Alibaba founder and CEO Jack Ma, through Ant Financial, will start using blockchain technology used in Bitcoins to record donations and improve the accountability of Chinese organizations engaged in philanthropy, Bloomberg reported.
Cheng Li, Ant's chief technology officer said that they have started using the blockchain technology on a tamper-proof ledger to record the donations of more than 400 million users of Alipay, the company's online payment and investment service platform. He added that "Ant Love" charity donors can track their transaction histories, learn where their donations go and how the fund is spent.
Chen said that with the use of this technology, records cannot be easily altered and it would help restore credibility to the organization.
Xinhua News Agency said that philanthropy in China increased by about 10-fold, reaching $15 billion, in the decade through 2014, despite reports of scandals and mismanagement.
The South China Morning Post has reported about a high-profile case involving Project Hope, which the country's anti-corruption watchdog has been investigating for irregularities. In 2011, the Red Cross Society of China was investigated after a woman who claimed to be associated with the organization posted pictures showing her extravagant lifestyle. But the organization later denied that she had been a member or staff of the agency.
Chen said that Ant has partnered with the China Social Assistance Foundation and several larger charities to launch the initiative for Ant Love, connecting users with more than 1,000 charitable organizations. As of the end of last year, they were able to collect over 600 million yuan.
"We hope to bring more transparency to charity and blockchain technology's decentralized nature fits that purpose well," Cheng said in a phone interview. "It means that all the information and transaction history of funds will be more reliable and can't be easily tampered with."
According to the report, Ant Financial also joined Citigroup Inc. and JPMorgan Chase & Co. in putting the blockchain technology to test. Financial firms are also studying the use of smart contracts to monitor events as well as enhance security. The other applications of decentralized ledgers are also being studied by Ant.
Blockchain technology has been hailed by the World Economic Forum as one of the six computing "mega-trends" that will shape the world in the next decade. By 2027, about 10 percent of global gross domestic product could be stored on blockchains.
"Ant Financial is smart to start experimenting with blockchain technology with something like charity, which is less sensitive and risky," according to Ma Haobo, the Beijing-based founder of Hoopox, a startup using blockchain for intellectual property security. "If it's really ambitious, the company should start looking at how to apply the technology in other financial areas."
Ant Financial used a private blockchain in its initial project, as Cheng said that the company plans to allow charity organizations and auditors to use the ledger in the future.
"It's great that Ant Financial is using blockchain technology to bring transparency to a murky industry that has operated like a blackbox," Chandler Guo, an investor in digital currency startups, said. "The key challenge is whether they have the right talent and execution strategy."