China’s Central Bank to Replace Paper Checks with A Blockchain System
The Central bank of China has reportedly completed the development of a blockchain based system which would probably replace paper checks in the country soon.
Di Gang, Deputy Head at digital currency research lab at People’s Bank of China said that the department has “completed the infrastructure of a system that issues digital checks based on a blockchain with smart contracts technology.”
The system was developed to swipe check frauds from the Chinese market. The project started in 2016 with a considerable investment in R&D and a prototype was tested successfully in a digital environment.
According to Gang, the underlying reason for frauds is the long chain of intermediaries for check issuance like banks. China might face a financial crisis if a massive number of fake checks are being circulated in the economy via commercial banks.
He added that practical Byzantine fault tolerance (PBFT) was used by banks to eventually conclude that having a blockchain based system is a good idea. In such a way banks could control transactions through smart contracts tokenizing the checks in the meanwhile. It will further help regulators have a transparent view to determine the life cycle of a virtual check.
Gang said, “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 always been a great supporter of the breakthrough technology. It is not astonishing that the country has the most number of patents filed concerning blockchain technology. Citizens of the country have also been able to send shipments using the technology which decreased the time used in traditional shipping formalities.
A few days ago CCTV, China Central Television acknowledged blockchain as ten times more valuable than the internet. Being the largest state broadcaster in the country any sentiment telecasted on the channel is bound to have a huge impact on citizens.
The news was featured in a segment called “Dialogue” telecasted on Sunday night via the Finance Channel. Chen Weihong, CCTV host, managed an hour-long show that was aimed to educate the audience about the basics, caliber and risks involved in blockchain technology.
The conversation included popular personalities from the blockchain industry from the public as well as the private sector like Don Tapscott, the well-known author of “Blockchain Revolution.”
On the other hand, the country has been pretty hostile against digital currencies. Earlier this year all the activities related to virtual coins, including mining, were banned by the authorities. As of now the people are able to trade through peer-to-peer platforms but cannot convert their holdings into the fiat currency.
It is still shocking to know that major players in crypto mining sector come from China, which is also the highest consumer of graphics cards and hardware used in discovering bitcoin.
The blockchain is enjoying a phase of universal acceptance in the country but only time will tell its impact on the economy.