Despite being one of the first countries to ban cryptocurrency trading and ICOs, currently, China is known for tolerance towards blockchain.
Agricultural Bank of China (ABC), the third largest bank in China in terms of total assets, the fourth among the world’s largest banks by assets, has granted a $300,000 loan in Guizhou province over a piece of land, according to Chinese media outlet Financialnews.com. This is the fist Blockchain-enabled loan used by the top bank.
The bank believes Blockchain technology is a tamper-proof system that effectively handles the challenge of double spending. The bank recognized that the current loan approval process involves intermediaries at every step. Most institutional banks still take weeks, or even months, before approving a potential borrower. Blockchain makes the manual process of approving credit applications easier and prevents loan seekers using a single property as collateral for multiple loans from different banks.
Another benefit of sharing data across multiple node partners is tamper-proofing. As each server hosts a copy of mortgage data, it would be difficult for hackers to find a single point of failure and organize an attack.
The bank believes Blockchain is the best way to provide financial services to farmers and businesses, especially in the rural parts of China.
ABC confirmed that it would expand its blockchain solution to other branches after testing the output of the initial test runs. Furthermore, the banking giant plans to incorporate other loanable assets, including real estate, soon.
HyperChain, a Hangzhou-based blockchain startup, is reported to have actively provided technical support to ABC’s blockchain project.
Among other banks that are utilizing the revolutionary technology of Blockchain for lending purposes is BBVA. It is Spain’s biggest bank. It signed a long-term bilateral corporate loan worth 100 million euros with construction firm ACS using Blockchain technology.
BBVA stated the tech ensures the contract’s transparency and traceability.