The cryptocurrency market has experienced a prolonged downturn, but recent developments suggest a potential resurgence of interest in blockchain technology among investors.
On November 1, the CEO of Hong Kong’s Securities and Futures Commission announced plans to establish a regulatory framework for cryptocurrency trading. Under this initiative, only professional investors would be permitted to invest in cryptocurrency funds. Additionally, the commission will begin issuing licenses to cryptocurrency exchanges following a sandbox testing phase. While this signals a step toward legitimizing cryptocurrencies, it doesn’t necessarily indicate an immediate recovery from their current price slump.
Although the explosive growth of cryptocurrencies in 2017 was followed by a sharp decline in 2018, investment in blockchain technology has remained robust. Major companies like JD.com, Huawei, and Baidu released their blockchain white papers in 2018, unveiling proprietary projects—some of which have already been applied in real-world scenarios.
So, what is the current state of blockchain development, and how are listed companies in Hong Kong leveraging this technology? Let’s explore.
Understanding Blockchain’s Evolution
Blockchain technology first gained prominence with the introduction of Bitcoin. In 2008, Satoshi Nakamoto published Bitcoin: A Peer-to-Peer Electronic Cash System, which introduced the decentralized framework that defines blockchain 1.0. The development of smart contracts by Ethereum in 2014 marked the beginning of the blockchain 2.0 era. Blockchain 3.0 refers to the application of this technology across various industries, though widespread adoption remains limited due to a lack of scalable use cases.
Currently, blockchain is primarily used in anti-counterfeiting, traceability, gaming, and financial payments. While these areas show promise, commercial applications are still in their early stages. As of March 2018, there were 456 blockchain-focused companies in China, 90% of which were startups. Very few have achieved meaningful commercial implementation.
Blockchain 2.0 remains the dominant paradigm, and investment in this area has surged over the past year. Major tech firms like Tencent, Alibaba, Baidu, JD.com, Suning, and even telecom giant Huawei have entered the space, releasing white papers and outlining their blockchain strategies. In May 2018, China’s Ministry of Industry and Information Technology also published a white paper on blockchain development.
Among the top three internet companies in China, Alibaba was an early adopter, beginning its blockchain efforts in 2015. By October 2016, Alibaba had partnered with Microsoft and other leaders to develop a “legal chain,” introducing an email certification product based on its cloud platform. In August 2018, the company launched its enterprise-grade Blockchain-as-a-Service (BaaS) platform. As of that month, Alibaba led globally with 90 blockchain patents, followed closely by IBM with 89.
Key Players and Real-World Applications
While industry giants often dominate discussions about blockchain, numerous small and mid-sized companies are also actively exploring the technology—even as commercial applications remain limited.
Many publicly listed companies have entered the blockchain space. Some may be seeking to attract investor attention and boost their stock prices, but others are genuinely committed to researching and implementing blockchain solutions. Over 100 small and mid-cap companies in the A-share market have adopted blockchain, and most internet firms listed in Hong Kong and the U.S. have followed suit.
In Hong Kong, companies such as Tencent (00700), HC Group (02280), Kingsoft (03888), Hong Kong Exchanges and Clearing (00388), Blockchain Group (00364), Zhongan Online (06060), Panda Green Energy (00686), and Languard Interactive (08267) are all exploring blockchain applications. Below, we highlight a few examples.
Tencent: Building an Enterprise Ecosystem
Tencent published its enterprise-focused blockchain white paper in April 2017. Since then, the company has matured its 2.0 technology and made progress in real-world applications.
Tencent’s blockchain strategy centers on its Blockchain-as-a-Service (BaaS) open platform, which supports both platform and application service layers. The platform layer focuses on digital assets, authentication, shared ledgers, and the sharing economy, while the application layer targets industries like banking, insurance, securities, and supply chain management. Currently, Tencent’s efforts are concentrated on the platform layer.
In terms of practical applications, Tencent has launched Let’s Catch Monsters, a blockchain-based game, and Micro-Enterprise Chain, a platform designed to improve financing access for small businesses. Micro-Enterprise Chain is an open supply-chain financial service platform that has already onboarded 71 core enterprises and established partnerships with 12 banks. It serves industries ranging from real estate and energy to automotive and pharmaceuticals.
