If you can’t see the YouTube player above, try watching here instead.

Editor’s note: This article was sponsored by electronicAsia and the Hong Kong Trade Development Council. We believe in transparency in our publishing and monetization model. Read more here.

Companies in the telecom industry generate, process, and manage large amounts of data on a daily basis, yet, many of these processes are still done in an inefficient and insecure way.

Chinese blockchain startup QLC Chain is using blockchain to create a more trusted and safe environment for telecommunication services.

Chris Zhao, senior research and development lead at Chinese blockchain startup QLC Chain, spoke at the electronicAsia trade fair in Hong Kong earlier this month on how blockchain can be applied in the industry.

Combating fraud

Telephone scams and text messaging fraud has become prevalent around the world, especially in China. Blockchain, a decentralized technology that can be used to record any exchange of goods, contracts, transactions, could work as a means of fraud prevention.

Hong Kong-based QLC Chain sees the potential of the technology in providing a more secure and trusted environment for communication services. The company claims to be the world’s first infrastructure-level public chain with embedded telecom service capabilities. QLC Chain’s Counter Telecom Fraud Platform, launched this May, aims to help enterprise clients that use one-way short message services to combat scams and fraud.

According to Zhao, each SMS is recorded on the QLC Chain as a transaction, which also makes it faster for SMS-based billing and clearance.

The company has partnered with Shenzhen-listed cloud communication provider Montnets Group, whose clients include Baidu, Alibaba, and Tencent.

If a bank has an account on the QLC Chain network, the user can track the ‘transaction’ on the blockchain to verify the authenticity of the sender and the text message, Zhao explained.

QLC Chain uses a different ledger structure to the traditional blockchain.

Through its unique dual consensus protocol combined with block-lettuce architecture, a form of DAG (Directed Acyclic Graph), the company claims its blockchain scalability has reached 3,500 transactions per second (TPS).

Decentralized WeChat

The company is also working on a hardware solution for enhancing the privacy and security of messaging services. Confidant, launched a year ago, is a device that can be paired with an app on users’ smartphones. It provides encrypted messaging and private email services.

It is not the same as the much-hyped blockchain phone, Zhao said.

Currently, most blockchain handsets out there focus on the implementation of cryptocurrency wallet functions, whereas Confidant is trying to use a blockchain to provide secure communication channels for enterprise clients.

Zhao explains further that Confidant helps build a secure peer-to-peer network. The messaging or email account configuration settings, the content, and the data are transmitted via and stored with encryption in the hardware.

5G challenges and opportunities

There aren’t many blockchain companies in the telecommunication space at present.

“We can expect many opportunities upon the arrival of 5G, given that faster and more reliable connection can support more devices,” said Zhao. However, it also presents significant challenges for Internet of Things (IoT) blockchain firms like QLC Chain, he said.

With 5G, there will likely be more IoT devices on a network, which collectively will generate more data. This will pose a big challenge for blockchain-based systems.

It is, therefore, crucial to have a solution that can “prune” the ledger, Zhao said. The process removes non-critical and less relevant data from the blockchain so that it has a lighter footprint.