In yesterday’s meeting of The Chinese Blockchain Technology and Industrial Development Forum, the Ministry of Industry and Information Technology and Software Services Secretary, Xie Shaofeng, said the Blockchain has brought new opportunities and challenges in the future to the software and information technology industries, according to Chinese media reports.
At the same time, a new paper was officially released called the “China Blockchain technology development and application of the White Paper” (2016 edition).
The Whitepaper has been in editing since early August. Multiple companies and institutions who have been committed to the development of the Blockchain Technology took part in the forum, including the Chinese Digital Technology Standardization Research Institution, Alibaba’s Ant Finance, Wanxiang Group, WeBank, Ping’an Insurance (also in R3), Wanda Finance, Onchain Solution and many others.
The Whitepaper highlights the status quo and future trend of the technology, analyzing finance, supply-chain, entertainment, smart manufacturing, social welfare, education and employment and many other application scenarios. It points out that the core path and standardization direction in the future.
Bitkan in China reports in more detail:
Finance is the Hot Spot
Financial sector is defined as the first application for Blockchain Technologies, including detailed scenarios like payment, asset management, securities, clearing & settlement and user ID.
Payment sector sees the greatest number of pain points. Cross-border inter-institutional netting, clearing and settlement always carry a tremendous amount of cost and manual interference. User-end and back-office payment expenditure remains high and causes trouble for small-amount payment services.
Once the blockchain technology is introduced, inter-institutional netting and conflict-settlement costs will be minimized and the efficiency improved. Moreover, lower costs and improved efficiency will force financial players to realize small-amount cross-border payment.
Multiple custodians dominate the asset management sector by overseeing stock equities, bonds, vouchers and so on. The sector is haunted by high cost and falsification risks. The Whitepaper points out that these assets can be integrated onchain, hence causing a disintermediation processs to allow asset holders directly transact with each other. Industrial infrastructure will function as the custodians, ensuring asset authenticity and compliance and as the bridge between custodian repositories and distributed ledgers. Distributed ledger platforms may access repository’s trusted assets securely.
For the security sector, the Whitepaper defines financial asset transactions as a contract among parties based on set rules. The blockchain is capable of fully expressing these business logics with CODES, such as fixed-income instruments, repos, swaps and syndicated loans. An automatic contract implementation can be guaranteed and visible only to counterparites involved.
Clearing & Settlement is the perfect breakthrough point for Blockchain Technology. Currently, different infrastructure frameworks, business processes and manual netting processes are all causing high costs and failure chances. The core character of the Blockchain Technology is that it simultaneously realizes value transfer without a trusted third party.
The Whitepaper considers two important aspects of financial transactions: payment and securities. Via blockchain and the creation of a digitized fiat currency / some sort of settlement instrument, the aforementioned onchain asset pairings can be cleared and settled in real time in a P2P fashion, significantly reducing the cost of value transfers and resulting in much shorter time for clearing and settlement.
Moreover, supply chain logistics and retro-anticounterfeiting, IP protection in the entertainment sector, information integration and interoperability in the smart manufacturing sector, transparency and publication in the charity sector…are all considered major pain points that are waiting for the Blockchain Technology to save the day.
The Path towards Technology Standardization
Though the development of blockchain technology is bourgeoning, a proper standardization is missing. Standardization is a must for all technologies for it reduces cost and improves efficiency for corporate commercialization, and enhances the security. More importantly, it is a crucial base for the government to make policies and implement regulation.
The international standardization of the Blockchain Technology is at its preliminary stage. Whether or not China can play an important role in the process and increase her influence will be largely dependent on early planning and swift responses.
The Whitepaper hence emphasizes on the standardization, and points the path towards it. It identifies the standard into 5 categories: the Basics, the Process and the Methodology, the Trust and Operability, the Business and Application, the Information Security. The implementation solution will set the system building at its core, and comprises of 4 steps: System Pre-Research, Standard Research, Trial and Promotion and System Improvement. Based on the timetable, the last step will commence no later than Oct. 2017.
The Whitepaper further argued for future preferential policy making for the blockchain technology. The relevant policies will support the major technological research, exemplary projects, entrepreneurship & innovation platform building, system solution R&D and public service platform building.