China to Make “Fastest Progress” With Blockchain in 2021
Top American market research company which provides advice on existing and potential impact of technology has dubbed 2020 “a year of reckoning” for blockchain or distributed ledger technology (DLT) while 2021 will see China “make the fastest progress” as they predict that the majority of networks that transition from pilot to production will run on enterprise blockchain platforms.
Forrester’s Principal Analyst, Martha Bennett, notes in a blogpost that they expect 30% of projects to make it into production globally in 2021 – including pandemic-induced projects that bring measurable benefit within a short timescale.
“China’s “new infrastructure” national initiative makes blockchain an integral part of the country’s digital infrastructure,” the post states. “In 2021, the Chinese government will make investments in most provinces across all verticals, and we’ll see a steady stream of systems going into production. China’s ambitions to provide a global public infrastructure via its global Blockchain Service Network won’t advance far in the current geopolitical climate.”
However, unlike the BSN, they note that the European Blockchain Services Infrastructure (EBSI) which is “equally bold in its mission” will see “some incremental progress in the form of pilot projects but no major breakthroughs” because of “convoluted procurement processes and conflicting interests.”
The pandemic amplified trends that were already underway as, increasingly, budgets for pure R&D projects — run in isolation from the business — were becoming harder to obtain and budgets for purely experimental and speculative projects cut this year while long-term strategic projects with potentials to change market structure or regulations are mostly working to extended timetables now.
The prediction comes as news surfaced that the first blockchain trade transaction between China and New Zealand has been recorded. It entails the shipment of milk powder from New Zealand dairy processor Fonterra to China’s Sichuan New Hope Trading with HSBC acting as the bank on both sides of the transaction, while blockchain-based digital courier platform Wave provided the underlying technology.
The goods’ shipper issued a cryptographically signed electronic bill of lading via Wave’s platform to Fonterra which added additional trade documents and submitted them in a digital ‘envelope’ to HSBC New Zealand which verified the compliance of the letter of credit and eUCP600 rules before forwarding the documents digitally to HSBC China then to Sichuan New Hope Trading before the bill of lading was returned back to the shipper thus releasing the cargo.
In a normal paper-based process, they note that it usually takes days if not weeks for a bill of lading – which is one of the most important documents in international trade – to travel from origin to destination physically changing hands several times along the way. But the end-to-end process, in this case, was completed in less than 24 hours even as they recognize that demand for electronic bills of lading has surged during the pandemic forcing exporters, carriers and financiers to seek alternatives as physical transfers of documents were held up by movement restrictions.
Rob Roughan, the interim CEO of HSBC New Zealand, described the development as supportive of the “digitisation of Fonterra’s supply chain into the key market of China” with streamlined trade workflows in the supply chain process and a cut down on costs.
Forresters maintained that while permissioned blockchains will remain the order of the day as many enterprise technology leaders have become open to exploring public blockchains, these platforms’ reassociation with the more “Wild West aspects of crypto assets” – citing recent headlines generated by decentralized finance (DeFi) – makes them remain scary for some risk-aware business leaders.