Ant Financial Brings Blockchain Application to SMEs

After agreeing to ban Facebook’s Libra cryptocurrency, Germany is now doubling down on its plan to stop parallel currencies. Germans recently passed a strategy that touches blockchain and cryptocurrency comprehensively and vows against parallel financial systems initiated by corporations. Berlin buckles up for the fight German chancellor Angela Merkel and her cabinet passed a comprehensive blockchain strategy on Wednesday. The government believes that the economy should make use of digital transformations but must also be aware of the risks arising out of these technologies. Finance minister Olaf Scholz said that blockchain technology could become the basis for the internet of the future. He also said, “We want to be at the forefront and further strengthen Germany as a leading technology location. At the same time, we must protect consumers and state sovereignty. A core element of state sovereignty is the issuing of a currency, we will not leave this task to private companies.” The government also wants to work in close cooperation with its European and global peers to ensure that stablecoins don’t end up becoming alternative currencies. Berlin will also focus on its dialogue with German central bank, Bundesbank, to talk about a digitized version of the central bank currency and the possible risks of such coins. Germany’s move is a threat to Facebook The German government has a holistic plan to tackle growing issues with digital currencies. However, it plans on introducing electronic bonds in the domestic market that will be issued on blockchains. The government, alongside France, has already pledged to ban Libra. The French authorities have also adopted a highly critical stance on Facebook’s Libra, and they are also looking forward to launching a digitized legal tender of their own. Meanwhile, the European Central Bank is also looking forward to the creation of a public digital currency, backed by central banks, that would eliminate the need for Libra. Francois Villeroy de Galhau, a member of the ECB board, said that Libra highlighted the gaps in European regulations and said that the company would be treated with a tough approach. This would create further regulatory and operational hurdles for the American social media giant that aims to leverage its 2+ billion userbase to launch a new digital currency. Libra will be a stablecoin backed by government securities, but with European countries launching their own government-backed stablecoins, it will face stiff competition in the market.

Global FinTech and business solutions provider Ant Financial Services Group has stepped up its blockchain adoption with a new service that is targeted at developing firms. Last week, the Chinese company, which is a subsidiary of the Alibaba Group, announced the development of OpenChain- a blockchain consortium, that will provide DLT tools to small and medium enterprises. 

Blockchain Goes Mainstream in China’s Business Space 

As the announcement explained, OpenChain will allow developers and AME businesses to access some innovative blockchain solutions that will optimize their work. Amongst other things, they will be able to explore the application of the technology to develop better applications and utilize smart contracts to enhance their businesses.

The release added that developers and SMEs would be able to use several combinations of tools to create products that will help business aspects such as digital invoicing, supply chain finance, product provenance, and even help them to make donations to charity organizations. 

All of these, as they explained, can help to diversify the technology and improve its use cases even further. Jin Ge, the company’s General Manager, also added that their initial objective is to boost the operations of almost 1,000,000 developers and SMEs in the first 36 months. 

Wu Xiao, the chief executive of WiteMatrix – a local company that has been developing smart contracts with the blockchain tool – made a direct comparison between OpenChaina and other blockchains. Amongst other things, he complimented the platform’s cost-effective smart contracts, as well as its ease of use for developers.  

“Not only are OpenChain’s transaction speeds several times faster than public blockchain platforms like Ethereum, but the cost per transaction is only one-tenth of others,” Xiao added. 

Ant Financial’s Involvement in the Digital Yuan  

Ant Financial has grown significantly over the past few years. The firm’s Wikipedia page confirms that it’s the most valuable FinTech firm in the world, with a real worth of over $150 billion. The firm, formerly known as Alipay, has now established itself as one of China’s “big tech” names. 

Ant Financial’s largesse has also grown beyond the private sector. Earlier this month, reports confirmed that the company had been incorporated into the government’s plan to develop a digital Yuan. Last week, ChinSci-Tech — an innovation board for enterprises and public companies listed on the Shanghai Stock Exchange – revealed in a report that the digital Yuan is now being implemented in Suzhou, a city west of Shanghai. As the report added, the Chinese central bank is using the digital currency as part of a transport subsidies scheme that will benefit both enterprise workers and local government administrations. 

Another official report confirmed that Ant Financial has contributed to the research and development of the asset’s hardware, as well as its distribution and payment channel technology. 

The report confirmed that for April, enterprises in the Xiangcheng District of Suzhou would pay 50 percent of their workers’ transport subsidies with the new digital currency. All participants will have to sign a digital currency distribution agreement with a wage distribution bank, which will give them the chance to install a digital wallet for their workforce.

The banks include the Bank of China, the Agricultural Bank of China, the China Construction Bank, and the Commercial Bank of China. 

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Jimmy has been following the development of blockchain for several years, and he is optimistic about its potential to democratize the financial system.