August 23, 2017 / 7:08 AM / a month ago

China's Fosun invests in local version of bitcoin tech blockchain

Fosun Group's Executive Director and Chief Executive Officer, Wang Qunbin attends a news conference in Hong Kong, China March 29, 2017. REUTERS/Bobby Yip

BEIJING (Reuters) - Chinese conglomerate Fosun Group has made a foray into blockchain with an investment in the Shanghai startup behind Onchain, a local version of the much-hyped technology that underpins virtual currencies such as bitcoin.

Fosun is the sole investor in the first round of fundraising of Shanghai Distributed Technologies Co Ltd, the startup’s Chief Executive Officer Da Hongfei told Reuters. It is looking at applying the technology across its businesses, which are as varied as financial services and pharmaceuticals, Da said.

Fosun is China’s largest private conglomerate and one of its most active investors. It confirmed the latest investment closed last month and said the amount was in the tens of millions of yuan. It declined to elaborate.

Blockchain involves creating permanent, public ledgers of transactions. Its ability to secure and validate any exchange of data has brought it attention from many industries. In finance, for instance, it promises to simplify cross-border clearing and settlement which currently involves multiple parties.

In China, the government is encouraging the development of blockchain to increase transparency and reduce fraud.

“The government, regulators and entrepreneurs ... see an opportunity for China to really put a stake in the ground and show its development and innovation around blockchain,” said Shanghai-based Zennon Kapron of consultancy Kapronasia.

Shanghai Distributed Technologies has about 40 employees. It works on blockchain with financial firms and has a joint venture with Guiyang city government in China’s south-west to develop blockchain-based systems for public services.

BITCOIN BUBBLE

Interest in blockchain has surged this year in tandem with the value of blockchain-based digital currencies, the number of which has mushroomed into the hundreds. The most well-known, bitcoin, has risen 480 percent in value this year, prompting concern of a market bubble at risk of collapse.

Da, who has no formal technical training and ran an education consultancy before becoming involved in digital currencies in 2011, told Reuters that the potential of blockchain validates the hype.

“Definitely there are bubbles. Perhaps 95 to 99 percent of projects are rubbish. But you don’t know,” he said. “Some are technologically good projects. I think the money (going into blockchain) is worth it.”

Reporting by Elias Glenn; Editing by Christopher Cushing

Our Standards:The Thomson Reuters Trust Principles.
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