The agricultural Bank of China, the largest in the PRC and the fourth largest by its assets in the world, with the help of the distributed ledger technology issued a loan secured by a land plot. This may mark the beginning of the switch of the entire loan system in China to blockchain. The authorities believe that this can prevent the global financial crisis. The agricultural Bank of China is controlled by the state, so its experiments with the blockchain should be considered as part of the Chinese authorities’ policy to create a state system of distributed ledger. In order to apply the new technology, the financial giant had to create a blockchain platform with the participation of local farmers and agricultural cooperatives. Computers of farmers and the local branch of the People’s Bank of China made a chain of blocks that confirm the transaction. The new technology guarantees to the Bank that the land plot pledged under this loan will not be offered as collateral for another loan. The practice of multiple pledge of the same property is very common in China, it has become perhaps the main cause of the giant credit bubble that threatens to burst and bring down the Chinese economy, and after it the world’s one. So, in China the blockchain is considered as a way to prevent the global economic crisis. The experiment with farmers in a remote province should prove that blockchain protects against financial fraud. |
