing directly from rider to driver. Namma Yatri is built on the Beckn Protocol, a product of the Beckn Foundation which is backed by Infosys co-founder Nandan Nilekani (Tyler and I had the opportunity to talk with many people behind the project including Nandan on a recent trip to India). Namma Yatri has booked over 15 million trips in just one year of operation, mostly in one city, Bangalore. I expect it will expand rapidly.

Namma Yatri is only one example of a digital public good in the India Stack, a collection that includes identity (Aadhaar), payments (UPI) and digital data sharing (e.g. digital lockers). Since its launch in 2008, for example, India’s Aadhaar system has created a digital identity for over 1.2 billion people allowing them to open some 650 million bank accounts. This has enhanced financial inclusion and facilitated direct government payments of pensions and rations, reducing corruption. Likewise, the UPI system built modern payment rails which are then leveraged by banks and firms such as Google Pay and WhatsApp. The resulting payments system does some 10 billion transactions a month and is one of the fastest and lowest cost in the world.

Challenges remain. The development of digital public goods relies on funding from non-profits, governments, and private consortiums, raising questions about long-term sustainability. These goods need regular maintenance and updates, and some require backend support. Namma Yatri began as a completely free app for drivers and users but if there is a problem who do you call? To support the back-end office, and to pay for updated inputs (such as maps) the service has started to use a subscription fee. Nothing wrong with that but it’s a reminder that firms are not so easily dispensed with. Privacy is another concern. While blockchains offer privacy at the technology layer, privacy for digital public goods depend on legal and normative frameworks. For instance, India’s Aadhaar system is legally restricted from police use, a smart balance that needs to be maintained in changing times.

Despite these challenges, there is no denying that India has built digital public goods at scale in a way that demonstrates an alternative pathway for digital infrastructure and a challenge to blockchains.