China Will Enable Blockchain Against Check Fraud
June 6, 2018
China’s Central bank has finished developing a blockchain-based system that issues digital checks instead of paper ones and that may help in struggle against fraud.
Di Gang, deputy head of the digital currency research lab in the People's Bank of China, told in the interview to Financial Times, the blockchain system infrastructure is ready and it will be able to issue digital checks and make use of smart contracts.
As Di put it, it took over a year for the lab to study the issue. It was 2016 when the plans to start the research became public, while the first tests were held in January last year. The purpose for the study was preventing fraud with checks issued by private organizations.
Checks in China function as money transfers, check recipients may exchange or sell them along with cashing it in the bank. The biggest problem here was that there lots of other mediator companies that issue checks themselves which increases risks of fraud. Fake checks come into the circulation of commercial banks and threaten financial stability of the country.
The developed blockchain platform is based on PBFT method (practical byzantine fault tolerance) while all its transactions are regulated via smart contracts. The platform issues token checks with transparency provided by blockchain so regulators can get information on a check anytime which eliminates the risk of fraud.
Remember that in April this year one of the Middle East largest banks Emirates NBD adopted blockchain into the process of check issuance.