How China is boosting the use of blockchain technology in the country
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In October 2019, China’s leader Xi Jinping backed blockchain technology in the nation's industrial and technological transformation.
For most, blockchain is known for being linked to cryptocurrency such as Bitcoin, but blockchain technology is so much more than just a platform for crypto.
According to the World Economic Forum, with the use of sophisticated maths and cryptography, blockchain provides an open decentralised database for any transaction which involves value in the form of money, goods, property and even votes.
It stores these transactional records in what is known as a “block” which resides on several databases in a peer-to-peer network called a “chain.”
“This creates a record whose authenticity can be verified by the entire community,” the World Economic Forum said in a video release.
“The future global economy will move towards one of distributed property and trust where anyone with access to the internet can get involved in blockchain-based transactions,” it said.
The World Economic Forum added that in doing so, third-party trust organisations such as banks will no longer be necessary as new networks would evolve to meet society’s needs more cheaply and securely.
South China Morning Post (SCMP) reported that blockchain could further be used as a decentralised registration system, an e-voting system or even a supply chain system. And, while Bitcoin has been at the forefront of blockchain technology as it disrupted the status quo in the exchange of money without the use of banks, blockchain will also change how information will be exchanged.
In its bid to latch onto this core technology, China created the Blockchain Service Network (BSN), which has slowly been evolving the nation’s ports and cities.
SCMP explains that blockchain technology can be compared to the early internet, when individuals and companies each created their own chains. However, these chains were not connected, and it was only once these individual chains from different countries and industries started to talk and share data that the internet exploded.
“BSN is China’s initiative to boost blockchain among its people and encourage companies to adopt the technology and eventually get the chains to connect,” said SCMP.
In July 2020, the BSN had split into two separate networks. One was meant solely for China and the second for the rest of the world. BSN China, which requires permission to participate, is being used to develop local enterprise applications such as ones that would speed up e-commerce, while BSN International is open to the public and has since adopted more than 20,000 users.
Earlier this year, the central banks of China, Hong Kong, Thailand and the United Arab Emirates announced they would collaborate on a central bank digital currency (CBDC) project for cross-border payments.
“We’ve seen that Asia is being first and leading the next generation of digital society,” said Charles d’Haussy, managing director at ConsenSys, a blockchain software tech company.
“It’s also the first time you see four different central banks working on building a shared infrastructure to go cross-border… Usually, in the experimentation of CBDC, central banks would only look at the domestic market,” he said.
According to China Global Television Network (CGTN), China has already rolled out its testing phase of the digital yuan, also known as e-yuan, to push a cashless economy to help curb money laundering and enable further development of online shopping.
Meanwhile, in Japan, a proof of concept for CBDC is under way, and in other countries including Hong Kong, Thailand and South Korea authorities are also looking to future-proof their cities and are studying a potential CBDC.
In Africa, there has been an increase in the adoption of blockchain, with services network companies such as PwC offering blockchain adoption strategies to those interested.
“Over the past two years, we have seen a significant growth in blockchain projects across the whole trade value chain, including trade finance, supply chain, shipping and freight, as well as digitisation of trade documents,” Louis du Plessis, head of trade finance at investment bank RMB, said in an interview with Engineering News.