The Bank of China will use blockchain technology to alleviate poverty in the Tibet Autonomous Region, a province with a high poverty rate of 12.4 percent, in comparison to the national average in China of 3.1 percent.
How the Blockchain Can Reduce Poverty
According to China Money Network, the Bank of China announced the initiative at a conference in Tibet. The Bank of China has developed a cloud-based system to manage a local poverty reduction fund in the past. The system had functions that included access to information, security certification, and file transfer to enable the collective management of projects like fund application, project verification, and fund allocation.
The Bank of China has decided to upgrade the existing system with blockchain technology. They will, therefore, set up a multi-node blockchain network to connect with their partners like the Agricultural Bank of China and their fund applicants.
Through the bank of China’s new system, there will be a clear overview of the use of the funds, how they are assigned, and whether they are managed efficiently. If the trial is successful in Tibet, it will set a great example to fund management projects in other poor Chinese Provinces which include Yunan, Gansu, and Qinghai.
Furthermore, Wall Street Journal journalists Phil Gramm and Hernando de Soto, believe that such an innovation could not only improve poverty reduction efforts, but potentially end the plight entirely. Apart from funds and donations to more impoverished cities, Gramm and Soto believe that:
“If blockchain technology can empower public and private efforts to register property rights on a single computer platform, we can share the blessings of private-property registration with the whole world. Where property rights are ensured, so are the prosperity, freedom, and ownership of wealth that brings real stability and peace.”
Chinese Banks are Quickly Embracing Blockchain Technology
The banks in China have been extremely active in implementing blockchain technology. According to data collected by Thomson Reuters from the World Intellectual Property Organisation database, over half of the 406 blockchain-related applications came from China in 2017 alone.
In March 2017, China Construction Bank initiated a technology research project with the Alibaba Group. In June 2017, the Bank of China partnered with Tencent, to trial and test blockchain technology in the finance sector.
In another development during June 2017, the Agriculture Bank of China partnered with Baidu, to focus on fintech and blockchain technology while China’s Industrial and Commercial Bank formed a similar initiative with JD.com.
In Q1 of 2018, the Bank of China filed a patent application in regards to scaling blockchain systems while in April 2018, the Bank of China Hong Kong announced their current use of blockchain technology to handle almost all real estate appraisals.