Interesting article:...

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    Interesting article:

    http://www.copyright link/news/worl...t-transparency-and-efficiency-20170915-gyi6hh

    by Lisa Murray
    For the believers, there are very few problems "blockchain" can't solve.
    You've just bought an Australian steak in a Shanghai supermarket but you don't trust the label and want to know where it's from. You want to send money overseas instantaneously without paying the bank a hefty transaction fee.
    You live in a house which has solar panels, but you're only at home four days a week and want to trade the excess power with your next door neighbour. You're a local government official in charge of taxation and you want to make the payments system faster and more efficient.
    Blockchain, the digital ledger that allows transactions to be authenticated and recorded across a network of computers, isthe solution. It's been likened to a constantly updating database and is lauded for increasing transparency and cutting out the middle man.
    But blockchain has a problem of its own.

    The first major application to use the technology, the digital currency Bitcoin, is facing an uncertain future as Chinese regulators struggle to control a speculative boom that has seen its value rise as much as eight-fold in the past year.
    Last week, the People's Bank of China outlawed Initial Coin Offerings, fund raisings via the online sale of digital coins.
    And this week, at least one major Bitcoin exchange decided to close on the mainland amid reports Chinese authorities were about to shut down all trading platforms.
    The price of Bitcoin has plummeted more than 30 per cent since it peaked at over US$5000 earlier this month.

    Blockchain has a strong association with Bitcoin so a crackdown on the digital currency is seen as a setback for the entire industry.
    Banks avoid being a victim of disruption

    This is frustrating for many people who have set up businesses based on the technology.
    At a blockchain conference in Shanghai's schmick new W Hotel this week, Australian entrepreneur Nicolas Steiger adjusted his bright red glasses frames and gestured to the presentation room.

    "No one is talking about Bitcoin in there. They are talking about Ethereum, Hyperledger and Ripple," he says, referring to other applications of the blockchain technology.
    Steiger, who worked for more than 15 years in investment banking and markets at UBS and Westpac, left the traditional finance industry to co-found FlashFX.
    His company, which uses blockchain technology for international money transfers, is the first of its kind to receive a financial services licence from the Australian Securities and Investments Commission.

    "Blockchain is a very broad term and Bitcoin is just its initial application," he says, eager to make the distinction, as were many among a group of Australian fintech entrepreneurs, who descended on China this week to learn more about the country's development and commercialisation of blockchain technology.

    Even JP Morgan chief executive Jamie Dimon, who added to Bitcoin's woes this week by insisting he would fire any employee caught trading it because it's "a fraud", was careful to separate it from wider blockchain technology
    Like most banks around the world JP Morgan is investing millions of dollars in blockchain, keen to harness the technology rather than be a victim of the potential disruption to the finance industry, and Dimon said its uses would be rolled out in coming years although he cautioned this wouldn't happen overnight.

    China bans but also embraces digital currencies

    China's central bank, too, made a point of differentiating between Bitcoin and blockchain this week. Sun Guofeng, director general of PBOC's research institute, said blockchain was "a good technology" and the bank's crackdown on ICOs should not dissuade companies from continuing their research.

    Indeed, blockchain was listed as a priority in the Chinese central government's current five-year plan that runs to 2020 and local authorities have begun rolling out pilot projects using the technology.
    The south-western Chinese city of Guiyang uses blockchain technology to manage its poverty relief fund and is also looking at applications for regulating internet finance and offering smart transportation services.
    And while stepping up regulation of Chinese Bitcoin exchanges, the central bank is working on developing its own digital currency.
    At the same time, big state-owned and private companies, such as real estate conglomerate Wanda, insurance group Ping'an and the Agricultural Bank of China have also started to use blockchain for intercompany payments, strengthening financial security and underpinning loan products.
    "China is very clearly moving at speed to implement blockchain technology," says Nick Giurietto, chief executive of the Australian Digital Commerce Association, who was also in Shanghai this week as part of the Australian Blockchain Mission to China, led by Austrade.
    "They have moved beyond proof-of-concept and they are commercialising real solutions."

    Where to for Australian investors?

    Giurietto says there are two big opportunities for Australian companies.

    "The first is in the supply chain and provenance area. Being a partner for China in building commercial-scale trust in supply chains using blockchain is an enormous opportunity for all exporters."
    There is already a pilot project involving Australia Post, Blackmores and Alibaba, which is aimed at increasing the traceability of food and health products.
    Launched in March, the project is still in its planning stage but is expected to be up and running by the end of the year, increasing transparency between producers and consumers through up-to-date audits. Rival Chinese e-commerce player, JD.Com, is also rolling out a quality tracking function on its web site using blockchain technology.
    Giurietto says the pace and scale of projects in China is being closely watched by Australia's fintech start-ups.
    "Talented blockchain start-ups are quite frankly struggling to get traction in Australia and they are looking to China and the rest of the world to be growth platforms," he says.
    Katrina Donaghy, co-founder of Civic Ledger, which is focused on using blockchain technology in the public sector, is visiting China with a view to collaborating with companies that are working with governments.
    "We know that blockchain technology has been around for nearly nine years and governments in Australia are now starting to put their hands up," says Donaghy, who is working with the federal government on a project aimed at streamlining the water market and making it more transparent, using blockchain.
    "But some governments still think blockchain is Bitcoin and they get confused and then they get scared and say we will sit back and let someone else do it first," she says.

    "We don't have time anymore. You come to China and they are doing it."
    However, there are still doubts about how far the technology can go in China before it is stifled by overzealous regulation.
    Beijing is wary of digital currencies because they can provide a channel for Chinese citizens wanting to get their money out of the country to evade strict capital controls. The value of all digital currencies, or "crypto" currencies, has risen to more than $140 billion.
    "There is a clash in China between strong government and a decentralised technology like blockchain," says Zhao Wei, chief executive of Oracle Chain, which is working with banks on blockchain applications.
    On the other hand, China is relatively better positioned than many other economies to take up blockchain because of the widespread adoption of new technologies.
    Mobile payments have surged due to the rise of China's tech giants, Alipay and WeChat, and consumers, governments and businesses have proven to be adaptable.
 
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