A number of governing entities in China recently came together to issue an official document, proposing the development of a blockchain-based trade finance platform.
Contributors included the People’s Bank of China, the China Banking Regulatory Commission, China Securities Regulatory Commission, and the Foreign Exchange Bureau.
In the document, the four organizations submitted their opinions on how best to finance the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, with an emphasis on global trade and finance.
Disrupting how cross-border trade info is shared
In an attempt to develop and implement better financial technology in the region, the proposal states that the country should build a blockchain-powered trade financing info service platform “under the premise of legal compliance and commercial voluntariness.”
The platform, they stated, would help participating banks securely share information pertaining to cross-border traders through a reliable source.
Blockchain’s decentralized infrastructure makes third-party intervention unnecessary when sharing trade info between members. This makes for a highly secure foundation for a trade finance information platform.
They further proposed the use of artificial intelligence and big data in marketing, risk prevention, and financial supervision.
China is going both local and global on blockchain
China is spearheading blockchain innovation faster than most other countries. Both its local and central governments are consistently experimenting to disrupt various industrial sectors.
A Cointelegraph report from April cited that the government launched its first blockchain platform for providing government services in the eastern China province of Anhui. The platform was intended to provide electronic certificates and licences.
China also recently launched a Blockchain-based Service Network that allows companies from all over the globe to develop and run blockchain applications.
Additionally, during a meeting with the Financial Technology Committee yesterday, the People’s Bank of China deputy governor, Fan Yifei, urged China to accelerate its blockchain adoption strategy.
On Thursday, blockchain technology company Blockstream revealed details related to their massive Bitcoin mining data centers in Quebec, Canada and Adel, Georgia. The facilities account for a combined 300 megawatts worth of energy capacity, and they’re currently available for hosting enterprise-level mining activities, in addition to Blockstream’s own mining operations.
Blockstream plans to open their facilities to smaller scale miners in the future. For now, two of their active customers include Fidelity Center for Applied Technology and LinkedIn founder Reid Hoffman.
The size of Blockstream’s mining facilities cannot be overstated. According to Blockstream CSO Samson Mow, the facilities would account for roughly 6 exahashes of Bitcoin mining power if used at full capacity with the latest ASIC mining hardware. This would have equated to 10% of Bitcoin’s total network hashrate less than a month ago, according to BitInfoCharts. However, the Bitcoin network hashrate recently skyrocketed to around 80 exahashes this week.
In addition to their mining centers, Blockstream will soon launch the first mining pool with a focus on putting more power back into the hands of individual miners via the BetterHash protocol.
Blockstream Concerned About Bitcoin Mining Centralization
Concerns related to Bitcoin mining centralization were recently discussed on a panel at the Bitcoin 2019 conference in San Francisco. Genesis Mining CEO Marco Streng explained why Bitcoin users should be more alarmed about the level of centralization in mining, while longtime Bitcoin developer Matt Corallo did his best to point out the issue may not be as bad as it seems at first glance.
Notably, Blockstream CEO Dr. Adam Back, who was cited in the original Bitcoin white paper, also spoke at the conference regarding his thoughts on the future of Bitcoin and other cryptocurrencies alongside Yugen Partners Chief Scientist Dr. Scott Stornetta, who was also cited in the Bitcoin white paper.
Putting Power Back in Miners’ Hands
In addition to pushing for the geographic decentralization of Bitcoin mining, Blockstream’s upcoming mining pool should be helpful due to its use of BetterHash. The BetterHash protocol, which was developed by the aforementioned Corallo, solves a key issue with mining centralization in that it allows individual miners to choose which transactions go into new blocks rather than the mining pool operators.
While Bitcoin mining is rather centralized in terms of mining pools, the picture looks much better in terms of the diversity of entities that are actually operating the hardware. Putting individual miners in control of transaction selection means collusion in terms of transaction censorship, blockchain reorganizations, or other types of 51% attacks on the network would be much more difficult.
When asked why Blockstream decided to go with BetterHash rather than Stratum v2, Blockstream CSO Samson Mow stated, “Stratum v2 seems to still be in the discussion phase, and we started with BetterHash months ago.”
Some critics may argue that implementing BetterHash while also developing large Bitcoin mining data centers may be a bit of a contradiction in terms of promoting decentralization, but Mow pushed back on this argument when reached for comment.
“I don’t believe Blockstream Mining poses centralization risks,” said Mow. “If anything, Blockstream Mining serves to decentralize the Bitcoin mining ecosystem in many ways. We’re self-mining with just a small portion of our available power, with the rest allocated to customers, and we have plans to make the hosting service available to smaller miners that otherwise would not be able to mine effectively. Also, by leveraging the BetterHash protocol in our mining pool, all of our customers can run their own full-nodes and build block templates. This means the pool cannot use their hashrate for censoring transactions or falsely signaling readiness for Bitcoin protocol upgrades – which has happened in the past as with SegWit2x.”
On the other hand, Facebook’s Libra cryptocurrency project would be much easier to manipulate, regulate, and control. That said, multiple members of the Bitcoin industry have pointed out the roundabout ways Bitcoin could benefit Facebook’s Libra.
I’m a writer who has been following Bitcoin since 2011. I’ve worked all over the Bitcoin media space — from being editor-in-chief at Inside Bitcoins to contributing to Bitcoin Magazine on a regular basis. My work has also been featured in Business Insider, VICE Motherboard, and many other financial and tech media outlets. I’m mostly interested in the use of Bitcoin for transactions that would be censored by the traditional financial system (think darknet markets and ransomware) in addition to the use of bitcoin as an unseizable, digital store of value. Altcoins, appcoins, and ICOs don’t make much sense to me. Find all of my work at kyletorpey.com. Disclosure: I hold some bitcoin
