China continues its blockchain journey by creating a new finance and trading platform with the assistance of its central bank.
While some countries may be giving cryptocurrencies the cold shoulder, the same cannot be said for blockchain technology. This is especially true for China. The country has been giving Bitcoin and the like a frosty reception since the infamous ICO ban of September 2017.
This doesn’t extend to its supporting technology though. The country is leading the way when it comes filing blockchain patents, even ahead of the US. Last week also saw China legalize the use of blockchain-verified information in Internet-related court cases.
Support from the People’s Bank of China
Now, according to the Global Times, the country’s central bank is next in line to enjoy all of the benefits that blockchain has to offer. The People’s Bank of China (PBoC) recently helped launched a trial of the (deep breath) Guangdong-Hong Kong-Macao Great Bay Area Trade Finance Blockchain Platform in Shenzhen in South China’s Guangdong Province.
Li Chao, who is an analyst at Beijing-based iResearch, extolled the virtues of blockchain and how it can help businesses in the country:
China has been cracking down on activities using virtual currencies, but blockchain is a quite advanced technology which has been adopted by many countries. So China will definitely not lag behind. Blockchain technology could also ensure a more efficient and safe information-sharing system, and it is expected to reduce the financing costs for micro- to medium-sized enterprises.
More Time- and Cost Effective
With regard to time-saving, a traditional round of trade financing would usually take two weeks to finish. With blockchain, it would take about 20 minutes. This drastic decrease would, of course, affect costs as well. Xu Honghui, who is the Vice President of the transaction banking division of Ping An Bank, explained just how much the technology can save businesses:
Previously, trade financing costs for micro- to medium-sized enterprises were about 7% to 8%, but the blockchain system could cut the cost to less than 6%.
However, upgrades are expensive, especially if you’re upgrading a previously well-established system and especially if it’s in the finance sector. Li believes that introducing this platform in the new financial area of Greater Bay is a good start to getting people familiar with blockchain technology before updating anything.
In fact, trust is a major force when it comes to the prevention of mass adoption. Although it is almost a decade old, this is still a brand-new technology for some. By fostering trust and familiarity, more companies and ultimately people will come to rely on it.
What do you think of China’s latest blockchain-based initiative? Let us know in the comments below!
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Author: Nikita Blows