Challenges of Blockchain adoption in financial services in China's Greater Bay Area

TL;DR

This paper reviews the progress, challenges, and barriers of Blockchain technology adoption in financial services within China's Greater Bay Area, highlighting its potential benefits and existing limitations.

Contribution

It provides a comprehensive overview of Blockchain applications in China's financial sector and analyzes the barriers and risks to widespread adoption.

Findings

Blockchain enhances transparency and security in financial transactions.

Transaction fee dominance poses risks to Blockchain sustainability.

Adoption barriers include technical, regulatory, and incentive challenges.

Abstract

In China's Greater Bay Area (Guangdong-Hong Kong-Macao), the increasing use of Blockchain technology in financial services has the potential to generate benefits for many stakeholders. Blockchains are known for their distinctive features, such as decentralized architecture, tamper-proof data structures, and traceable transactions. These features make Blockchain a preferred choice of platform for developing applications in financial service areas. Meanwhile, some questions have been raised regarding Blockchain's suitability to compete with or even replace existing financial systems. This paper provides insights into the current progress of Blockchain applications in insurance, banking, payments, asset trading, loans, remittances, the Internet of Things (IoT) for the finance industry, financial inclusions, and enterprise-level interaction in finance and governance. We review the barriers to widespread Blockchain adoption, especially the risks when transaction fees dominate mining rewards. By comparing the emerging Blockchain technologies and incentive issues related to real-world applications, we hope that this paper can serve as a valuable source of reference for Blockchain researchers and developers in financial service areas.