China is already using blockchain and other Distributed Ledger Technologies (DLT) to empower various industries and to pioneer the development of a national digital currency.

When we think of blockchain, we tend to relate it to cryptocurrencies, although this is far from its only use. The Chinese government has drawn a clear line between cryptocurrencies and the underlying blockchain or other DLT, regulating them separately. While cryptocurrencies are strictly regulated, blockchain technology and its industrial applications are fully encouraged to develop in a relatively open environment.

The regulated crypto market and centralized digital currency

China has regulations in place that tightly control the proliferation of cryptocurrencies within its borders, given the ability of these currencies to circumvent capital flight controls. In addition, all types of capital-raising activities through cryptocurrencies, such as ICOs (Initial Coin Offerings) and STOs (Security To­ken Offerings), are illegal.  This prevents illegal fundraising, financial fraud, and pyramid schemes which proliferated from 2013 to 2018.

This does not mean however that China rejects all digital currency. In fact, the Chinese Central Bank, PBOC (People’s Bank of China) has explored the launch of its own, centralized, digital currency called DCEP (Digital Currency Electronic Payment) since 2014. DCEP is a central bank digital currency relying on cryptographic technology.

Research questions

1. Explain blockchain, its technology (DLT) and cryptocurrency, with theories related to these.
2. Blockchain-based businesses in China to operate in the supply chain industry, helping resolving issues faced by the industry. VeChain good case
study to analyze.
3. Pros and cons of supply chain using blockchain technology
4. Conclusion: What is the future of the industry if the technology is capable of solving issues faced by the industry?

The research will cover a general introduction of blockchain technology and cryptocurrency, and their utility. Focus on the impact this technology is having by focusing on a specific industry, the supply chain. More specifically focusing on businesses in China.

The literature review will focus initially on explaining the technology and how it works, by reviewing relevant paper; then focus on papers discussing the use cases of blockchain, and cryptocurrencies, in the supply chain industry.

The methodology will be a case study on the VeChain business model with one of its partners*. Discussing pros and cons of implementing blockchain technology in the industry.

The conclusion will further summarise the research findings and the case study, and support whether blockchain technology is capable of solving the problems the industry is facing.