America’s gold reserves offered it a strategic position of strength during the Bretton Woods negotiations. Today however, with the currently-implemented fractional reserve monetary system collapsing, China is seeking to capitalise on the opportunity. The Chinese state has propelled blockchain technology into the international sphere upon founding the Blockchain Innovation Alliance, a collaborative project that brings together more than 100 enterprises, namely, IBM, AliBaba, Huawei and Tencent, with a view to build an open platform for open communication, cooperation and innovation through the utility of blockchain technology. (Peng, 2020)
Through the alliance, China has launched its public service blockchain platform, “Yu Express Chain”, that seeks to serve as a blockchain engine and a development services provider. Once launched, it will be the first global infrastructure network, where companies will be able plug in to the network, choose from one of many enterprise blockchain protocols or public chains, and effortlessly build global applications. “Designed to unify the fragmented market, BSN is a cross-cloud, cross-portal and cross-framework public network that enables developers to easily and affordably develop, deploy, operate and maintain permissioned and permissionless blockchain applications and nodes,” Leon Lu, CEO of Huobi, expresses.
The Chinese state asserts a variety of use cases; namely, smart city applications, whereby internet-connected sensors are used to collect data to better-manage public resources, specifically, energy conservation. Other use cases include identity registration and data storage. In support of such ambitions, China has filed for the most blockchain patents, globally. Following successful launch, the project will expand to Hong Kong and Singapore, among 54 other planned locations. In addition to international unification, another benefit is the network’s low price which will attract SMEs and individuals, further accelerating adoption of blockchain technology. (Zhao and Pan, 2020)
OneConnect, the FinTech branch of China’s largest insurance company, Ping An Insurance, has partnered with a logistics conglomerate, China Merchants Port Group, with ambitions to develop a blockchain-based information sharing platform for the country’s biggest trading hub. The platform will include information from the custom services, port operators, logistics companies, financial institutions and import/export firms to manage information pertaining to trade companies, logistics, contracts and other documents from a single system via shared databases on chain. The blockchain will aid tracking efficiency at a lower cost. Government access will enable state monitoring of international trade. (Pan, 2020)
Blockchain technology its third phase of utility and adoption, by way of which, the world is becoming smaller. This is resulting in significant geopolitical and macroeconomic implications. The financial system is sequentially being reinvented through the innovation of economic and technological world leaders. The current system of fiat-based economics is being challenged through the blockchain revolution.
As the Blockchain Innovation Alliance suggests, China is a leading actor in blockchain-based economic revolution through its innovation in FinTech. In the United States, Facebook’s corporate project, Libra, is set the launch in 2020. Similar to the above described Chinese project, Libra is a decentralised, programmable blockchain that seeks to support low volatility cryptocurrencies with ambitions to serve as an exchange platform for billions of individuals and organisations across the globe. The Libra protocol aims to create an infrastructure with a view to foster innovation, lower barriers to entry, whilst improving access to financial services. In anticipation of a globally-collaborative effort to further the ecosystem, Libra have launched an open-source prototype, Libra Core. Transactions on the blockchain are processed through validators who jointly maintain the database through smart contracts in a new programming language, Move. The blockchain will host a range of stablecoin cryptocurrencies, with international recognition, to further global adoption. Earlier this month, Libra announced that it initiated the licensing process for its formal payment system with the Swiss Financial Market Supervisory Authority, FINMA.