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China’s Central Bank Develops Blockchain-Based Checks to Combat Fraud

The Digital Currency Research Lab headed by Di Gang at the People’s Bank of China, China’s central bank, has developed a system that issues digital checks using blockchain and smart contract technology. This follows a year-long effort that began in 2016 in order to combat check fraud in the Chinese market.

The digital checks exist on the blockchain in the form of smart contracts that are automatically enforced. Since the blockchain is an immutable ledger, this reduces transaction risks since it would be extremely difficult to forge a check. China has been suffering from check fraud since there are a large number of intermediaries that issue checks, giving fraudsters lots of different types of checks they can forge, and this has been undermining the Chinese economy.

The proposed blockchain-based digital check system organizes all different types of Chinese checks into one network, making it easy for regulators to set rules and keep track of what’s going on.

Each digital check is a piece of code that contains the check’s data and business logic, and will have capabilities including endorsement transfer, discounting, transfer discounting, and redemption. These capabilities are realized through smart contracts.

The blockchain nature of this new system for issuing checks gives consumers and regulators a transparent view of the lifecycle of a digital check. This is also helpful for judicial proceedings following bad business deals since everything involving a check will be easily accessible on the blockchain.

The proposed system will only take seconds to confirm a check, rapidly accelerating the speed at which checks are processed in China. Also, the encrypted data will be highly protected, with blockchain’s cryptographic features yet to be breached easily.

A prototype of the blockchain-based digital check system was already successfully tested in 2017. It is unknown when the system will go into operational real-world use. Regardless, it is a positive sign from the Chinese central bank, as it appears to not only be embracing blockchain technology, but accelerating its advance and finding new uses for it.


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