ALIBABA IN BLOCKCHAIN: INTEGRATING BLOCKCHAIN

Alibaba one of the fastest growing cloud service providers (growing at the annual rate of

93%) in the Asia pacific region. This cloud services have changed the way infrastructure is

handled in businesses operating in this region and have provided them unique opportunity to

experiment with advance technologies such as Blockchain in fintech industry. Operating

blockchain on the cloud is an ideal choice as blockchain needs high processing and

computational power along with a lot of storage. Deploying blockchain based remittance on

cloud helps reduce investment and IT spend required to setup the business. This also allows

Alibaba to test blockchain based remittance in other geographies without a lot of upfront

investment using existing infrastructure.

Also, the blockchain is a transparent and interconnected network that does not need a

centralized authority and can solve for cloud’s security risk.

1. The remittance business involves money transfer from sender to receiver countries by

keeping an on-going record of millions of daily transactions. The problem arises with the

reconciliation of transaction across individuals and ledgers which is a time consuming,

error prone, expensive and complex process.

Blockchain based money transfer enables low cost, transparent, secure and real time

settlement of the transaction. Using blockchain the verification and execution of the

transaction can happen at the same time and hence leads to real time settlement of

transactions in minutes compared to days earlier through competitors like Western Union,

MoneyGram etc.
2. Alibaba has grown to be dominant force as a result of the “Iron Triangle” – strength in e-

commerce, logistics and finance. There are many potential blockchain solutions that can be

implemented across these verticals.

 Contract enforcement: Alibaba can use block chain enabled smart contracts to

automate payments and transfer of currency whenever a predetermined set of

conditions are met. These can have a wide usage across industries starting from buyer

supplier relations, employee employer contracts etc.

 Supply chain management: Alibaba can evaluate the used of blockchain to track,

reconcile and verify inventory items throughout its complex supply chain. Blockchain

can help with issues like record keeping, tracking etc.

3. In order to solve the problem of insufficient transaction liquidity to achieve network effects

within its blockchain remittance service Alibaba can evaluate the below potential solutions

a. Integrate other banks and financial institutions into the blockchain networks to

ensure reach and coverage across the globe

b. Expand to other geographies to increase transaction size and volume

c. Introduce Alibaba’s own blockchain based currency to insure smoother

transactions across the globe across users

Increasing the current remittance network to include more customers and banking institutions

will lead to increased adoption and eventually achieve network effect within its service