Alibaba's financial arm Ant Financial wants to improve the transparency of transactions involving charitable donations through the use of new blockchain technology.
Ant Financial has already implemented the new blockchain platform to record transactions to charitable institutions and phi9lathropic organizations made through its payment service Alipay, the Computer Business Review reported.
All of the transactions are recorded on a distributed ledger that can then be accessed by donors to track their donations and ensure that it reaches the recipient organization. The system can also track how the funds are used.
A blockchain is a form of distributed database that securely manages a continuously changing list of data records by breaking everything down into separate data blocks. The design of the system helps protect the date for unauthorized revisions and tampering.
According to Ant Financial's Chief Technology Officer Cheng Li, the decision to use blockchain technology to handle transactions made to charity was due to the need to provide more transparency in the way these organizations receive funding from donors.
Grave misuse of donation funds by an organization's officers is one of the many problems that have been plaguing charitable institutions not only in China but also in other parts of the world.
Li added that blockchain technology's decentralized nature makes it perfect for the level of security and reliability they are looking for.
The China Social Assistance Foundation is one of the first organizations that Ant Financial has partnered with for the implementation of the new technology, the Bitcoin News Service reported. More organizations are expected to come onboard the system in the future.
Experts believe Ant Financial will extend the use of blockchain technology to its mainstream banking and financial services once the initial implementation with philanthropic organizations proves successful.