Shanghai Gov’t Partners With 6 Banks on Blockchain Alliance for Trade

The Global Times reported on Nov. 7 that during the China International Import Expo earlier today, the Shanghai Municipal Commission of Commerce, Shanghai Customs and representatives from six bank branches – including the People’s Bank of China and Bank of Communications – signed a Blockchain Alliance proposal for the city’s e-port area.

The municipal Shanghai government has joined forces with financial institutions to create an alliance to foster the use of blockchain for global trade.

Blockchain for multilateral trade

Chen Huifang –  a professor at the College of Information Science and Electronic Engineering of Zhejiang University – told the Global Times that blockchain has previously been implemented in several free trade zones across China, noting that:

“Blockchain technology increases the reliability of information, thus improving the efficiency of customs clearance, reducing costs and promoting trade facilitation.”

An official from the General Administration of Customs of Shanghai, Ye Jian, emphasized that the blockchain alliance represents “the first blockchain application project in customs and the first service project for the CIIE.”

He added that blockchain had been successfully implemented in the newly-launched cross-border yuan trade financing services for Shanghai’s single window system, helping to tackle data imbalance issues in the process.

As the Global Times notes, a pilot blockchain system was also trialed for cross-border financial services in Nanning, South China’s Guangxi Zhuang Autonomous Region, this October.

Qi Hong, vice director of China Construction Bank’s Shanghai branch, emphasized to reporters that the technology remains in its early experimental phase in the country, outlining that:

“We now use blockchain in sporadic financial products instead of the whole finance industry chain, and the public doesn’t have a sound understanding of the technology when it comes to financing. But I think the government’s call for blockchain construction will help push the technology’s application in a more comprehensive way.”

High-level endorsement

As reported, China’s President Xi Jinping has recently stated that the adoption of integrated blockchain technologies is key to promoting tech innovation and industry transformation in the country.

Reflecting on the president’s remarks, Galaxy Digital CEO Mike Novogratz this week claimed that the statement had “credentialized crypto and blockchain.”

Even as China’s National Development and Reform Commission has now rolled back its former plans to crack down on Bitcoin (BTC) mining in the country, local media has cautioned against misinterpreting the president’s remarks as being an endorsement of decentralized cryptocurrencies.

Share of SegWit-Spending Bitcoin Transactions Now Over 50%

The percentage of Segregated Witness (SegWit)-spending Bitcoin (BTC) transactions has reached 50.5%, or an all-time high, according to transactionfee.info statistics.

SegWit solution to Bitcoin transactions

SegWit is a proposed update to the Bitcoin Core, which is designed to reduce processing and wait times. Originally, the update was aimed at solving transaction malleability, a well-known weak spot in Bitcoin software. However, SegWit offers a range of other advantages and now the focus of attention has shifted from fixing transaction malleability to solving the problem of Bitcoin scaling.

Explaining its metrics, transactionfee.info points out that a Bitcoin transaction can have multiple outputs and can therefore transfer funds to multiple recipients. The payments metric counts the number of outputs of a transaction and subtracts one, while a transaction that spends one or more SegWit outputs is considered a SegWit transaction.

Percentage of SegWit-spending Bitcoin payments. Source: transactionfee.info

Historical trends of Bitcoin transactions

As previously reported, average Bitcoin transaction fees increased by nearly 200% in April compared to March. The on-chain transaction volume reportedly rose 43% during April and resulted in full blocks, while SegWit approached 40% of the total transactions per block and blocks regularly exceeded the one-megabyte block limit. The average SegWit usage was 26% in 2018.

Back in February, when daily Bitcoin transaction volumes surged to levels not seen since January 2018, after Bitcoin hit the $20,000 price mark, Jameson Lopp, the CTO at Bitcoin personal key security system firm Casa, argued:

“Lower transaction demand, improved fee estimation algorithms, adoption of SegWit, and transaction batching have resulted in more efficient use of block space and less contention for this scarce resource.”

This summer, Bitcoin Core version 0.16.1 was released, a new major version including “new features, various bugfixes and performance improvements, as well as updated translations.”


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