President Xi of China seems to have surprised the world when he so wholeheartedly endorsed the wonders of blockchain technology by demanding that his countrymen “seize the opportunity”. New blockchain-related legislation was passed 24 hours after his statement, and it appeared to all observers that China was now off and running in a blockchain “arms race”. Aside from state-controlled initiatives to issue a national digital currency, there has been very little press about other potential crypto projects.
Believe it or not, the Middle Kingdom has not been sitting on their respective hands, when it comes to the blockchain and the potential benefits that it affords. DeCrypto reports that: “As it stands, roughly 74 percent of Bitcoin nodes are Chinese, while about 225 blockchain patents have also been filed in China. And last year, the Cyberspace Administration of China administered new regulatory guidelines that will require all blockchain and crypto-based businesses to register with the government and pass along data regarding their customers.”
That little bit about reporting data back to the government regarding customers’ activity might be anathema to your typical crypto libertarian, but news about all things crypto that has seeped out of China tends to emphasize the “state-controlled” nature of the goings on. One such example is with Wianxiang, the country’s largest automobile maker. It has invested $30 billion into “a new blockchain startup that’s seeking to build a blockchain-powered “smart city” which can track residents’ data”.
According to reporters at DeCrypto, the automaker announced last July: “Wanxiang City is set to become China’s largest, most interconnected, blockchain-powered smart city. The company’s tech is meant to track, transfer, and secure critical data such as resident identification cards and smart devices.” This news may not ring true in most crypto users ears, but not all initiatives in China have this particular “Big Brother ring” to them.
Chinese Merchants Bank, a banking institution with over $1 trillion on its balance sheet, is planning to release a number of their own decentralized financial applications. There are not many more details to report, other than the fact that the bank has partnered with the Nevos blockchain network in order to provide their decentralized apps (dapps).
Another interesting thing happened after Xi Jinping’s favorable blockchain remarks. The state-controlled media censured speculators for driving up share prices for any and all blockchain related companies traded on the Shanghai exchange, an indication that much more is going on under the hood than thus far disclosed. Add to this fact that the Hurun Report, released by a Shanghai-based analysis company, highlighted 11 blockchain entities in China that were private, but had valuations in excess of $1 billion. Known as a “unicorn”, Bitmain, the mining conglomerate, topped the list at $12 billion.
China has always been betwixt and between all things crypto, perhaps, due to the decentralized nature of the technology. Government officials, however, are wise enough to know that, if they ignore prevailing innovations, they will end up far behind the pack when the competition heats up. While quasi-bans exist related to trading and exchanges and a threat to outlaw mining still persists, DeCrypt reports that:
A recent court case in China’s “Internet Courts” saw Bitcoin recognized as having the same legal status as physical assets. The court ruled that Bitcoin has “value, scarcity and disposability,” and deserves protection from Chinese property laws.
Both David Marcus and Mark Zuckerberg have warned Congress in two separate hearings that China is moving quickly in all areas involving cryptos and blockchain technology. Their government officials, who have actually praised the Libra concept, have recently promised their digital currency would be launched well ahead of the competition. Does the West really want to be “far behind the pack”? Time will tell.