If you’re like most people, the term “blockchain” probably conjures up images of cryptocurrency. And while it’s true that blockchain is the technology that powers Bitcoin and other digital currencies, there’s a lot more to it than that. Simply put, a blockchain is a digital ledger of all transactions that have ever been made in a given system.
Each transaction is recorded in a “block,” and each block is chained together with all the other blocks that have come before it, creating a permanent record of every single transaction that has ever taken place in the system. This makes blockchain an incredibly secure way of doing business, as it theoretically makes it impossible for anyone to tamper with the record.
How Did Blockchain get its Start
The first blockchain was created in 2009 as the underlying technology powering Bitcoin. Satoshi Nakamoto, the pseudonymous creator of Bitcoin, designed the blockchain as a way to process transactions without the need for a central authority like a bank or government.
Since then, blockchain has been adopted by a wide range of industries beyond just cryptocurrency. Banks, for instance, are using blockchain to process international payments and reduce the likelihood of fraud. And in the healthcare industry, blockchain is being used to secure patient records and prevent counterfeit drugs from entering the supply chain.
The Chinese government has also been exploring ways to use blockchain technology to streamline its bureaucracy and increase transparency. In 2016, the country’s president, Xi Jinping, announced that China would be “looking into” blockchain as a way to boost the economy.
Since then, China has become one of the world’s leading investors in blockchain technology.
China Creates Own Digital Currency First
And now, it looks like China is poised to take its involvement in blockchain one step further by creating its own digital currency.
The People’s Bank of China, the country’s central bank, has been working on a digital currency for several years and is reportedly close to releasing it to the public. The new currency, which is still unnamed, will be similar to Bitcoin in that it will be decentralized and based on blockchain technology.
However, there are some key differences between the two. For one, the Chinese digital currency will be backed by the Chinese government, which means it will have more stability than Bitcoin.
It’s also believed that the new currency will be able to be used in conjunction with China’s existing currency, the renminbi. This would make it much more practical for everyday use than Bitcoin, which is not currently accepted as legal tender in most countries.
What is China’s Social Credit System
The Chinese government is also planning to roll out a new “social credit system” next year, which will use blockchain technology to track the financial behavior of its citizens.
The social credit system is designed to reward people for good financial behavior and penalize them for bad behavior. For instance, people who frequently pay their bills on time may be rewarded with lower interest rates on loans, while people who frequently miss payments may be penalized with higher interest rates.
The social credit system is controversial, as it could potentially be used to unfairly punish people for things beyond their control. However, the Chinese government has defended the system, saying that it will help to create a more “honest” and “trusted” society.