Blockchain technologies are driving innovation all around the banking sector. According to the World Economic forum, about 80% of the top global banks are planning to launch blockchain projects in the next year. Now Chinese banks are looking to join the party.
Like most financial markets related activities in China, the adoption of blockchain technologies will come in unique flavors and will have some unique implications for the blockchain space.
Chinese banks are initially looking at blockchain technologies to improve transparency to fight fraud in the financial sector. The Chinese banking space is still drastically behind the rest of the first world countries in terms of digitalization and the adoption of modern technologies. The adoption of blockchain solutions could help push Chinese banks to the forefront of a new wave of innovation in the banking sector.
Similarly, the Chinese government has recently embarked on an anti-corruption campaign that has uncovered more than one scandal. Top Chinese authorities such as the Ministry of Industry and Information has identified blockchain technologies as a fraud-fighting tool and called on the government to encourage large firms to invest on that area. As a result, big Chinese banks are aggressively trying to recruit blockchain engineering talent.
As a country, China certainly has a lot of experience with blockchain technologies. The Asian giant accounts for a large percentage of the Bitcoin global trading. However, the adoption of non-Bitcoin blockchain technologies remains almost non-existent.
The unique socio-political and economical environment in China is likely to cast a unique flavor in the adoption of blockchain technologies by Chinese banks. I’ve summarized a few ideas about that should be considered when analyzing the implications of the adoption of blockchain technologies by the banking sector in China. Here are my top three:
1 — A Private Chinese Financial Blockchain: Looking at how the Chinese government operates and regulates the country’s internet access or public stock exchanges, it is likely that the involvement of the governments in the adoption of blockchain technologies will result on the implementation of a private or consortium blockchain among the Chinese banks and the government. That model will grant the Chinese government regulators special access to transaction data from its citizens.
2 — A Chinese Ethereum Fork: The unique characteristics of the Chinese market creates an interesting opportunity for blockchain platforms specialized on that market. A Chinese version of the popular Ethereum platform is certainly an intriguing idea.
3 — Communist Rules on the Blockchain: Not to get overly political but I can’t avoid wondering what could be the implications of a communist government having access to an efficient systems to track financial transactions Crazier currency manipulations or stronger persecution of human rights activists are some of the things that come to mind.