China Plans to Adopt Blockchain for Social Security Funds
China’s social security system will be adopting the blockchain for fund management, ChinaDaily writes. While countries around the world are in disagreement regarding digital currency and the blockchain, China takes a different approach. Some countries are recognizing Bitcoin as valid currency. Some are not. Meanwhile, China is embracing the blockchain head on.
According to Wang Zhongmin, vice-chairman of the National Council for Social Security Fund, the blockchain is revolutionary. “There’s no doubt that blockchain technology will be used in the social security system because of its valuable applications in the investment and management of social security funds,” he said.
The blockchain is likely best known in association with Bitcoin. At the very essence, the blockchain is a tamper-proof ledger for digital transactions. Every “block” has a timestamp and a link to a previous block, creating the “chain.” Every transaction recorded within a block can be verified against previous blocks in the blockchain. When a new transaction takes place, the entire blockchain is authenticated by the network. The transaction is then added to a block and ‘becomes’ part of the blockchain.
Wang Zhongmin explains that China’s adoption of the blockchain is to ‘cut out middle men.’ The blockchain is decentralized intermediary. China hopes to cut costs and increase transaction efficiency. The blockchain also functions as a public record of transactions that is unlikely to be tampered with.
Axel Lehmann, chief operating officer for UBS Group says “To realize the full potential of blockchains, we will above all need to collaborate on a common platform. At UBS, we think it is essential that the industry avoid a standards war of the type that has bedeviled the adoption of new technologies in the past.”
Lehmann goes on to explain that several large scale collaborations are already in place. The movement to greater implement the blockchain into our every-day lives is rapidly growing. He gives an example involving UBS. The bank has been “experimenting intensely with the technology [blockchain]” and working openly with other organizations.
Banks are the current largest momentum behind the blockchain movement. WeBank, China’s first online-only bank, is expected to be making an announcement at Shanghai’s Global Blockchain Summit in mid September. This Global Blockchain Summit is expected to be the largest blockchain event ever. Alongside a host of banks, both domestic and international, incredibly prominent companies will be making appearances. IBM and Microsoft are some of the most notable on the list of projects. There will be nearly 100 organizations involved in the summit, according to EconoTimes. The Chinese government will not likely be making an appearance, contrary to unfounded rumors.
Regardless, an entire country is officially getting behind the blockchain by incorporating it into the social security program. Banks will no longer be the driving force behind finding an answer to the evolving blockchain ecosystem.
Currently, China has become part of the China Ledger Alliance, an organization that focuses on researching and developing blockchain applications. The China Ledger Alliance is led by Wanxiang Blockchain Lab, another blockchain research organization. As of now, the alliance has 15 members. The majority of organizations involved are financial services or technology companies.
“China’s central bank announced a 2016 investigation into digital currencies as an answer to the growing interest of Chinese investors in bitcoin and other cryptocurrencies,” ChinaDaily writes.
According to the alliance’s Twitter account, the group “aims to promote the use of distributed ledger technology in China.”
While global application of the blockchain is being pushed, China’s announcement brings out skeptics. Many would like to believe that a transparent social security system is coming. However, the fear of a non-public blockchain is overwhelming. For many Bitcoin users, a permissioned blockchain is in contradiction to a part of the blockchain’s essence.