After its crackdown on cryptocurrencies, China is now embracing blockchain technology. The country has identified three regions as “blockchain pilot zones.” The move is seen as a way for China to remain competitive in the global race to adopt blockchain technology.
China has long been a major player in the cryptocurrency world, but it took a hardline stance against digital currencies last year. The country banned initial coin offerings and shut down exchanges, dealing a blow to the crypto industry.
But China appears to be softening its stance on blockchain technology, the underlying framework for cryptocurrencies. The country has identified three regions as “blockchain pilot zones.” And President Xi Jinping recently said that blockchain should be a “core” technology for the country.
Why would China implement cryptocurrencies?
China’s embrace of blockchain technology comes as the country looks to maintain its competitiveness in the global race to adopt the emerging technology. Blockchain is a distributed database that allows for secure, transparent and tamper-proof transactions.
The Chinese government has been investing heavily in blockchain research and development. The Cyberspace Administration of China, the country’s internet regulator, released a set of guidelines last month that encourage businesses to use blockchain technology.
And earlier this year, the People’s Bank of China, the country’s central bank, announced it was working on its own digital currency. The move could give Beijing more control over the flow of money in and out of the country.
The effect of the decision on the Chinese financial companies
The Chinese government’s support for blockchain technology is a boon for companies like Ant Financial, which is already using the technology to power its popular Alipay mobile payment platform.
Alipay is the world’s largest mobile payment platform with over 700 million users. And it’s not just a payments platform. Alipay also offers loans, insurance, and investment products.
Ant Financial is an affiliate of Alibaba Group, the Chinese e-commerce giant. And Alibaba founder Jack Ma is a member of Ant Financial’s board of directors. Ma has been a vocal advocate of blockchain technology. He believes it has the potential to transform the financial industry.
“The first generation of the internet was about connecting people,” Ma said at a conference in Shanghai last month. “The second generation is about connecting businesses. The third generation is about connecting data, devices, and things.”
“Blockchain technology could potentially connect everything,” he added. “It has the potential to create a trustless society.”
Ant Financial’s blockchain platform is called Ant Blockchain. It’s a permissioned blockchain platform that allows enterprises to build their own decentralized applications (Dapps). Ant Blockchain has already been used by a number of banks and other financial institutions in China. And it’s not just for payments. The platform can be used for traceability, supply chain management, and cross-border remittances.
In March, Ant Financial announced that it had built a blockchain-based cross-border remittance platform called Ant Blockchain Global remittance. The platform allows users to send and receive money in real-time.
Ant Financial is just one of many companies working on blockchain technology. Others include Alibaba, Baidu, and Tencent. These companies are collectively known as BAT.
The benefits of embracing blockchain technology for China
Blockchain technology has a number of potential benefits for China.
First, it could help to reduce the country’s dependence on US dollars. Currently, most international trade is conducted in US dollars. This gives the US a lot of influence over the global economy. If China could use its own currency for more international transactions, it would reduce its reliance on the US dollar.
Second, blockchain technology could help to improve the efficiency of Chinese businesses. Many businesses in China are still using paper-based processes. This is inefficient and slow. Blockchain technology could help to speed up these processes by digitizing them.
Third, blockchain technology could help to fight corruption. The distributed nature of blockchain means that there is no single point of failure. This makes it difficult for corrupt officials to tamper with the data.
Fourth, blockchain technology could help to protect intellectual property rights. The immutable nature of blockchain means that once something is written on the blockchain, it cannot be changed. This could help to prevent plagiarism and counterfeiting.
Finally, blockchain technology could help to improve the transparency of the Chinese government. The Chinese government is often criticized for being opaque. Blockchain technology could help to make the government more transparent by providing a public record of all transactions.
Conclusion
Overall, blockchain technology has the potential to transform the Chinese economy. It will be interesting to see how the Chinese government embraces this new technology in the years to come.