China has developed the blockchain, which will soon replace paper cheques in the country

China has developed the blockchain, which will soon replace paper cheques in the country

According to a senior official, China’s Central Bank has completed work on a system based on the blockchain, which digitizes checks issued by Chinese companies.

The material published by local news source on Tuesday, Di gang, Deputy Director of the research laboratory for digital currencies the people’s Bank of China, said that the Department “completed the work on the infrastructure of the system of digital checks based on blockchain technology and smart contracts.”

According to Di, the process of research and development started in 2016 when the lab first announced its plans to use the blockchain, hoping to solve the problem of fraud in the Chinese market. In January 2017, the Agency successfully tested a prototype in a virtual environment.

The obvious problem in the current China’s financial system — a large number of intermediaries who take on the role of traditional banks to issue cheques, and this carries additional risks of fraud and tax evasion. Subsequently, fake receipts can be distributed among commercial banks and potentially undermine the financial integrity of the country.

Counterfeit “Fapiao” (发票, cheque, receipt) acquired special resonance with the widespread tightening of control of officials and government organizations. On the “receipt” to many employees of large and small companies are reimbursed for expenditures, among which may be relatively harmless as the purchase of components for office equipment, and diffuse and uncontrolled “entertainment expenses” on dinners and gifts to the right people. Check for whatever amount you can buy on the street or through friends of friends, this is not a problem. Fake, and real.

According to Dee, the new platform based on consensus with a practical Byzantine paradigm of fault tolerance (PBFT) that can block fraudulent checks, while the transaction can be controlled using smart contracts.

According to him, the main advantage of the system is to provide regulators a transparent overview of the entire life cycle of digital check regardless of whether the check is redeemed for cash. Also the system will be used as security backup other corporate assets.

Di explained:

“Rules of the smart contract are recorded in the blockchain. For updates of the code, the regulators will have full access to the records, which increases the efficiency of regulation and lowers costs by removing the manual process of cross-validation for transactions.”

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