China’s government has announced that it will use Blockchain technology for tax collection and electronic invoice issuance. This will be a major test case for Blockchain technology as China is currently the second largest economy in the world with a gross domestic product (GDP) of more than $10 tln in 2016.
Blockchain overview
A Blockchain is a decentralized online record-keeping system that is maintained by a network of computers. These computers verify and record the transactions through the use of proven cryptographic methods.
Often called “distributed ledger technology” (DLT), Blockchain provides a way to record and verify data without having to trust the counterparties to a transaction. It was invented by Satoshi Nakamoto and is at the heart of the Bitcoin network.
China’s other plans for the technology
China is the leading country in terms of adoption of Blockchain technology. In fact, the Chinese government recently included Blockchain as a priority project in its Thirteenth Five-Year National Informatization Plan in 2016. Among the possible applications of the technology under the plan are the management of health records and tax returns.
Wave of the future
China’s announcement furthers the likelihood of Bitcoin and Blockchain becoming important financial and technological forces in the future. Though China is ahead in Blockchain adoption at the moment, several American legislators are promoting the technology to both their peers and constituents. Republican Congressman David Schweikert of Arizona and Democratic Representative Jared Polis of Colorado have established the Congressional Blockchain Caucus in response to the growing interest of their colleagues about Blockchain.
According to Polis, they aim to provide a forum to educate people about the technology.
“Members of Congress are starting to get visits from people that are doing things with the Blockchain and talking about it. They are interested in learning more, and we hope to provide the forum to do that.”
Polis also cited some possible applications of the technology in the government such as managing health records, tax returns, and identity management.
Both Japan and South Korea have also recently been in the news due to their official acceptance of Bitcoin as legal tender.