China Pins Hopes On Blockchain Technology For Government Audits
The National Audit of the People’s Republic of China, the country’s supreme audit institution, is pinning high hopes on blockchain technology as a way to improve government auditing functions, according to a statement posted April 24.
An article titled “Some Ideas on Applying ‘Blockchain’ Technology in Big Data” notes that the blockchain portion of the stock market has increased 19.95% for eight straight days this year, reflecting blockchain application capability. The technology, according to the article, can improve data storage, management, transmission and other work modes for data audits.
The article offers an overview about blockchain technology, noting that its features decentralized computing and time stamping services such as recognizing textual information based on time sequence and the permanent saving of data.
Present System Has Limitations
The present system for auditing data relies on centralized storage, the article noted. Accredited agencies collect the data to do their audits, then upload it to a data center. While the method has a high level of security, it is destined to result in “infinite expansion” of data center hardware and software requirements.
The 19th Party Congress established goals for using science and technology, including the integration of the Internet, big data and artificial intelligence, the article noted. General Secretary Xi Jinping called for taking the initiative with using big data.
However, in the audit area, big data applications remain in an environment in which data usage operations are cumbersome to administer, management is complex. On-site auditors, the article noted, are inconvenient.
Blockchain To ‘Open A Skylight’
“It is still a long way from the requirements of General Secretary Xi Jinping and the Audit Committee Party Group,” the article stated, adding that blockchain technology will “open a skylight” to address the issues.
Blockchain based distributed accounting and storage require no centralized hardware or management organization, the article observed. Data points can be established in city audit offices and internal department agencies. Each agency can establish data backup points and collect and manage data.
The audit office data center will only store the timestamp the auditor uses and oversee the confidentiality, reliability and legality of the audit application.
Blockchain technology’s timestamp, data self management and encryption algorithm will allow the data center to record every auditor’s data, including activities that require identity management and the creation of data operations.
Future data inquiries will be able to be conducted any time at the data site. Users will need to provide qualification certification to enter the data center.
Also read: ‘ASAP’: China is working toward national blockchain standards
Audits To Use Smart Contracts
Future data audits will consist of a chain of auditing personnel operating time stamps created by provincial offices and internal agency auditing departments, the article stated. The audits will be based on blockchain data structures that will store and validate data, use consensus algorithms to create and update data, and use encryption and decryption algorithms to secure data transmissions.
The audits will also use smart contracts consisting of automated script code to operate data. Studies will be required before the technology is applied, according to the article.
PRC emblem image from Shutterstock.