China’s Blockchain Push is Centralized and will Kill Crypto
Nowhere on Earth is blockchain more evangelized under a state paradigm and crypto more ruthlessly banned.
I used to make a decent living supporting the marketing efforts of blockchain companies who had crypto products in the pipeline, many never reached maturity or even a legit product launch. Fraudulent ICOs and a global crypto ban led to what we term the crypto winter.
However in China, the blockchain banner is strong. In late October, 2019, China’s Cyberspace Affairs Commission (CAC) released the second batch of approved blockchain projects, 309 in total by companies in the financial services, healthcare, auto manufacturing, e-commerce, and logistics sectors. The scope of blockchain innovation in China dwarfs innovation in the space in the United States.
China reveals itself as a technology player in 5G, IoT, blockchain and a new kind of surveillance capitalism with its head-start in integrating facial recognition with everything including payments.
China Will Marry 5G, Blockchain and IoT in the 2020s
In November, 2019, the Standardization Administration of China (SAC), the standards organization authorized by the State Council of China, has set up a national standards committee for blockchain technology to boost “high-tech innovation.”
China’s own version of regulatory frameworks enforces its own kind of centralized innovation paradigm. Meanwhile China launching its own digital currency with a state-backed RBM across all of its digital channels is highly likely in the next few years.
Meanwhile as Facebook’s Libra faces skepticism and scrutiny it’s worth noting that in the October 23 Congress hearing on Facebook’s digital currency Libra, Mark Zuckerberg, the founder and CEO of the social media giant, warned Washington that blocking Libra would give way to China’s growing technological supremacy, which would eventually jeopardise America’s democratic values.
If the U.S.’s military is falling behind in AI, the way China will utilize blockchain is also not fully understood. China aims to be the leader in the 4th industrial revolution and now has a national strategy around blockchain that appears very good for creating new jobs and companies in the sector.
Recently approved projects according to TechNode include projects by Chinese tech giants also made it on the list, including blockchain-as-a-service (BaaS) platforms by JD.com, Alibaba Cloud, Baidu, and Huawei Cloud.
China’s “Enlightened” Blockchain Era Begins in 2020
China’s government-backed digital currency is expected to be launched with an “enlightened” infrastructure. In the crypto winter I’ll be the first to tell you that Crypto markets are seen as “fragmented” in the rest of the world. China’s approach to blockchain, however, is much more meticulous and organized. China appears to understand technological regulation at a more sophisticated level than the United States.
China’s leadership understands the importance of blockchain technology. Blockchain, the technology that underlies bitcoin and other cryptocurrencies, was endorsed by President Xi Jinping near the end of 2019. PBOC was the first major central bank to study digital currencies in 2014, a step to counter the challenge from cryptocurrencies including Bitcoin. However as the crypto has been dismantled with bans, China’s blockchain initiatives in the 2020s could be the best blockchain products in the world.
China maintains a blanket ban on new listings or trading of any digital currency, including bitcoin, as Beijing regards digital tokens as a source of financial risk. At the same time, China’s central bank has been longing for a “sovereign” digital currency.
China’s centralized blockchain push into a digital currency could become ubiquitous in Asia very quickly. One day that could challenge the supremacy of the American fiat dollar.
China’s Blockchain Push Is Innovation Centric
China’s blockchain push is good for startups, innovation and interoperability between the Cloud, E-commerce, apps and integrated services as China’s evolves in digital transformation. During a meeting last month, President Xi Jinping endorsed blockchain as the nation’s core technology. China’s plan to launch a sovereign digital currency is also triggering new appetites for start-ups, traders, investors, and researchers.
China’s blockchain emphasis over crypto truly changes the kinds of businesses that will prosper in that environment. Xi said blockchain technology could be applied to many different fields, including finance, education, employment, elderly care, poverty alleviation, health care and food security, infrastructure management and public services.
According to CNBC, With Xi’s backing, China is developing a Digital Currency Electronic Payment, or DCEP, to be issued by the People’s Bank of China. The national currency may be launched within months. This means China will beat Libra to launch a highly scalable digital currency based on blockchain.
Libra is trying its best to cut corners and duck under red tape to get its product ready ASAP. I’d put my vote on China’s DCEP over Libra, with the current information on hand.
China’s Version of Blockchain will Promote China’s Centralized Approach to Technological Innovation
While, blockchain is a distributed, decentralized and public digital ledger system that allows information and data to be immutably stored and transparent to all. China’s implementation of blockchain tech is likely to be far from decentralized.
However it will boost efficiency, interoperability, and fit it nicely with the surveillance architecture it is creating that is a data-centric society of scale, the likes of which we have never seen before.
In the event that China is becoming an AI-state, blockchain is one piece of the puzzle along with things like 5G, improved venture capital efficiency for startups, AI-plan, IoT, maturation of the Cloud and so many other aspects of China’s technological focus.
Central banks need to evolve beyond fiat and enter the realm of digital currencies with blockchain and China is expected to do this the best. The PBOC, after receiving approval from the State Council, have been working with market institutions on creating a central bank digital currency.
China is embracing blockchain and cryptography technologies as it paves the way for its digital currency rollout. Not to be confused with crypto products or startups. The technology is also set to be involved in the development of smart, digitally connected cities.
China is bullish on becoming the leader in the 4th industrial revolution and is likely to experience a renaissance period in the 2020s and 2030s in technological growth.
China’s push in blockchain will be state-led and ban crypto projects that have rogue elements or try to disrupt innovation or traditional business models. The Chinese central bank’s digital currency has been in the works for the past five years. Blockchain and cryptography will likely be crucial to the development of the architecture of the planned digital currency.