Alibaba's Ant Financial Joins Quest for Transparency in Charitable Transactions
In February, Bitcoin Magazine reported that Alipay, an online payment platform of the Chinese e-commerce corporation Alibaba Group Holding Ltd., had announced a project based on blockchain technology and cloud services. The announcement indicated the growing interest of Alibaba in distributed ledger technology.
Now, it appears that the Chinese giant is gradually committing to the blockchain. Ant Financial, the Alibaba company that operates Alipay, is using distributed ledgers to transparently record transactions and improve the accountability of Chinese philanthropic organizations, Bloomberg Technology reports.
Ant Financial dominates the online payments market in China through its Alipay service, which has more than 450 million annual active users and has been compared to PayPal. Credit Suisse estimates that that 58 percent of China’s online payment transactions go through Alipay. The company also operates a money-market fund called Yu’e Bao and an online bank called MYbank.The name Ant refers to the small merchants — myriads of hardworking ants — who sell goods through Alibaba, The Wall Street Journal explains.
Ant Financial was spun off as a stand-alone company before the $25 billion Alibaba initial public offering in 2014 and is expected to launch its own IPO. The company completed a new $4.5 billion funding round in April as reported by The Financial Times, giving it a valuation of roughly $60 billion, according to China Business News, a respected daily newspaper that is part-owned by Alibaba. The new investors include high-profile state-owned Chinese corporations such as a unit of China Investment Corp. (CIC), the country’s sovereign wealth fund and a subsidiary of China Construction Bank, the country’s second-largest lender by assets.
“We hope to bring more transparency to charity and blockchain technology’s decentralized nature fits that purpose well,” said Ant Financial CTO Cheng Li. “It means that all the information and transaction history of funds will be more reliable and can’t be easily tampered with.”
The China Social Assistance Foundation is one of the first large Chinese charities to join the project.
Cheng explained that donors on “Ant Love” — the charity platform operated by the company — will be able to track transaction histories and gain a clearer understanding of where their funds go and how they’re used. According to the Ant Financial executive, that makes it tougher to alter records and may help restore some of the trust that’s been squandered over the years. In fact, though philanthropy is growing fast in China, numerous scandals have undermined the donors’ confidence and trust.
Cheng added that Ant Financial is using a private blockchain for the project and plans to open up the ledger to charity organizations and auditors in the future. It seems plausible that Ant Financial has chosen philanthropy, a non-controversial and socially important application, for its first projects with distributed ledger technology before moving on to business-relevant and potentially very profitable applications such as payments and remittances.
In this case, Ant Financial — a fast-growing subsidiary of one of the world’s largest tech giants, expected to become a high-profile public corporation itself — would give a significant boost to the distributed ledgers in the mainstream business world.
BitGive Foundation’s Ongoing Charity 2.0 Initiative: Donation Transparency Platform on the Bitcoin Blockchain
Ant Financial is not the first to try to improve transparency in charitable giving. The BitGive Foundation, a U.S. 501(c)(3) nonprofit whose mission is to “revolutionize global philanthropy through technology,” announced BitGive’s Charity 2.0 Initiative: Donation Transparency Platform for donors and nonprofits using Bitcoin's blockchain technology in 2015.
“It is interesting and exciting to see entities like Ant Financial and Jack Ma’s Alibaba Group looking at blockchain technology,” BitGive Founder and Executive Director Connie Gallippi said to Bitcoin Magazine. “Their desire to develop a charity project focused on transparency is certainly great testament to BitGive’s Charity 2.0 Initiative: Donation Transparency Platform, which we have been developing for over a year. BitGive’s platform has been widely supported by the Bitcoin and Blockchain community and has received grants and other financial support from philanthropic entities, including the Walter and Karla Goldschmidt Foundation.”
According to the BitGive website, the new platform will revolutionize philanthropy by allowing donors and the public to trace nonprofit transactions on a public platform in real time, to track the funds until they reach their final destination and to see how the donations are spent. BitGive’s platform also has a donor-experience focus that ties donor contributions to direct results on the ground so donors will not only know how and where their donation funds were spent, they will also see the impact and results first-hand from their contributions.
Gallippi also noted that a key distinguishing principle for BitGive’s Donation Transparency Platform is that it is built on the public and widely-accepted Bitcoin blockchain, rather than on a private blockchain, “providing true public transparency and accountability on an immutable ledger that is housed on a distributed global infrastructure.”
BitGive’s MVP (minimum viable product) will be released within the next month or so, says Gallippi, showcasing charity partners who have elected to be demonstration use cases, including those using cross-border transactions for projects in developing countries. The platform will also incorporate administrative and data analysis features for charities to use in reporting and auditing.