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Kingsoft: Cloud-Based Blockchain Services
Kingsoft entered the blockchain space relatively late, announcing its plans in May 2018. Its subsidiary, Kingsoft Cloud, developed KBaaS, a cloud-based blockchain service. In June of that year, the company introduced Project-X, a blockchain gaming initiative, and expanded into finance, healthcare, copyright protection, and artificial intelligence. While Kingsoft’s website highlights the advantages of KBaaS, it has yet to disclose specific industry use cases.
Zhongan Online: An Ecosystem Approach
Zhongan Online launched AnLink Cloud in May 2017, a cloud service platform powered by blockchain and AI technologies. Its offerings include digital asset and IoT platforms, smart contracts (T-Series), data intelligence tools like public sentiment analysis and investment research (X-Series), insurance acceleration services (S-Series), and fintech solutions such as capital and credit asset applications (F-Series).
AnLink Cloud has already implemented several practical applications. For instance, it partnered with Lianmo to enhance food safety through anti-counterfeiting and traceability solutions. The platform has also collaborated with airlines to integrate blockchain-based loyalty coupons, digital assets, and smart contracts. Additionally, Zhongan Insurance uses AnLink’s electronic policy management system, which employs asynchronous on-chain recording and has already generated revenue.
Other listed companies have also implemented blockchain in real-world scenarios. HC Group (02280), for example, uses the technology for anti-counterfeiting and traceability, serving clients such as Hongjitang, Chengde Lulu, and Dezhou Braised Chicken. This initiative has also begun contributing to revenue.
The Path Forward for Blockchain
As the examples above illustrate, blockchain technology remains in the 2.0 era. The transition to 3.0 depends on broader industry adoption, which is currently most advanced in financial payments and anti-counterfeiting. Other sectors have yet to catch up. That said, new applications are continuously emerging, suggesting significant future potential for commercialization.
Many investors conflate the cryptocurrency market with the broader blockchain ecosystem. In reality, there are two distinct spheres: the “coin circle” (cryptocurrencies) and the “chain circle” (blockchain technology). Although related, the two have grown apart due to the speculative and sometimes fraudulent nature of the crypto market. Legitimate blockchain applications, like those developed by Tencent, typically avoid cryptocurrency issuance. As Tencent’s Pony Ma has stated, “Tencent Blockchain does not issue coins.”
Unfortunately, some companies continue to use blockchain as a pretext for launching cryptocurrencies, muddying the waters and causing confusion among investors. Effective regulation is essential for the healthy development of the crypto market. In contrast, the chain circle focuses on practical applications, driving real-world adoption of blockchain technology.
In summary, the blockchain industry is still in its infancy. Widespread commercialization will require continued innovation, clearer regulations, and time.
Frequently Asked Questions
What is blockchain 3.0?
Blockchain 3.0 refers to the application of blockchain technology across various industries beyond cryptocurrencies and financial services. It aims to solve real-world problems in sectors like healthcare, logistics, and public administration through decentralized and transparent systems.
How are companies currently using blockchain?
Most enterprises are focused on blockchain 2.0 applications, such as smart contracts and private ledgers. Common use cases include supply chain traceability, digital identity verification, cross-border payments, and fraud prevention.
What are the major obstacles to blockchain adoption?
Key challenges include scalability limitations, regulatory uncertainty, interoperability issues, and a lack of standardization. Additionally, many businesses are still evaluating the return on investment and practical implementation pathways.
Is blockchain the same as Bitcoin?
No. Bitcoin is a cryptocurrency that operates on a blockchain framework. Blockchain is the underlying technology that enables decentralized record-keeping, with applications far beyond digital currencies.
Which industries benefit most from blockchain?
Currently, finance, supply chain management, healthcare, and intellectual property protection are among the sectors seeing the most tangible benefits. These industries rely heavily on transparency, security, and efficient record-keeping.
Will blockchain replace existing systems?
Blockchain is more likely to integrate with and enhance existing systems rather than replace them entirely. Its value lies in improving transparency, reducing fraud, and streamlining processes across decentralized networks.