Alibaba Moving On Blockchainhttp://news.8btc.com/alibaba-moving-on-blockchainSince its US IPO, Alibaba has been on a buying spree of companies around the globe. Recent investments include e-commerce companies in India and the Philippines, leading a $793 million dollar stake in US augmented reality company Magic Leap, and a $1.25 billion stake in Chinese food delivery startup Ele.me. At the same time, Alibaba’s payments and finance arm, Ant Financial (a $60 billion dollar powerhouse), has also been active with its cash. Most significant was Ant’s recent $880 million dollar bid for MoneyGram, the US based firm that settles payments all over the world.
It’s safe to say that Alibaba’s founder, Jack Ma, has a grander plan than dominating Asia’s e-commerce industry. Ma’s plan for Alibaba is for a new digital revolution, where data, smart supply chains, online payments, and P2P finance will enable small businesses everywhere. And blockchain could play a major role in all of these applications.
One Belt, One Road
To understand China’s future, it helps to know its past. 2000 years ago, the Silk Road was a web of trade routes that spanned 4,300 miles from China to Rome. On the roads, Chinese merchants moved cheap Asian goods to Europe and Africa, but Rome controlled the flow of goods, creating more prosperity for itself and its people. Having today become “the factory of the world”, and with history as its guide, modern China has established an economic plan called One Belt, One Road (OBOR), in which Xi Jinping has laid out a way to resurrect the Silk Road, by creating a new modern web of land and sea routes that will carry Chinese-made goods to every corner of the planet.
Financing of the New Silk Road began in 2015, with China’s creation of the Asian Infrastructure Bank (AIIB), a big piece in Beijing’s plot to become an economic empire. With planned land routes to Europe through Pakistan, Iran, Turkey, and Eastern Europe, and a new network of sea routes, the AIIB has heavily invested in foreign infrastructure projects. And as China builds ports, roads, and railways in developing countries, Alibaba is building logistics centers and distribution hubs in Europe, Russia, India, and Malaysia. As the world becomes one vast marketplace, we may see our goods originated, verified, paid for, tracked, and distributed with blockchain technology.
Alibaba’s Eye on The Prize
The prize, in this case, is a new connected global marketplace, and Alibaba certainly has its mind on China’s New Silk Road. In addition to international trade hubs, Jack Ma has proposed an Electronic World Trade Platform (eWTP), introducing ‘digital free trade zones’ (DFTZs) for small businesses. By reducing national barriers to trade, and applying new technologies, Ma hopes that any small business can utilize a smart-road of smart-hubs to sell their goods and services around the world.
The first DFTZ has just been launched by Alibaba in Kuala Lumpur this month, with the Malaysian government contributing more than $36 million to the project, in line with Malaysia’s goal of making 2017 the year of the Internet Economy.
Ant Financial’s bid for MoneyGram also plays into this strategy. Now with more than 450 million users of its mobile wallet Alipay, the company aims to service 2 billion customers over the next 10 years. As MoneyGram handles cross-border currency transfers in nearly 200 countries, the acquisition would allow users of Alibaba’s platforms nearly-instant international payments. Meanwhile, Ant Financial is currently exploring blockchain technology for microfinance, and to simplify and streamline its financial processes.
The Chinese government also has its eye on a new digital revolution, and has published such language in its 13th National Five-Year Plan, in a recent Informatization Strategy by the State. The document says “The internet, cloud computing, large data, artificial intelligence, machine learning, blockchain, bio-genetic engineering and other new technologies will drive…the evolution of everything – digital, network, intelligent services will be everywhere.”
Blockchain Baby Steps
As it explores the benefits of blockchain technology, Alibaba has chosen to take small steps forward rather than giant leaps.
In October of 2016, the company announced that it would use a blockchain called the Law Chain, with development partners Microsoft and China’s open-source blockchain Antshares, as an email repository for its Ali Cloud platform. By backing up its email and cloud services on the Law Chain, Alibaba will enable large scale adoption of digital evidence and emails in Chinese courts.While this news has mostly flown under the radar, it has significant implications for Chinese society. Ali Cloud is one of China’s top providers of computing services, domain services, emails, network security and big data analysis. With its data and emails preserved for judicial departments as courtroom evidence, this may be the first instance of blockchain being utilized by a state judiciary.
Another of Alibaba’s baby steps came in March, when it teamed up with PwC to build a pilot blockchain platform to prevent counterfeit food products from reaching consumers. Calling it the ‘Food Trust Framework’, the platform will be tested in Australia to track the flow of foods from producer to consumer. As food fraud is a big issue in China, as well as fraudulent goods across Alibaba’s many online platforms, a successful test-run will likely see blockchain applied to all manufactured goods, ushering in a new era of connected things on the supply chai
A Blockchain For The People?
With such a dominant online presence, one would expect Alibaba to develop its own enterprise blockchain solution, to be applied as a standard across its many digital businesses. And while this may be the case, we have yet to see any in-house solution from the company. In the meantime, Chinese conglomerates like Tencent, Baidu, Wanda Group, and others have been very actively forming consortiums and announcing new blockchain solutions for finance, agriculture, energy management, smart-cities, and other applications. Often said to be a man of the people, perhaps Jack Ma is keen on the open-source nature of Bitcoin and Ethereum, and is waiting to see how this race for blockchain dominance plays out.
