PBOC blockchain push tech­give blockchi­naa mas­sive fil­lip tech a mas­sive fil­lip

Dig­i­tal cur­rency, global pay­ment sys­tems are likely to be first seg­ments to ap­ply new way of shar­ing tam­per-proof in­for­ma­tion

China Daily (USA) - - BUSINESS - By CAI XIAO caix­iao@chi­nadaily.com.cn

China is in­vest­ing sig­nif­i­cantly to de­velop blockchain tech­nol­ogy to re­shape fi­nan­cial ser­vices. Dig­i­tal cur­rency and global pay­ments may be the first ap­pli­ca­tions.

This tech­nol­ogy al­lows par­ties to carry out direct trans­ac­tions with­out us­ing an in­ter­me­di­ary by pro­vid­ing a means for peo­ple to share re­li­able and tam­per­proof lists of in­for­ma­tion known as dis­trib­uted ledgers.

The Peo­ple’s Bank of China said ear­lier this month that it would re­cruit per­son­nel to de­velop dig­i­tal cur­rency.

“Blockchain tech­nol­ogy can be ap­plied to many ar­eas, and dig­i­tal cur­rency and global pay­ment sys­tems may be the first ap­pli­ca­tions,” said Xu Mingx­ing, CEO of a blockchain pay­ment com­pany OKLink.

Xu said blockchain tech­nol­ogy is still at the early de­vel­op­ment stage and will be ma­ture in the next two to three years, adding that de­vel­op­ing dig­i­tal cur­rency with the blockchain tech­nol­ogy is not dif­fi­cult, but it is very im­por­tant to con­trol risks.

OKLink is a Bei­jing-based global busi­ness-to-busi­ness blockchain pay­ment plat­form that co­op­er­ates with about 100 fi­nan­cial in­sti­tu­tions with re­mit­tance li­cences in more than 20 coun­tries and re­gions. “Our busi­ness is grow­ing rapidly and we ex­pect the trans­ac­tion value of our plat­form will reach more than $100 mil­lion in 2017,” said Xu.

Yao Qian, the cen­tral bank of­fi­cial lead­ing the dig­i­tal cur­rency re­search cen­ter, said de­vel­op­ing dig­i­tal cur­rency can­make trans­ac­tions more trans­par­ent and ef­fi­cient and de­crease costs of print­ing and trans­porta­tion. China will first in­tro­duce the cur­rency in cer­tain money mar­kets and pro­mote its use in a grad­ual and cau­tious way.

Ac­cord­ing to a re­port of the­World Eco­nomic Fo­rum in Au­gust, in­ter­na­tional pay­ments and wire trans­fers, which cur­rently

es­ti­mated trans­ac­tion value on OKLink, a Bei­jing-based global busi­ness-to-busi­ness blockchain pay­ment plat­form, by 2017

in­volve a lot of man­ual steps and fees, would be re­placed by blockchain.

Sev­eral blockchain al­liances have been formed to de­velop the tech­nol­ogy. In Oc­to­ber, Shang­hai set up a Lu­ji­azui blockchain al­liance with 13 fi­nan­cial in­sti­tu­tion mem­bers. Its main re­search ar­eas in­clude ren­minbi cross-bor­der pay­ments and blockchain’s ap­pli­ca­tion in a regis­tra­tion-based ini­tial public of­fer­ing sys­tem.

In April, a non-com­mer­cial or­ga­ni­za­tion, China Ledger Al­liance, was set up to fo­cus on re­search and de­vel­op­ment of blockchain ap­pli­ca­tions. It is led by re­search and de­vel­op­ment com­pany Wanx­i­ang Blockchain Lab.

“Be­fore full adop­tion of blockchain is pos­si­ble, there are fac­tors that need to be ad­dressed, in­clud­ing an un­cer­tain reg­u­la­tory en­vi­ron­ment, lack of stan­dard­iza­tion ef­forts and the need for a for­mal le­gal frame­work,” said Bob Con­tri, Global Fi­nan­cial Ser­vices In­dus­try leader, Deloitte Global.

Huang Zhen, a pro­fes­sor of the law school of the Cen­tral Univer­sity of Fi­nance and Eco­nomics, said it is nec­es­sary for reg­u­la­tors to mon­i­tor blockchain ac­tiv­i­ties and carry out ap­pro­pri­ate reg­u­la­tions.

The re­port of the World Eco­nomic Fo­rum said blockchain will fun­da­men­tally al­ter the way fi­nan­cial in­sti­tu­tions do busi­ness around the world, but it comes with a set of risks that must be con­sid­ered. Th­ese in­clude er­rors in de­sign, ma­li­cious be­hav­iour as a con­se­quence of hu­man de­ci­sions, and po­ten­tial gaps in se­cu­rity across all in­puts and out­puts.

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