by Joseph Young
Alibaba’s popular fintech subsidiary Ant Financial Services Group, formerly known as Alipay, has begun pilot testing blockchain-based platforms to process donations on a distributed ledger for greater transparency.
Ant Financial, the world’s second largest private tech company with hundreds of millions of users and a US$60 billion valuation, offers a variety of financial products including loans, insurance, wealth management and alternative payment services.
One of the major products of Ant Financial is the group’s charity platform called Ant Love, which is used by both organizations and individuals to fund projects using the existing financial and payment infrastructure of Alipay.
China’s most popular payment platform offers users a significant advantage over traditional means of payment. Users of the AliPay financial network can settle transactions efficiently without transaction fees, which are substantially high in other competing platforms such as PayPal.
The limitation of the AliPay network and any other third-party payment solutions restrict donors from thoroughly evaluating the expenses of the charity group or the organization they fund. Thus, it is virtually impossible for donors track the flow of their donations after they are passed onto the charities.
Ant Financial and its development team is about to change the entire donation ecosystem on its platform by pilot testing the blockchain technology and integrating a greater level of transparency that will allow donors to easily track down their transactions and observe its flow.
The blockchain technology, or the underlying technology of Bitcoin, has become an international sensation after researchers, institutions, and organizations discovered two of the technologies greatest assets: transparency and security.
Since the blockchain technology offers a network of distributed ledgers, computers, and servers, it enables anyone on the network to view anchored data in a more transparent environment, in which all pieces of information are available with real-time visibility.
That means, if one person on the network creates a transaction or uploads data, it be broadcasted to the entire network, anchoring the data to a block which is unalterable and irrefutable.
Alibaba’s Ant Financial attempts to test the blockchain technologies practicality in its existing field of products by launching a pilot test to settle numerous donations for a project listed on its charity platform Ant Love.
“We are trying to bring small and beautiful changes to users with this pilot,” said Ant Financial’s Cheng Li at the fintech Bund Summit held in Shanghai. “If used properly, the trust element in blockchain technology might help build a charity platform that is more trusted, open and transparent in the future.”
Leading analysts and experts in both the fields of finance and cryptocurrency praised the efforts of Alibaba to understand and embrace the blockchain technology, which demonstrates the company’s appreciation for innovation and trending technologies.
“Ant Financial is smart to start experimenting with blockchain technology with something like charity, which is less sensitive and risky,” said Ma Haobo, the Beijing-based founder of Hoopox, a startup using blockchain to securitize intellectual property. “If it’s really ambitious, the company should start looking at how to apply the technology in other financial areas.”
The project was briefly announced as a part of Li’s talk at the fintech Bund Summit in Shanghai and the company hasn’t disclosed any additional information regarding the technicalities of the project and the implementation.
However, it is highly likely that the company will gear towards the implementation of a permissioned blockchain, a blockchain network which offers a certain level of control to network administrators, to be fully compliant with China’s Know Your Customer (KYC) regulations.
With this project, the company’s executives state that they plan to leverage emerging technologies to enhance their existing infrastructure for benefits of their users and customers in the future.
“We firmly believe that technology is key to promote equal access to financial services in China and beyond,” said Ant Financial president Eric Jing speaking at the same conference.
“We have developed a wide range of products and services, covering payments, loans, insurance, and wealth management. With all our products, our aim is to simplify the process for our customers, giving access to financial services to the many, not the few.”
Philathropy in China has increased tenfold over the past decade to over $15 billion according to Xinhua News Agency. But the sector has been plagued by numerous scandals. For example, the parent of Project Hope and the Red Cross Society of China have both recently come under scrutiny for mismanagement of charitable funds, highlighting the benefits for charities that come with operating a blockchain-based system.