After finance, blockchain may be used in logistics, food sectors
When his daughter persuaded him to buy a black lightweight suit online, Kan Jianfeng, 61, a cautious dad that he is, raised a host of sharp questions: Is the seller honest? How can he make sure that the product he buys would actually be delivered (and not swapped with a counterfeit, or, worse, not delivered at all)?
Kan's nagging doubts arose because uncertainty sometimes shrouds online shopping, with e-tailers rigging positive ratings, exaggerating products' quality and messing up on deliveries.
To overcome such hassles, blockchain technology will likely be used increasingly in China. For, data, once recorded in a blockchain-based digital ledger or register, cannot be altered, experts said.
It can be shared among a distributed network of computers with no need for middlemen (visualize transactions between two parties without banks in between). Decentralization is its hallmark.
Bettina Warburg, the founder and director of Blockchain Futures Lab, said in a talk: "It's basically a public registry of who owns what and who transacts what."
Despite being controversial, if cryptocurrencies such as bitcoin are receiving a benefit of doubt from certain sections of the financial markets, it is because they use blockchain technology. Its most-talked-about applications are in finance.
Enterprising Chinese companies are, however, looking to use blockchain beyond finance in areas such as food traceability and charitable works. Layla Dong, CEO and founder of Blockshine, a Shanghai-based blockchain consultancy, said, "In China, e-commerce giant Alibaba's logistics branch got a head start. It applied blockchain to track the origin and destination of every package and all the information is transparent to the clients involved."
Yuan Peizhang, product manager with Beijing Chilun Yichuang Technology Co Ltd, said, "For traditional logistics firms, missing or inconsistent delivery information remains the most difficult problem to solve. Blockchain, if comes to its full fruition, will make harder for anyone who wants to fake information."
According to Chinese research firm CCID Consulting Co, blockchain services in China are projected to reach 81 million yuan (12.79 million U.S. dollars) in sales by this year-end, and 512 million yuan (80.84 million U.S. dollars) by 2020. The figure in 2015, according to the report, was "almost zero".
E-commerce company JD, in partnership with Wal-Mart Stores Inc and Tsinghua University, launched a blockchain alliance in China to test the technology for food traceability and transparency.
Chai Yueting, professor of Tsinghua University's Department of Automation, said, "Blockchain tech's integration into food safety is one of the most important ways to improve life quality of the Chinese, and even global peoples."
"If some application scenarios already have good decentralized solutions, and blockchain neither lowers the cost nor improves efficiency, then there is no need to insist on using it," said Zhong Xinlong, a consultant at CCID Consulting.
To ensure blockchain's healthy development, China is expediting technical standards and guidance. The country's first official guidance, a document titled "The Blockchain Technology and Application Development Whitepaper", was published in 2016 by the Ministry of Industry and Information Technology.
Experts expect blockchain technology to make rapid advances in China over the next three years as companies are exploring various solutions in many sectors like bill verification and logistics.
Tencent Holdings Ltd has been exploring blockchain-based applications in various scenarios, but the technology is still in its infancy, said Pony Ma Huateng, chairman of the company best known for its app WeChat.
A possible application could be verification of bills and documents, said Ma, who is also a deputy to the 13th National People's Congress, China's national legislature.
A key to healthy development of the blockchain technology is to draw social attention away from digital currencies, Ma said ahead of the first session of the 13th NPC.
His comments came as regulators around the world are looking to effectively regulate cryptocurrencies, which pose potential risks like money laundering and tax evasion.
Blockchain is just the technology behind digital currencies, and the technology per se has no problem, said Ding Lei, a member of the 13th National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body.
But blockchain should not be used as a gimmick to defraud, Ding, who is also the CEO of NetEase Inc, said at a news conference in Beijing.
Agreed Zhang Jindong, a deputy to the 13th NPC, the country's national legislature. In his suggestions to the NPC, Zhang, who also chairs Suning Group, called for the integration of artificial intelligence and blockchain technology to improve risk prediction and prevention.