Jack Ma has begun to plan and develop blockchain. Will China's blockchain industry explode?

Since its US IPO, Alibaba has been on a global acquisition spree. Recent investments include e-commerce companies in India and the Philippines, a $793 million stake in Magic Leap, and a $1.25 billion stake in Chinese food delivery company Ele.me. Meanwhile, Alibaba's payment and financial arm, Ant Financial (valued at $60 billion), has also been actively capitalizing. Most importantly, Ant Financial's $880 million acquisition of US fast money transfer agency MoneyGram will enable it to handle payments around the world. Alibaba founder Jack Ma has a more ambitious plan than dominating Asia's e-commerce industry, namely a new digital revolution. Small businesses can be made ubiquitous through data, smart supply chains, online payments, and P2P finance. And blockchain will play an important role in these applications.

Belt and Road Initiative

To imagine China's future, it helps to understand its history. 2,000 years ago, the Silk Road spanned 4,300 miles from China to Rome. Along the way, Chinese merchants shipped cheap Asian goods to Europe and Africa, and China controlled the flow of goods, creating a lot of wealth for itself and its people. Today, China has become the "world's factory." With history as a guide, President Xi Jinping has laid out plans to revive the Silk Road and create new land and sea networks to bring Chinese-made goods to every corner of the globe. This economic policy is called "One Belt, One Road."

China's New Silk Road

The New Silk Road began in 2015. The Asian Infrastructure Investment Bank (AIIB) provided funds to China to make Beijing a new economic center. Not only that, the AIIB also invested heavily in foreign infrastructure projects. The New Silk Road passes through Pakistan, Iran, Turkey and Eastern Europe. At the same time, China, as a developing country, has built a large number of ports, roads and railways. Alibaba is also building logistics centers and distribution centers in Europe, Russia, India and Malaysia. When the world becomes a huge market, we can use distributed blockchain technology to see the source of goods and conduct a series of verification, payment and tracking operations.

Alibaba's Game

In this case, the "game" refers to the new global market, and it's clear that Alibaba has its own ideas for China's New Silk Road. In addition to the International Trade Center, Jack Ma also proposed the concept of the Electronic World Trade Platform (EWTP), including the introduction of "Digital Free Trade Zones (DFTZs)" for small businesses. By reducing national trade barriers and applying new technologies, Jack Ma hopes that any small business can use smart technology to bring their goods and services to the world. In Kuala Lumpur, the first Digital Free Trade Zone was just successfully built by Alibaba this month, and the Malaysian government donated more than US$36 million to the project, which is in line with Malaysia's 2017 Internet Economy Goal.

Ant Financial also plays an important role in this project. Alipay, which currently has 450 million mobile wallet users, hopes to serve 2 billion customers in the next 10 years. The acquisition of MoneyGram, which can handle cross-border remittances in nearly 200 countries, will enable Alibaba's platform to have more international payment users. At the same time, Ant Financial is also exploring blockchain technology for microfinance and simplifying its financial processes.

The Chinese government is also eyeing a new digital revolution, and recently released the country’s informatization strategy, the 13th Five-Year Plan. The document states: “New technologies such as the Internet, cloud computing, big data, artificial intelligence, blockchain, and bio-genetic engineering will drive economic change, and digital, networked, and intelligent services will be ubiquitous.”

The Journey of Blockchain Exploration

To realize the advantages of blockchain, Alibaba has chosen to take small steps rather than trying to make a big leap. In October 2016, the company announced that it would use blockchain technology called "FaChain" and would work with Microsoft and AntShares to launch a mailbox evidence storage product based on the Alibaba Cloud platform. Through emails and cloud services backed up on FaChain, Alibaba will enable Chinese courts to adopt digital evidence emails on a large scale.

Although these ideas are not mature yet, they are of great significance to Chinese society. Alibaba Cloud is one of the top providers of computing services, domain name services, email services, network security and big data analysis in China. Its data and stored emails can provide court evidence for the judiciary, which may be the first case of blockchain being used in a national judicial institution.

Another exploration is the cooperation between Alibaba and PwC, who announced that they will apply new technologies such as "blockchain" to jointly create a transparent and traceable cross-border food supply chain and build a safer food market. The platform will be tested in Australia and track the flow of food from producers to consumers. Food fraud and many fraudulent goods on Alibaba's online platform have become a problem in China. If the test is successful, we may see the application of blockchain technology in these goods, and the commodity supply chain will enter a new era of connecting all parties.

What does blockchain mean to the general public?

As a company with a dominant online presence, Alibaba is expected to apply blockchain technology to many digital industries. While this is very likely the case, we have not yet seen solutions within the company. Meanwhile, companies such as Tencent, Baidu, Wanda Group, etc. have been keen to use blockchain to solve problems related to finance, agriculture, energy management, smart cities and other applications. Jack Ma, who is often talked about, is also keen on the open source nature of Bitcoin and Ethereum, and is waiting to make better use of the advantages of blockchain.