Will Ant Financial's 'charitable' push into blockchain technology be a world first?

Written by Felix Yang || July 27 2016

Blockchain technology has become one of the hottest topics in China Fintech. So when Ant Finance, the most valuable tech unicorn company in the world, announced they were working on a blockchain-based solution for the charity space, it captured lots of attention - but what is behind the move?

China’s internet development has been dominated by 3 giants: Baidu, Alibaba and Tencent, collectively called the "BAT". Tencent joined China's Blockchain Research Alliance, which is loosely considered the Chinese version of R3, and Baidu, the dominant Chinese search engine, invested in Circle, a cross-border 'do everything' bitcoin-based company.

A chain with promise

Not to be left behind, Ant Finance, which is the financial arm of the e-commerce giant Alibaba, announced that it would launch a blockchain initiative around its 'Alipay Donation' product in the near future. Compared to other 'BAT' investments around blockchain, Alibaba’s move seems to be more promising for a few different reasons:

Firstly, charitable giving has had a checkered past in China as there have been a number of scandals involving charities. Most famously, in 2011, Chinese online celebrity Guo Meimei claimed to be affiliated with the China arm of the Red Cross. This turned out to be false, Guo Meimei did time, and the reputation of the Red Cross took a serious dip as did trust in charitable giving in China, which was already not very established. 

The transparency of putting donations on a distributed ledger could do a lot to help this. Knowing that your donation is going to the right person anywhere in the world can be an issue, even more so in China. On the Alipay platform, the donation function is already popular among users. Amounts given are typically not large, but Ant's Blockchain for Charity would provide complete transparency that would allow the public to check when and where the money is used. It can also save on auditing cost and process as it is recorded in everyone’s Alipay account, which would presumably be immutable. 

Secondly, charities are largely not for profit and aimed at the common good, so finding parters to develop an accepted blockchain-based solution should be easier as all parties would be more willing to cooperate, especially with Ant Financial behind the effort. Compare that to the current bank-mentations of blockchain which are largely going nowhere due to differing agendas...

Finally, the information needed and involved in such a solution would be less than required by a more complicated environment like one for securities clearing or payments, which means a less demanding and simplified platform, as well as likely in the management of the system.

Yes, but will it work?

So overall, the decision for a solution around charitable giving makes sense for an entity like Ant Financial, especially as it is the first effort by the company. 

At the moment, Ant Finance has not disclosed details of technology used in the program. It may use bitcoin or Ethereum blockchain, or more likely Ant will develop their own blockchain platform, which can take all the Alipay users as nodes.

The solution may provide a big benefit for charities in China if Ant Financial can really address all the issues they are trying to, but there are still a number of questions to be answered. Like will the blockchain be completely public or private? Who will be able to look at charitable details?

Nevertheless, it is a positive move and one of the more promising blockchain initiatives we have seen in China. We could also see this as being a precursor to more sophisticated and commercially focused blockchain platforms from Ant Finance in the future.