Hall & Wilcox Special Counsel John Bassilios was part of the recent Australian Blockchain Mission to Shanghai and Taipei. He shares his key takeaways from the mission, which was organised by Austrade and the Australian Digital Commerce Association.
China is way ahead of Australia when it comes to enterprise blockchain adoption and Australian businesses need to start considering how blockchain technology may be able to improve, and potentially revolutionise, their business processes. That is the key takeaway for me from the mission.
The blockchain mission
Austrade provided the following backdrop before our trip:
The World Intellectual Property Organization records indicate that China was the largest blockchain patent filer in the world in 2017, with China contributing 225 international blockchain patent applications, followed by the USA with 91 filings and Australia, a distant third, with 13.
The Chinese blockchain ecosystem is rapidly growing with a reported 456 blockchain companies at the end of March this year.
China’s State Council has endorsed blockchain technology as part of an Information Technology Reformation Strategy in China’s 13th Five-year Economic Development Plan (2016-2020), with President Xi Jinping calling the technology a ‘breakthrough application’ in May 2018. In fact throughout 2018, Chinese local government authorities have demonstrated a pro-blockchain attitude, funding multi-billion-dollar initiatives and blockchain-based networks.
China: world leader in blockchain
Everything we saw and did on the mission reinforced the fact that China is by far a world leader in the adoption of enterprise blockchain technology.
The mission kicked off with a ‘China Ready’ Bootcamp organised by Austrade and held at the Australian Landing Pad at XNode. These sessions were aimed at providing a high-level overview to the delegates on doing business in China and assisting the start-ups in the delegation with pitching to potential investors and partners throughout the trip.
The blockchain mission gave us a chance to hear from top Chinese financial services companies, Chinese investors and blockchain consultants and learn about blockchain trends. As part of the mission in Shanghai, we visited companies who are using blockchain technology to enhance their businesses. These included:
- Dianrong who have developed a trusted tokenised account payable solution that allows for the financing of accounts payable and to fractionalise interests in the account payable. They are also working on provenance, identification, smart contract and document sharing blockchain.
- Ant Financial, who are using blockchain for a charity platform, international provenance, cross border remittance and urban governance (including leasing management).
- Gingkoo who are using blockchain for cross border payments and remittance.
Other interesting facts to come out of the mission include:
- Alibaba has the most blockchain patents in the world.
- Alibaba launched a blockchain-based tracking system for luxury goods sold on its flagship shopping site Tmall.
- Alibaba’s Australian unit is now developing a blockchain platform to track food.
- Tencent’s bank subsidiary joined the Financial Blockchain Shenzen Consortium, one of the first business alliances in China to explore applications of the technology.
- Tencent published a whitepaper detailing its plans to build a suite of blockchain services on top of an open platform called TrustSQL, which was launched months later.
- Tencent partnered with a southern Chinese city to test a blockchain-powered system that allows local residents to track their medical prescriptions.
- Tencent has adopted blockchain in finance, logistics and charity.
We also attended the Wanxiang 4th Global Blockchain Summit, which is the largest blockchain event in China. Some notable presenters included:
- Vitalik Buterin, who gave a keynote address on the development of blockchain technology;
- Henry Ma from WeBank, who gave a keynote address on the evolution of consortium chain – open consortium chain;
- Eric Ly, the founder of Hub and LinkedIn, who discussed delivering mainstream solutions using blockchain; and
- Associate Professor Jan Liphardt of Stanford University, who discussed distributed scalable healthcare.
In addition, the Chair of the International Standards Organisation Technical Committee on Blockchain and Distributed Ledger Technologies, Craig Dunn, spoke about the progress that has been made in developing the ISO Blockchain Standards, for which Australia leads the charge.
Sophie Gilder, the Head of Innovation, Blockchain and Embedded AI at the Commonwealth Bank Innovation Labs, also delivered a keynote address at the conference, where she discussed CBA’s recent BOND-i Kangaroo Bond, the first global bond on the blockchain (end-to-end management of the bond lifecycle), and TradeChain, a supply chain blockchain that was trialled by the CBA for a shipment of almonds from Victoria to Europe.
I was impressed by the scale and speed of blockchain innovation in China. The main areas that Chinese companies are using blockchain technology are financial services and supply chain.
In addition, the Taipei Medical University Hospital, the leading smart hospital in Taiwan, is the first hospital in the world to introduce blockchain technology for patient records. In Taipei, we were also fortunate to meet many people that are involved in blockchain in Taiwan, including Cheng-Mount Cheng, the Deputy Minister, National Development Council, who discussed the application of blockchain within the Taiwan Government, and Jason Hsu, a Taiwan legislator, also affectionately known as the ‘Crypto congressman’, who discussed the current state of Taiwan’s Blockchain Regulation and Policies.
Other key events were the mission’s opening night dinner, where more than 100 Australian and Chinese companies gathered, the opening of the Blockchain Centre Shanghai and a welcome dinner at the Consul General’s Shanghai residence with leading financial services companies from China.
A couple of bold unofficial predictions coming out of the mission include:
- a one belt one road supply chain and financing blockchain with on and off ramps for fiat in each country through which the one belt one road passes; and
- a supply chain and financing blockchain for all imports and exports coming into and out of China.
Although these are unofficial predictions, Matrix has been appointed as the sole blockchain partner for the National Government-commissioned One Belt One Road Research and Development Centre. Silubium also has high-level government support for the ‘one road, one belt’ economic development strategy of China and is already being actively implemented by several large enterprises in Hong Kong, Macao and elsewhere. Both of the above projects would be considered game-changing blockchains.
China has clearly outpaced the rest of the world in blockchain adoption. If Australia is to have any chance of being among the leading group of countries for blockchain adoption, the Australian Government needs to introduce a light touch regulatory regime for the initial offer of ‘utility’ and cryptocurrency type tokens that are at risk of being a managed investments scheme under current Australian law. This compliance-heavy regime is not facilitative of fast and nimble innovation required in this space, particularly for the start-up community. A light touch disclosure regulatory regime would foster such innovation and provide Australia with an opportunity to be a global leader. The economic benefits to Australia of doing so would be enormous, as Australia would become a worldwide hub for this revolutionary technology.
Valuable insights were gained on the trip and many valuable connections made with the fellow delegates with whom I look forward to continuing the Australian blockchain journey.