China Builds a Blockchain-Based System That Could Eventually Replace Paper Checks
China is working very hard in order to integrate blockchain technology into the country’s economic system. This time, the Chinese central bank has finished its work on a blockchain platform that is able to digitize checks that have been issued by domestic businesses.
China’s Central Bank Blockchain System
According to a local news outlet, Di Gang, deputy head of the digital currency research lab at the People’s Bank of China (the country’s central bank), explained that the department finished with the development of a system that issues digital checks. The interesting fact is that the bank was able to use blockchain technology and smart contracts.
The country has been working on the platform since 2016 when the lab announced plans to finish with check fraud in the Chinese market. Later in 2017, the agency tested a prototype in a virtual and regulated environment. This time, the work has already been finished and could be released to the market very soon.
Physical business checks in China can also work like money orders. Besides being used to claim payment from a bank, users can exchange them with other financial entities. But even when that seems a very good system, there problems related with fraud, the risk is even bigger when there are so many intermediaries.
The agency has been working with the byzantine fault tolerance consensus (PBFT). Additionally, Di explained that the agency’s blockchain platform can tokenize checks and transactions can be controlled by using smart contracts.
Di said about that:
“Once the smart contract rules are set in the blockchain, any participant cannot alter the system easily, Even for code updates, regulators will have full access to the record, which increases regulatory efficiency and reduces the cost by removing a manual cross-checking process for transactions.”
China has been heavily investing in blockchain technology during the last years. According to the Financial Times, China has been the most active filer of blockchain patent applications. Moreover, Chinese president Xi Jinping embraced the technology several times in the past.